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Birmingham Bar Association Summer 2016

Real Estate Law Paul H. Greenwood and M. Lee Johnsey, Jr. Alabama Statutory Rights of Redemption: The Basics, Revisited & Updated This is an update to an article entitled Alabama Statutory Rights of Redemption: The Basics, which was published in the Fall 2009 edition of the BBA Bar Bulletin. To this day, the authors receive calls with follow-up questions to that article. Given the recent updates to foreclosure redemption law, an update to the article seemed timely and appropriate. With the continued high numbers of Alabama foreclosures, discussions and confusion regarding Alabama rights of redemption remain common. Anyone wishing to sell foreclosed real estate during the redemption period generally must accept a reduced price or negotiate with those entitled to redeem the property. Therefore, banks and creditors contemplating foreclosure and resale of properties, junior lienholders, potential purchasers, title companies and mortgagors all must consider the implications of Alabama rights of redemption. A general understanding of Alabama statutory rights of redemption is therefore necessary when advising clients on all sides of real estate transactions, both before and after foreclosure. 1. Who is entitled to Redeem? In order to mitigate the harshness of foreclosure, a statutory right of redemption was created in favor of certain parties. Subject to a few exceptions explained below, any party having a right of redemption may take (or “redeem”) foreclosed real estate from its current owner, so long as it properly and timely exercises its right of redemption The right of redemption from foreclosure is a right conferred exclusively by statute. Section 6-5-248 of the Alabama Code lists all parties entitled to redeem, which can be grouped into two (2) separate categories of parties: A. Debtors and Mortgagors, Their Transferees, Spouses, Children, Heirs or Devisees 1.  Any debtor, including any surety or guarantor; 2.  Any mortgagor, even if such mortgagor is not personally liable for payment of the debt; 3.  Any transferee of the interests of the debtor or mortgagor, either before or after the sale; 4.  The respective spouses of all debtors, mortgagors, or transferees of any interest of the debtor or mortgagor, who are spouses on the day of the execution, judgment, or foreclosure sale; or 5.  Children, heirs, or devisees of any debtor or mortgagor. 24 Birmingham Bar Association


Birmingham Bar Association Summer 2016
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