Defined. The right of redemption refers to the right of a property owner to re-acquire ownership of his or her property after it has been sold to satisfy an obligation secured by the real property. This right had previously been associated with judicial foreclosures only. Beginning January 1, 2006, the right was extended to nonjudicial assessment lien foreclosures. If an association sells a property via nonjudicial foreclosure (a trustee's sale), the highest bidder, whether the association or a 3rd party, takes ownership subject to a 90-day right of redemption.
Redemption Price. The redemption period allows the foreclosed owner to "redeem" the property by paying the delinquent amounts plus any collection fees and costs. (Code Civ. Proc. §729.035, Civ. Code §5715(b).) In the event the buyer of the foreclosed property incurs expenses for maintenance and repair work on the unit which were reasonably necessary for the preservation of the property, he can include those expenses in the redemption price. (Barry v. OC Residential Properties.)
Certificate of Sale. During the 90-day redemption period, title to the property does not transfer to the highest bidder. Instead, the trustee records a "certificate of sale" which gives notice of the bidder's right to the property. If the delinquent owner does not redeem the property within the 90-day period, the trustee delivers a Trustee's Deed Upon Sale (TDUS) to the successful bidder with ownership transferring to the buyer. If the owner does exercise the redemption rights by paying all amounts due, a Certificate of Redemption is issued instead of a TDUS and title reverts to the property owner.
Redemption Period Cautions. If the association is the successful bidder on a foreclosed property, the 90-day redemption period limits what it can do until the period ends.
1. Eviction. Because the successful bidder does not officially own the property until the end of the redemption period, the bidder does not have a right of possession and cannot evict the occupant from the property during the redemption period. Once the redemption period is over and title transfers, the buyer can evict anyone who might be in possession of the property by means of an unlawful detainer action.
2. Damage to Property. If the occupant is damaging the property, the association cannot enter the property to stop the damage. Instead, it must immediately file a court action to enjoin the occupant from damaging the property. (Code Civ. Proc §729.090(c).)
3. Vacant Property. If the property is vacant, the association should secure the property and, if there is personal property left in the property, comply with the storage, notice and sale of abandoned property laws. (Civ. Code §1980 et seq.) Since the prior owner has a right redeem the property, the association should not re-model the property or rent it out until the redemption period has ended and right of possession has transferred to the association.
Right to Rent. The buyer of foreclosed property has the right to collect rents and profits from persons in possession of the property. (Code Civ. Proc. §729.090(a).)
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