In a foreclosure situation, the redemption period is a period of time after a person’s home has been sold in a foreclosure sale when the person can still get the home back. In order to do this, the person has to pay the outstanding mortgage balance, liens, and all other costs that were incurred in the course of the foreclosure process.
The amount that has to be paid to redeem the property may vary depending on state law and other circumstances. For example, if the house was sold in a foreclosure auction, then the amount that must be paid to redeem it would be the amount of the winning auction bid.
That is, the person who wants to redeem the property would have to pay the same amount that the property sold for at the auction. In addition, they would have to pay any taxes or interest the auction buyer paid from the time of sale to the time of redemption.
If a person lives in a community with a homeowners’ association (HOA), they are required to pay HOA fees on a regular basis, whether annually, quarterly or monthly. If an owner of property that is governed by an HOA does not pay these fees, the HOA may have a right to place a lien on the person’s property.
They may eventually foreclose on the lien and force a sale of the property in order to collect the unpaid fees. The HOA can do this if it is permitted by the Covenants, Conditions, and Restrictions (CC&Rs) of the HOA and the law in the state in which the HOA is located.
If foreclosure by an HOA is legally allowed in the state in which a person lives, they may have the right to redeem their property in order to get it back after the foreclosure. In other words, the person may pay the past dues they owe, plus costs and any amount that was paid by the buyer at the foreclosure auction to stop the foreclosure process.
Does the Right of Redemption Apply to Me?
As noted above, if a homeowner does not pay their HOA fees as required, the HOA can place a lien on the homeowner’s property. After placing a lien on the property, if the CC&Rs of the HOA and state law allow it, the HOA may foreclose on the property.
There are two types of foreclosure. The types that are allowed in a state are determined by state law. A state may either have a system of judicial foreclosure, which requires the debtor, e.g., an HOA, to go to court to foreclose on its lien.
Or some states have laws that provide for non-judicial foreclosures. In a non-judicial foreclosure, the party seeking to foreclose on a mortgage or a lien does not have to go to court before starting the foreclosure process. Some states allow both types but under different circumstances.
Can an HOA Foreclose if My Home Has a Mortgage?
The law allows an HOA to proceed with a foreclosure on a lien, even if there is a mortgage on the home. In the case of a judicial foreclosure on an HOA assessment lien, the law requires the HOA to file a lawsuit against the homeowner and obtain a judgment from a court.
The judgment would state how much the homeowner owes the HOA and grant the HOA permission to sell the home. Of course, the proceeds of the foreclosure sale would be used to satisfy the HOA’s lien and any other liens on the property, including a mortgage.
To foreclose through a non-judicial process, the HOA is not required to go to court and get a judgment. Instead, the HOA would follow the foreclosure process that state law and its own CC&Rs establish.
Not all states offer a right of redemption to homeowners after a foreclosure. Arizona, for example, is a state that does not offer the possibility of redemption after a foreclosure. However, in most cases where state law does provide for a right of redemption, the homeowner’s association cannot require the homeowner to waive this right in its CC&Rs.
What Is the Redemption Period?
The redemption period depends on the law of the state in which the property is located. It may also depend on the type of foreclosure involved. For example, in California, the redemption period lasts for 90 days after the foreclosure sale takes place.
The redemption period is not available after a non-judicial foreclosure sale on a deed of trust. So redemption would be available if the sale involves only a lien placed on the property by an HOA, not foreclosure on a deed of trust.
Laws regarding the foreclosure process in some states sometimes provide varying redemption periods based on the circumstances. Some of the factors that might affect the length of the redemption period are as follows:
- Whether the property is located in an HOA or a condominium association;
- Whether the foreclosure is non-judicial or judicial;
- Whether the homeowner moves out of the property permanently before the foreclosure process has come to a conclusion.
Another state that offers homeowners a right of redemption is Texas. The law in Texas provides a redemption period of 180 days. The period starts on the date when the HOA sends written notice of the foreclosure sale to the homeowner, as it is required to do by law. The redemption period for a condominium In Texas is 90 days.
In some states, the redemption period is very generous. For example, the law in the state of Washington requires a purchaser at a foreclosure auction to send a person with the right of redemption a notice. The notice must inform the person that they have a right to redeem the property within the eight months after the foreclosure sale. If the purchaser fails to send this notice within the time required, the right of redemption is extended for six additional months.
What Is the Cost of Redemption?
The cost of redemption depends on whether the homeowner owes on the lien, or as stated in a court judgment, if there is one. In most cases, the homeowner would have to pay the following to redeem their property following the foreclosure sale:
- The total amount of the lien;
- Possibly the price the buyer paid for the property at the foreclosure sale;
- Interest on the unpaid fees, and
- Attorney’s fees and court costs.
In some states, the law requires that a person who wants to redeem their property pay various other allowable charges. For example, in California, say a homeowner wants to redeem a property that has been sold in foreclosure. In that case, they must pay the buyer any repair costs the buyer paid if the repairs were reasonably necessary to preserve the property.
The buyer at the foreclosure sale may pay for maintenance and repair work if the following applies:
- The property needs repair, and
- The buyer makes repairs that must be made to prevent further damage to the property.
If the buyer has made allowable repairs, then the homeowner who wants to redeem the property has to reimburse the buyer for those expenses.
It is important to note that waiting for a redemption period to pay off a lien debt and get one’s home back after a foreclosure is the most costly way to avoid losing one’s home in a foreclosure. Court costs, attorney’s fees, and other expenses are all added to the costs of redemption.
It is financially better just to pay the HOA fees that a person owes if that is at all possible, and avoid foreclosure altogether. A person can contact their HOA’s collection attorney and negotiate a payment plan for the unpaid fees.
Do I Need a Lawyer?
If your HOA is threatening to foreclose on your property or has already done so, you want to consult an experienced foreclosure attorney.
LegalMatch.com can connect you to an attorney who knows your rights and your state’s laws regarding redemption. They can make sure your right to redemption is respected by your HOA and everyone else involved in the foreclosure process.
