Wednesday, July 4, 2012

The Right of Redemption—or lack thereof—in Illinois

Most US states have a statutory condition that allows for the repossession of property after a foreclosure has occurred.  In these states, the redemption comes at a price; in general terms, if the individual is able to accumulate the finances to repay the debt in a certain time, he or she is able to reclaim that property.  Yet, our Oak Park real estate lawyers often explain how Illinois does not have this statutory “right of redemption” which makes the foreclosure process all the more difficult and precarious. Equitable Right of Redemption

Instead, the state of Illinois has what is known as an “equitable right of redemption.”  This entitlement is quite similar to its statutory cousin, but is a pre-foreclosure measure.  A mortgagor in default may be able to exercise this right over the period of seven months after the date of service or the first publication date, or three months after the date of entry of judgment of foreclosure—whichever is later.  Moreover, these time spans can even be shortened.  When the court deems a property abandoned, the redemption period is cut down to 30 days after the date of judgment for foreclosure.  All foreclosure sales cannot occur until the redemption period expires.

Waiving Redemption Rights

Homeowners in Illinois have the option to waive their right of redemption, only if the lender agrees to waive his or her own right to a deficiency judgment.  A deficiency judgment is a decree against the borrower or debtor whose foreclosure sale did not produce sufficient funds to pay the mortgage in full.  If a deficiency judgment is granted, the lender has permission to collect the required money by any legal means, including levying assets and garnishing wages.  If such finances to reclaim the home are unattainable, it would be wise to consider waiving this right in order to escape a future deficiency judgment.  In contractual terms, the homeowner and lender must file written consent waiving their rights.

Applying Your Right of Redemption

If a homeowner wishes to repossess his or her property, the state of Illinois requires individuals to file a notice of intent to redeem with the court; this notice must be filed five days before exercising the right.  Furthermore, persons must provide necessary proof of adequate funds.  In total, the redemption price includes the amount of the loan plus attorney fees, court costs, outstanding insurance and taxes and other related fees.  The exact amount owed is specified in the foreclosure judgment.  Payment should be made out directly to the clerk court.

The Snares of Foreclosure and Your Relief

Redemption issues in the foreclosure realm can be treacherous, particularly in the state of Illinois.  For one, in respect to waiving redemption rights, it is an important as a homeowner that you are protected from deficiency judgment.  In addition, exercising your right of redemption is controlled by specific measures and difficult vernacular.  The burden of negotiating with lenders should not all be on your shoulders.  The highly experienced Chicago, Oak Park, and River Forest real estate lawyers at the Emerson Law Firm can provide a helping hand to overcome these obstacles.  Redemption troubles are just one of the many areas in which these attorneys can provide you and your family with these difficult issues.

See These Related Posts:

The Homeowner Bill of Rights in California and What it Means for Illinois

Job Transfer with an Underwater House

(Photo courtesy of Jay Santiago)

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