The “equity of redemption” is a legal term that arises in the context of mortgages and property law, particularly in common law jurisdictions. It refers to the right of a mortgagor (the borrower or property owner) to redeem their property from foreclosure by paying off the mortgage debt even after a default has occurred. It is a principle rooted in common law.
When a person borrows money to purchase a property and uses the property as collateral for the loan, a mortgage is created. If the borrower fails to make the required mortgage payments or otherwise breaches the terms of the mortgage agreement, the lender may have the right to foreclose on the property. Foreclosure is a legal process by which the lender takes possession of the property to recover the outstanding debt.
The equity of redemption acts as a safeguard for the borrower. It allows the borrower to reclaim the property by paying off the entire mortgage debt, including any interest, fees, and costs incurred by the lender in the foreclosure process. This right typically continues until the foreclosure sale is complete.
The equity of redemption is an equitable remedy rooted in principles of fairness and justice. Courts may intervene to protect the borrower’s rights and ensure that the lender does not deprive the borrower of their property unfairly. In some jurisdictions, the equity of redemption may be subject to certain time limitations, and the borrower may need to act within a specified period to exercise this right.
