Re: Right of Redemption
Posted by steele in minnesota on November 15, 2008 at 09:17:02:
In Reply to: Right of Redemption
Posted by Julie on November 14, 2008 at 21:50:43:
NJD is right. It would help to have what state you are in.
Here in Minnesota we have a six month redemption period on residential properties. The exception is if the property is "abandoned". Then the period can be shortened to five weeks with a court order.
The way redemption works is that as long as it is effect the former owner can continue to live in the property, even try and sell it. You see, one does not buy the property itself at the Sheriff Sale/Auction, they buy a right to own the property after redemption is over. Here they refer to it as buying a Sheriff Sale Certificate.
As most people are not willing to wait for six months (or whatever your state has for redemption) to take possession of the property there are rarely bidders at the auctions other than the lender who is doing the foreclosure. The opening bid is what is owed to them at the time of the sale. As no one else usually bids this is the typical Sheriff Sale amount. (Other reasons we rarely see outside bidders is that one has to have certified funds for the entire purchase at the auction, and the fact that if you have to wait for six months while the former owner lives rent free, who knows what they are doing to the property.)
Now it is important to understand that this redemption amount continues to grow as additional payments are missed. In order to redeem a property a request is made to the Sheriff Department for redemption payoff. The bank will calculate what is owed to them through the date of the payoff. Here there are also costs to the Sheriff Department for them doing this payoff work.
Now, on the rare occassion that someone else buys the certicate at auction you would have to pay them off instead. And they do get interest on their money invested as they had to put up cash to buy the certicate.
So every day one waits the cost of redemption grows higher. (FYI. In my experience less that one in twenty redeem a property.)
Understand that a bank would never go into a property and put any money into it during redemption for improvements. If the property is abandoned they would secure it and winterize it this time of year, but no improvements would be done. Only an emergency repair might be considered.
If an outside party bought the certificate, secured it and did improvements because you had left the property... Well, if you came back and redeemed they would be out the entire amount of the improvements. You see, the house was not really theirs yet.
Short story long.
I am curious as to the state you are in. Alabama is the only one I know that has a year average for redemption. A couple have six months and then a year for certain circumstance. But there are changes occuring all the time.
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