If we get the question asked once, we get it one hundred times....what does it take to redeem a property after foreclosure in Alabama? As many of our clients are aware, the state of Alabama has a statutory right of redemption after a non-judicial foreclosure as provided in Ala. Code 6-5-247 et. seq. This statute provides, in a nutshell, that for a period of one (1) year after a foreclosure sale date, the former owner or other qualifying parties (see Ala. Code 6-5-248) may purchase the property subject to foreclosure from the purchaser at foreclosure sale. The price that must be paid by the redeeming party is the purchase price at foreclosure, plus interest, plus certain lawful charges that are added to the foreclosure sale price. One of the purposes of this statute is that it allows for a private and efficient remedy of foreclosure sale by mortgagees while protecting the mortgagor or other qualifying parties.
However, many post-foreclosure buyers seek to make improvements or are forced to spend money related to the property sold at foreclosure and worry about the risk to these funds should the foreclosed upon mortgagor or other qualifying party redeem the property from foreclosure sale. First, it is important that any purchaser at foreclosure sale timely respond to a written request from the mortgagor or other qualifying party to a request for an accounting of the redemption amount. According to Alabama law, a buyer at foreclosure has ten (10) days to provide an itemized statement of all charges claimed by the buyer at foreclosure (Ala. Code 6-5-252). If the buyer at foreclosure fails to timely respond to a written demand for an itemized statement, then the buyer at foreclosure "shall forfeit all claims or rights to compensation for improvements". Ala. Code 6-5-252.
Lawful charges that a foreclosure sale buyer may include in an accounting of the price to redeem a property include: purchase price paid at foreclosure plus interest, permanent improvements to the property, taxes paid related to the property, insurance premiums paid by the foreclosure buyer, any other valid liens paid by the foreclosure buyer under qualifying circumstances and all mortgages made on the real property to the extent of the purchase price paid at foreclosure sale (see Ala. Code 6-5-253). It is important that a foreclosure buyer be able to account for each expense described above that was incurred by the foreclosure buyer should the mortgagor or other qualifying party seek demand an itemized statement as explained above.
At the end of the day, it is highly unlikely that a mortgagor or qualifying party that was unable to pay off the mortgage utilized for a foreclose sale will have the ability or find it beneficial to redeem the property that was subject to foreclosure. After all, the mortgagor would not have defaulted on the debt secured by the mortgage in the first place. And as to other qualifying parties, they typically get notice of the original foreclosure sale and opt not to fund the payment of the debt secured by the mortgage subject to foreclosure sale.
A link to the relevant Alabama Code provisions may be found searching HERE. Should you need assistance navigating through foreclosure or the statutory right of redemption in Alabama, please feel free to contact any of the attorneys at Walding, LLC.