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Equity of Redemption
The borrower's right to redeem mortgaged property by paying the full debt before the foreclosure sale, recognized in equity courts.
In depth
Equity of redemption is the historic equitable right protecting borrowers from harsh forfeiture. Modern statutes codify it as the pre-sale right to redeem by paying the full accelerated balance plus costs. Misconception: equity of redemption is not the same as statutory redemption; equity of redemption applies before sale, while statutory redemption applies after. Practically, in seller-financed deals, equity of redemption preserves the buyer's ability to save the property by paying off the loan even after default. Some contract for deed states limit equity of redemption to a short post-default window before forfeiture. Lenders cannot contractually waive a borrower's equity of redemption (the prohibition on "clogging the equity of redemption"). This doctrine influences modern foreclosure timelines and reinstatement rules.
Educational content only. Definitions reflect typical usage in US owner-finance and FSBO transactions; statutes and case law vary by state. Consult a licensed real-estate attorney for fact-specific guidance.