In real estate terms, the right of redemption is the right of a homeowner to buy his or her property back from the person who bought it at foreclosure or a tax sale. You can only have the right of redemption after your home was lost either through foreclosure or a deficiency judgment foreclosure. The redemption price is determined for not only the foreclosure price but also the costs associated with the foreclosure. However, this is still usually less then the fair market value of the property and the pre-foreclosure debt on the home. The right of redemption after foreclosure procedures varies from state to state.

In order to prove that your personal circumstances have changed enough so that you can now afford to reclaim your home you will most likely have to petition the court to schedule a hearing to show “proof of funds”. This can be proof of money in the bank, or a pre-approved letter. You will probably want to have a lender involved in the redemption of your property. The new lender may not be a bank but what’s known as a “hard money lender” or “predatory lender” because they will charge you higher interest rates and closing points, and the amount of money they will lend you is based on the “quick sale” value of the home. This will enable the lender to recoup the loan money if they have to foreclose on the property again.

A prospective buyer of foreclosed real estate property may purchase the right of redemption from the debtor. This right must be exercised within a year of the foreclosure sale date if there was previously a deficiency judgment. In some states, such as California, the right of redemption itself expires in three months if the proceeds of the foreclosure sale took care of the amount of the debt. After the period of redemption, you will retain the right to possess the property. In other states, including Arizona, Connecticut, Delaware, Hawaii, New York, and Texas, there is no redemption period so it is possible to bring legal action against the lender regarding deficiencies in the foreclosure process, but this rarely yields positive results for the homeowner.

By acquiring back your property from the purchaser via the right of redemption, you have the added benefit that any liens extinguished by the foreclosure cannot reattach.