Alabama Foreclosure — Right of Redemption To Get Your Property Back


Alabama Foreclosure — Right of Redemption To Get Your Property Back

Alabama Foreclosure -- Right of Redemption To Get Your Property BackIn Alabama, your right of redemption is the right that you have, under certain circumstances, to redeem or buy back the property from the current owner.

You normally need to move out within 10 days of the Alabama foreclosure (non judicial) sale to preserve this right to redeem and you also will have to pay the new owner back for the amount of the foreclosure sale and necessary improvements along with interest.

As a practical matter, few people can afford to redeem property but sometimes it does come up and when it does, this is a very powerful legal right to have on your side.

After a foreclosure, you have to decide whether to stay or leave.  If you leave, this right of redemption is the way to get back in your home.

It depends on your particular mortgage but the time frame to buy back (redeem) is usually either six months or 12 months.  Point is it is a short time period so definitely find out your options ASAP and plan accordingly.

Contact Us.

If you have already been foreclosed, or if you are facing a foreclosure, and you live in Alabama, give us a call at 205-879-2447.

We will be glad to answer your questions.

You can also fill out our contact form.

We will get in touch with you as soon as we can.

Thanks for reading, ans have a great day!

-John G. Watts


14 Comments

  1. Robert says:

    I am looking to buy a home from a person under her right of redemption. It has been auctioned but she holds the right of redemption. I get the loan, pay her, she redeems and pays the auction buyers. What rights does she or myself have in order to complete the sale? I need access to the home for an appraisal but the current “owners” who bought from auction are not cooperating.

    • John Watts says:

      Robert,

      I’ve never looked at this situation from your perspective but I’ll tell you what my thoughts are….

      I think you may can buy her right of redemption directly — if you don’t then you always have the chance of her not giving it back to you. Check with a real estate lawyer in your area on this.

      But whoever “redeems” the house — a written demand has to be sent in compliance with the law to get a dollar amount owed. If there is any disagreement that can’t be worked out, then whoever holds the right of redemption files a lawsuit in the Circuit Court where the property is located to get a judge to decide how much is owed.

      I don’t think the owner of the house has to allow access for an appraisel — again I’ve never faced this situation before so I don’t know for sure but I doubt you have the right to inspect the house.

      Remember the right of redemption is 1 year so keep that date in mind.

      If you get with an experienced real estate lawyer in your county — or actually where the property is located — then I think they can walk you through the steps as a buyer.

      Best wishes and let us know what you find out.

      Thanks

      John Watts

  2. Eugene says:

    If you lose your home to foreclosure and the bank sells to a new owner, what price do you pay to redeem your home?

    • John Watts says:

      Eugene,

      The price paid at redemption is normally the foreclosure price — the amount the house sold for at the foreclosure sale — plus interest and any necessary improvements made to the house. So if the bank, or the new owner, fixed the roof, then you may need to add that into the price. If the A/C is replaced, that may be added to the price.

      Alabama law says you need to send a letter to get the redemption price. I would send it to the new owner and the bank to cover your bases.

      Do keep in mind that normally you have to be out of the house within 10 days of the foreclosure to retain your right of redemption.

      Best wishes….

      John Watts
      Birmingham, Alabama

  3. Melissa says:

    My house was sold at a foreclosure auction. I know I have a right of redemption and I have successfully (maybe a few more items) moved out of the home within the 10 day period. They buyer wants me to “relinquish” my right of redemption. I am wondering how that is done, is it common, does he buy my right of redemption, what is my liability or responsibility? Thanks.

    • John Watts says:

      Melissa,

      I’m assuming your home is in Alabama.

      If you met the requirements of the right of redemption, then that can make it challenging for whoever buys your home as they will wonder for the next year or so if you are going to redeem it. If you do, then they have to move out.

      So sometimes they will offer to buy the right of redemption so you will not have that any more and the buyer of the house can rest easy knowing there is no chance you come back to them.

      You have to make a judgment call on whether the amount they are offering you is worth giving up that right.

      If you want to chat about this by phone, call us at 205-879-2447 and ask for Randi. She’ll then set us up a call to discuss.

      Thanks

      John Watts

  4. Theresa says:

    Hi John,
    I have a quick question. I’m about to purchase a home thru an online auction. This home is located in Alabama and the rights of redemption period is up on March 21, 2017.
    I’m about to drain an IRA to pay cash for this house. If the rights to redeem come up, I need reimbursed for the purchase price, and any all debt accrued which includes the taxes accessed to the federal government. I understand that I will be reimbursed to the total effect that I didn’t lose anything except maybe my time. If I understand correctly, a rights of redemption letter may come to me asking me a total amount and I have 10 days to respond with an itemized list. Hopefully, the rights of redemption period will pass and I won’t have to woryy about any of this anymore.For now, I just need some reassurance.
    Thank you,
    Theresa

    • John Watts says:

      Theresa,

      I can’t tell you what you would be paid back. It gets a bit complicated and I suggest getting with a real estate lawyer to find out your exact rights.

