If you are going through foreclosure on your house, you may be wondering what exactly are redemption rights. Redemption rights are in place to let the homeowners redeem (buy back) foreclosed properties.
Foreclosure is a stressful position to be in and redemption rights are a difficult subject to understand, but just keep in mind that redemption rights are there to protect you and help you save your home.
Laws regarding redemption rights are different in every state and not every state has these rights. For this article, we are discussing rights in the state of Kansas as Missouri does not have redemption rights.
What Exactly are Redemption Rights?
If you are behind on mortgage payments, then your lender is going to take action. They will file a lawsuit to foreclose. At the end of the lawsuit, there will be a Sheriff Sale, which is an auction at the courthouse, where your house either goes back to the bank or a third party buys it with cash.
Your redemption period starts on this day. Typically, redemption periods are 90 days in Kansas but can be up to a year if you’ve paid your original loan balance down significantly. You can find the length of your redemption period by reviewing the documents in your foreclosure case. During this redemption period, you still have the right to live in the home, sell it, rent it to someone else, sell your redemption rights to an investor, or use them to buy the home back yourself. If you choose to do nothing with your rights, the home will be deeded to the buyer at the Sheriff Sale at the end of the redemption period at which time you will no longer have any rights to the house.
Taking Advantage of Redemption Periods
If you choose to use your redemption rights to buy the property back, you’ll need to pay the amount of the highest bid at the sheriff’s sale plus interest and fees. This will put the property back into the homeowner’s name free and clear of the mortgage that was foreclosed. Often, this is hard to do as your credit has been hurt by the financial strains, but not impossible, especially if you have some ways to get creative with raising the funds.
If you choose to sell your rights to an investor instead, make sure you do your due diligence! Get several offers instead of just one to ensure that you are getting a fair price. If your house sold at the Sheriff Sale for quite a bit less than what it’s worth, you should have several investors who already approached you about your rights. Not all are created equal and there are several that will offer you much less than what you’re rights are worth.
Either way, redemption rights allow you to recoup at least some of the equity you had built up in the property, otherwise, it is just lost.
If you want to keep living in the home and feel like you’d be able to make the rent payments, talk to the investors about being able to do a lease back and make having the options part of their offer to you.
Whatever you choose to do, just know that time is of the essence so don’t procrastinate! If you wait until the last minute, the investor will have the upper hand and you may run out of time to do anything at all.
What Exactly are Redemption Rights?
If you have questions about redemption rights or want to get an offer to sell them, contact us at Black Door Signature Homes. We can help you take advantage of your redemption rights and almost always beat other investors’ offers since we are a small husband/wife team with low overhead. We can provide references from others from who we’ve bought rights and can also look at the option of providing you with a lease back.
Don’t wait until it’s too late. Get local, expert advice and find out what you can do to take advantage of your redemption rights today.