How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask VF LAW Your Own Question

VF LAW
VF LAW, Lawyer
Category: Real Estate Law
Satisfied Customers: 230
Experience:  Experienced Attorney with Real Estate Transactions and Litigation.
11637316
Type Your Real Estate Law Question Here...
VF LAW is online now
A new question is answered every 9 seconds

I have a client who wants to buy a property that was recently

Resolved Question:

I have a client who wants to buy a property that was recently forclosed on. The foreclosure just took place last week, and now the new buyer has immediately listed the property for sale at a really reduced price. I need to know exactly how the redemption laws work. Would she get back everything she puts into it if the redemption takes place?
Submitted: 6 years ago.
Category: Real Estate Law
Expert:  VF LAW replied 6 years ago.
Here is a good article on Alabama foreclosure by a law firm. Your instincts were right - there is a one year redemption period and that is the reason for the greatly reduced price. Like you, I see problems here.

http://www.sasserlawfirm.com/index.php?option=com_content&task=view&id=34&Itemid=47

The Right of Redemption in Alabama

Sasser, Sefton, Connally, Tipton & Davis, P.C.
Montgomery, Alabama

The right of redemption in the State of Alabama is a statutory right that may be exercised
following foreclosure of real property in order to retake title to the property sold.[1] Alabama law permits redemption of real property by certain statutorily defined persons with an interest in the real property if the right of redemption is exercised within one (1) year following the foreclosure sale of the real property and is exercised according to the statutory requirements.[2]

Here is information on what she would receive back:

B. Payment of Statutory Redemption Charges.
Alabama law establishes the charges required to be paid for redemption of real property following foreclosure.[10] Payment or tender of the following charges by the redeeming party to the purchaser is required to redeem real property:

1. The purchase price paid at foreclosure sale, plus interest (at the rate allowed to be charged
on money judgments, which is currently 12%);

2. Permanent improvements to the real property;[11]

3. Taxes paid or assessed;

4. All insurance premiums paid or owned by the purchaser;

5. Any other valid lien paid or owned by the purchaser, or if the redeeming party is a judgment creditor or junior mortgagee (or any transferee thereof), then all recorded judgments, recorded mortgages and recorded liens having a higher priority in existence at the time of sale which are revived;

6. If the redemption is made from a person who, at the time of redemption, owned the debt for which the property was sold, the redemptioner must also pay the balance due on the debt, with interest; and,

7. All mortgages made on the real property by the purchaser to the extent of the purchase
price paid at foreclosure sale.

Please write back on the issue of her being the "second property owner". I have to leave right now but will seek to address this later.

Please click on the GREEN ACCEPT for my answer so that I may get paid for my time.   Leaving a BONUS is greatly appreciated.

The responses do not create an attorney client relationship and are informational only.


Customer: replied 6 years ago.
So here it is. The current owner just bought this property and I don't know what he paid. If my customer gets a mortgage for $80,000.00 to buy it from him, what if he only paid $50,000.00 or $60,000.00 at auction? Will the previous owner still have to pay the difference to get it back?
Expert:  VF LAW replied 6 years ago.
The former owner holding the right of redemption only needs to pay the statutory amount to redeem.

1. The buyer of the property at the sale can sell the property to your client and pocket the cash, and then the risk is on your client for the possible redemption. The property can be redeemed for the purchase price at the foreclosure sale plus 12% interest and other costs.

You client needs to know the sales price, and needs a title report showing all of the liens and encumberances.

Perhaps in a couple of months there will be more money available for lending and the former owner with the right of redemption will be able to arrange some type of loan. The property is not expensive. It seems like a real risk.

2. Here is an explanation of the computation of the redemption amount under the statute:

Payment of Statutory Redemption Charges. ?Alabama law establishes the charges required to be paid for redemption of real property following foreclosure.[10] Payment or tender of the following charges by the redeeming party to the purchaser is required to redeem real property:
1. The purchase price paid at foreclosure sale, plus interest (at the rate allowed to be charged ?on money judgments, which is currently 12%);
2. Permanent improvements to the real property;[11]
3. Taxes paid or assessed;
4. All insurance premiums paid or owned by the purchaser;
5. Any other valid lien paid or owned by the purchaser, or if the redeeming party is a judgment creditor or junior mortgagee (or any transferee thereof), then all recorded judgments, recorded mortgages and recorded liens having a higher priority in existence at the time of sale which are revived;
6. If the redemption is made from a person who, at the time of redemption, owned the debt for which the property was sold, the redemptioner must also pay the balance due on the debt, with interest; and,
7. All mortgages made on the real property by the purchaser to the extent of the purchase ?price paid at foreclosure sale.

Regardless of the identity of the redeeming party, the basic elements of the redemption process are the same. To redeem, the redeeming party must pay or tender to the purchaser an amount equal to the "purchase price," plus interest calculated at the rate set for judgments (which is currently 12%),[12]"and all other lawful charges" with interest.[13]

3. Note: Your client should investigate if the former owner still has the right of redemption:

http://www.matthewdunaway.com/PracticeAreas/Foreclosures.asp

If a foreclosure sale has been held, you will receive a notice of eviction. You must move out within ten days or you lose the right of redemption – the right to recover your property by repaying your debt and certain expenses related to the sale.

