Equity Of Redemption Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Equity Of Redemption, written in plain English, along with examples of how it is used.
What is Equity Of Redemption?
n. the right of a mortgagor (person owing on a loan or debt against their real property), after commencement of foreclosure proceedings, to “cure” his/her default by making delinquent payments. The mortgagor also must pay all accumulated costs as well as the delinquency to keep the property.
History and Meaning of Equity of Redemption
Equity of redemption is a term that has been around since the 16th century and refers to a legal right given to mortgagors to reclaim their property after defaulting on their mortgage payments. In the English legal system, it was known as an equitable right, as it upheld the principle of fairness and protected property owners from being unfairly dispossessed of their land.
The importance of equity of redemption was recognized in early common law and became a fundamental principle of most modern legal systems. It allows property owners the chance to rectify their financial situation and keep their property in the process.
Examples of Equity of Redemption
In some cases, a lender may threaten foreclosure if the borrower fails to pay their mortgage payments on time. At this point, the borrower can still work out a way to cure their debts and regain their property through equity of redemption.
Additionally, if there are any false claims made by the lender or discrepancies in the loan agreement, equity of redemption provides recourse to the borrower to rectify these issues and keep their property.
In Canada, equity of redemption rights have been enshrined by law, and the right of the mortgagor to redeem their property can only be extinguished by the court.
Legal Terms Similar to Equity of Redemption
Foreclosure – a legal process whereby a lender takes control of a property due to the borrower's failure to repay the mortgage loan.
Redemption period - a period where a property owner can redeem their property after a foreclosure process begins.
Lien – a legal right or claim over property as collateral for outstanding debt.