The owners may be able to get the home back after the foreclosure, but not by catching up on their mortgage payments. They would have to repurchase the home by paying you the purchase price you paid at the foreclosure sale, plus various other charges. This is called redeeming the property. Because the distressed former homeowner has to come up with so much cash to get the house back, redemption is rare.
The Right to Redeem After Foreclosure in Alabama
The redemption period after a foreclosure sale in Alabama depends largely on when the foreclosed homeowners took out their mortgage.
Mortgages before January 1, 2016. Alabama law gives homeowners a one-year redemption period after a foreclosure sale.
Mortgages after January 1, 2016. Alabama law gives homeowners a 180-day redemption period after the foreclosure sale for homestead properties—if proper notice about the right to redeem was given. (Ala. Code § 6-5-248(b).) By law, the foreclosing party must mail the homeowners a notice about the right to redeem the home at least 30 days before the foreclosure sale. (Ala. Code § 6-5-248(h).) If the notice isn’t mailed to the homeowners at least 30 days before the foreclosure sale, they get 180 days to redeem the homestead property from the date the notice is provided. But the homeowners can’t redeem more than one year after the sale.
It’s also possible, but exceedingly rare, for some other party to redeem the property, such as other creditors who had liens on the home.
Another very rare possibility is the IRS redeeming the property after a judicial or nonjudicial foreclosure, if there was a federal tax lien on the home. The IRS gets 120 days (or the allowable period under state law, whichever is longer) to redeem. If the IRS considers redeeming the house, it would send you a notice beforehand.
The Homeowners Can Lose the Right to Redeem
After you purchase the property at the foreclosure sale, you can demand that the homeowners vacate the property. To do this, you must deliver a written demand for possession to the homeowners. If they do not move out of the home within ten days after you give them the notice, they lose the right of redemption (Ala. Code § 6-5-251).
How the Homeowners (or Other Party) Redeems in Alabama
To redeem the property, the former homeowners (or other redeeming party) must send you a written demand requesting a statement of all amounts you’ve spent on the property since the foreclosure sale. You must then provide an itemized statement within ten days of the demand. If you do not provide the statement within ten days, you lose the right to compensation for any improvements you made to the home since the foreclosure sale (Ala. Code § 6-5-252).
How Much the Foreclosed Homeowners (or Other Party) Must Pay to Redeem
In order to redeem the property, the foreclosed homeowners (or other redeeming party) must pay you the purchase price you paid at the foreclosure sale, plus all allowable charges such as:
- interest
- the value of any permanent improvements you made to the property since the sale (though the redeeming party may challenge your valuation of the improvements)
- taxes you paid (or that are assessed)
- all insurance premiums you paid, and
- any valid lien you paid (Ala. Code § 6-5-253).
What Will Happen if You Don’t Give Up the Property
Once the redeeming party pays the appropriate amount within the redemption period, you must convey (sign over) the property to that party. If you fail to do so or refuse to transfer the home, the redeeming party may file a lawsuit against you to enforce the right of redemption (Ala. Code § 6-5-255).
Hi Pam – Generally, interest would begin to accrue on the date of the foreclosure. Most (well, many) mortgage companies require a “redemption bond” which is essentially an insurance policy that makes the mortgage company whole if the property is redeemed. The price of a redemption bond is based on the price at which the foreclosure sold at the trustees auction. Most title companies can get a redemption bond.
After the previous owner send a letter stating they are planning to redeem their rights and you send a letter back with expenses how long do they have to present you with the money? Surely there is a time frame not just anytime within the rest of that year time from when you received the property.
If you’ve reached the point where you’ve bought a foreclosed property and a party begins the redemption process by sending a letter asking for your expenses, you need to consult a real estate attorney. Generally speaking, they can redeem up to the 180 days or one year period, but an attorney looking at your specific situation will give you better advice. The redeeming party will have legal counsel and so should you!
I have a homestead property that was foreclosed on in Alabama 4/17/2024. I want to redeem it back. What’s my 1st step.
Hi Laura – The very first place to start is to contact a real estate attorney. They will be able to look at your specific situation and get the process started. The party that foreclosed will have legal counsel and so should you. Redeeming a foreclosed property is not really a DIY kind of project.
If someone buys a foreclosed property as a second buyer, as in a contractor bought the property at foreclosure, flipped it, and we purchased how long does the original homeowner have to redeem?
If the original mortgage that’s foreclosed on, was taken out by a business and not an individual, does that change the redemption period?
If the property was purchased from the contractor as a second buyer with cash vs a mortgage, does this change the redemption process?
Since the mortgage was a commercial business loan not an individual, and the property wasn’t homesteader does this change the redemption period?
If foreclosure notice is not mailed by the lender to the person being foreclosed on, but public notice is given in the newspaper, does the redemption period change?
Lydia, I have the same question. I’m buying it from someone who obtained it from foreclosure or lien sale basically from a Flipper. Do I still have the same legal rights and obligations as the Flipper? If the original owner wants to Redeem their property, do they pay back all the money I’ve invested in it including the purchase price I paid?
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