See this link:

http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=11th&navby=case&no=946802opa

On October 18, 1993, Commercial Federal conducted a valid foreclosure sale and purchased Smith's property. Commercial Federal then sent Smith a letter notifying him that he had ten days to vacate the property, as required under Alabama law. Smith vacated the property within that time. Thus he preserved his statutory right of redemption under Alabama Code § 6-5-251 (1993).

The only way to exercise a statutory right of redemption under Alabama law is for the mortgagor to make a lump sum cash payment of the entire purchase price paid at the foreclosure sale, plus interest, taxes, and "all other lawful charges." Ala.Code § 6-5-253(a).

Here is a footnote that alludes to your client’s situation:

[5] A foreclosure sale may introduce a third party into the relationship between the mortgagor and mortgagee, a good faith purchaser. While the good faith purchaser buys the property at the foreclosure sale with the knowledge that the mortgagor retains a one-year statutory right of redemption, he does not purchase with the knowledge that if the mortgagor files for bankruptcy, the redemption period under a Chapter 13 plan will be extended, thus further clouding the purchaser's title to the property. Although this case did not involve a third-party purchaser, we foresee problems with allowing the interests of third-party purchasers to be clouded in this way. Cf. In re Thompson, 894 F.2d 1227, 1230 & n. 6 (10th Cir.1990) (concluding that "

urchase by an independent third party at a foreclosure sale raises enough additional concerns to justify ending the right to cure in bankruptcy at that point," but declining to hold the same when the purchaser at foreclosure is the mortgagee).

4. Here is another case - there are quite a few cases under this statute:

http://209.85.173.104/search?q=cache:nfNY5s_xHjgJ:www.bradleyarant.com/publications_opinions.php%3FID%3D3182+Ala.Code+§+6-5-253(a)&hl=en&ct=clnk&cd=4&gl=us&client=safari

5. Here are attorneys that advertise on the web for this type of work:

http://www.matthewdunaway.com/PracticeAreas/Foreclosures.asp

http://www.sasserlawfirm.com/index.php?option=com_content&task=view&id=34&Itemid=47

Sasser, Sefton, Connally, Tipton & Davis, P.C.
Montgomery, Alabama

Thanks. There is certainly a meaningful right of redemption in Alabama.

Please click on the GREEN ACCEPT for my answer so that I may get paid for my time.   Leaving a BONUS is greatly appreciated.

The responses do not create an attorney client relationship and are informational only.








VF LAW, Lawyer
Category: Real Estate Law
Satisfied Customers: 230
Experience: Experienced Attorney with Real Estate Transactions and Litigation.
VF LAW and 10 other Real Estate Law Specialists are ready to help you
Expert:  VF LAW replied 6 years ago.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • Tina

    Lawyer

    Satisfied Customers:

    4813
    16 years of legal experience including real estate law.
< Last | Next >
  • http://ww2.justanswer.com/uploads/MU/multistatelaw/2011-11-27_173951_Tinaglamourshotworkglow102011.64x64.jpg Tina's Avatar

    Tina

    Lawyer

    Satisfied Customers:

    4813
    16 years of legal experience including real estate law.
  • http://ww2.justanswer.com/uploads/LA/lawpro/2012-6-25_171315_PT206740s.64x64.jpg Law Pro's Avatar

    Law Pro

    Lawyer

    Satisfied Customers:

    6227
    20 years extensive experience in real estate law, foreclosure, finance, and landlord tenant law.
  • http://ww2.justanswer.com/uploads/BA/barristerinky/2012-6-10_22423_office.64x64.jpg Barrister's Avatar

    Barrister

    Lawyer

    Satisfied Customers:

    4966
    13 years real estate, Realtor. Landlord 24+ years
  • http://ww2.justanswer.com/uploads/LA/LawTalk/2012-6-6_17379_LawTalk.64x64.JPG LawTalk's Avatar

    LawTalk

    Attorney

    Satisfied Customers:

    4446
    I've more than 27 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
  • http://ww2.justanswer.com/uploads/RA/rayanswers/2012-6-7_23346_Untitled1.64x64.jpg Ray's Avatar

    Ray

    Lawyer

    Satisfied Customers:

    4030
    Texas Attorney for 29 years dealing in real estate
  • http://ww2.justanswer.com/uploads/PH/philip.simmons/2012-6-7_161915_BIGPhilipSimmons.64x64.jpg P. Simmons's Avatar

    P. Simmons

    Lawyer

    Satisfied Customers:

    2377
    12+ yrs. of experience including real estate law.
  • http://ww2.justanswer.com/uploads/mnphillips2/2009-03-13_203105_10984459-249293407.jpeg Phillips Esq.'s Avatar

    Phillips Esq.

    Attorney-at-Law

    Satisfied Customers:

    2355
    B.A.; M.B.A.; J.D.
 
 
 

Related Real Estate Law Questions

Chat Now With A Real Estate Lawyer
VF LAW
VF LAW
219 Satisfied Customers
Experienced Attorney with Real Estate Transactions and Litigation.