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. 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;
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%),"and all other lawful charges" with interest.
3. Note: Your client should investigate if the former owner still has the right of redemption:
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:
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:
 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:
5. Here are attorneys that advertise on the web for this type of work:
Sasser, Sefton, Connally, Tipton & Davis, P.C.
Thanks. There is certainly a meaningful right of redemption in Alabama.
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