      Basically you get the purchase price at the foreclosure sale (which may or may not be what you are going to pay for it) and then certain improvements. The concept is the improvements that are needed — i.e. roof is leaking. But not necessarily the improvements that are not needed — like a new swimming pool.

      There is some interest involved if you end up having to sell it back to the redeeming party.

      Again I suggest you get with a real estate lawyer to find out the details — hopefully this general information is helpful to you as you make your decision.

      Best wishes!

      John Watts

  5. Andrea says:

    Are the previous owners notified in writing that their home will be sold at foreclosure aution? If so, if that notice is not given properly, can the foreclosure sale be nullified?

    • John Watts says:

      Andrea,

      Whoever is on the mortgage (and often the deed) is normally given notice. Here’s the basic sequence in Alabama:

      1. You get a default letter — saying you are in default for lack of payment, etc. and you have 30 days to fix (cure) the problem.

      2. If the default is not cured or fixed, then you get an acceleration letter that tells you in 30 days (or more) you the home will be sold. And the entire amount owed is due now (instead of being due over 30 years).

      3. The foreclosure sale will be advertised for 3 weeks in the newspaper in your county (it can vary if more than one paper).

      So you as an owner should have received at least 3 forms of notice. And the monthly statements would talk about a foreclosure also.

      If proper notice was not given, then yes that can sometimes mean we can “void” the foreclosure sale.

      Give us a call if you would like to chat about it — call Randi in my office at 205-879-2447.

      Be glad to hear from you and help you in any way we can.

      Thanks!

      John Watts

  6. randy says:

    Can I sell my right of redemption to someone who then can redeem my foreclosed home which sold at auction?

    • John Watts says:

      Randy,

      That’s a great question and I simply don’t know the answer in Alabama.

      My hunch is that you can. Talk to a real estate lawyer (I can help you find one if you want) and they can let you know in your situation whether you can.

      Various factors — did you get out of the house in time, are you still within your time limit to redeem (normally either 6 months or 12 months), etc.

      It happens so rarely I’ve just never had this question come up but my guess is that you can.

      You could always try it and then if it doesn’t work, you could return whatever money the other person paid you for your right of redemption. I don’t see much downside in trying.

      Do keep in mind the other person (if successful) will own your old home and they normally will be able to do what they want with it. That could include renting it to you, selling it to you, etc.

      Bottom line is I would get with a real estate attorney to see what your options are.

      Thanks for good question and if I find a different answer I’ll update this post.

      John Watts
      205-879-2447

  7. Liz says:

    Hi John,

    Question: My husband and I are looking to buy a house from an investor who “flipped” a recently foreclosed property. He would, of course, be reselling the house to make a profit, so we would pay more for the home than he did at the foreclosure auction. The home still has 8 months left for redemption. The seller has agreed to buy a redemption bond.

    I’m confused about what amount the foreclosed owners would owe if they were to come back to redeem. Would they owe $180,000 paid at the auction, or the $230,000 current selling price?

    Also, I understand the redemption bond would cover the debt owed by my husband and I, but what about our down payment and closing costs? Would we lose those in the event that the property was redeemed?

    • John Watts says:

      Liz,

      I’m assuming you are in Alabama.

      Honestly, I’m not an expert in redemption. I do a lot of lawsuits with mortgage companies but rights of redemption issues are pretty rare and certainly not along the lines of what you are asking about.

      But I’ll give you my thoughts and then you can get with a real estate lawyer to get answers to your specific questions.

      As to the price, I believe the foreclosed previous owners would pay the $180,000. Plus interests and certain types of repairs or improvements.

      I’m not familiar with a redemption bond — I suggest you read it very carefully to know what it covers and what it doesn’t cover.

      In my experience not very many people are able to redeem property but it is a right they have — and a risk you run. In any situation where the seller is buying something to “protect you” as the buyer, be very careful that you understand what it is. I would not want a “summary” but instead the actual document so I could see it and read it for myself.

      Also definitely get with a real estate lawyer to make sure you are protected or at least that know what your risks are if you move forward with the purchase.

      Best wishes and hope the new house works out great for you.

      John Watts

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