Redemption

What is redemption?

Redemption is the transaction by which the mortgagor reacquired or buys back the property which may have passed under the mortgage, or divests the property of the lien which the mortgage may have created.

What are the kinds of redemption?

1. Equity of Redemption is theright of mortgagor to redeem the mortgaged property after his default in the performance of the conditions of the mortgage within the 90-day period from the date of the service of the order of foreclosure or even thereafter but before the confirmation of the sale. It applies to judicial foreclosure of real mortgage and chattel mortgage foreclosure.

2. Right of Redemption is the right of mortgagor to redeem the mortgaged property within one year from the date of registration of the certificate of sale. It applies only to extrajudicial foreclosure of real mortgage. It is best supported by this article:

Art. 1606. The right referred to in Article 1601, in the absence of an express agreement, shall last four years from the date of the contract.

Should there be an agreement, the period cannot exceed ten years.

However, the vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase. (1508a)

What are the Periods of Redemption?

The following are the periods of redemption for the following:

a) Natural person has one year from registration of the certificate of sale with Registry of Deeds
b) Juridical personhas thesame rule as natural person
c) Juridical person(Mortgagee is a bank) isthree months after foreclosure or before registration of certificate of foreclosure whichever is earlier
d) Extrajudicial, the provisions of Act No. 3135 applies

What is the amount of the Redemption Price?

The following rules govern:

Mortgage is not a bank (Act No. 3135, in relation to Sec. 28, Rule 39 of Rules of Court)
a) Purchase price of the property
b) 1% interest per month on the purchase price
c) Taxes paid and amount of purchaser’s prior lien, if any, with the same rate of interest computed from the date of registration of sale, up to the time of redemption

Mortgagee is a bank (General Banking Law 2000)
a) Amount due under the mortgage deed
b) Interest
c) Cost and expenses

What is the redemption period in mortgage for homestead or free patent?

1. Mortgagee is a rural bank under RA 720 as amended-2 years from registration of the sheriff’s certificate of sale (titles or untitled); if the mortgagor fails to redeem he may still repurchase from the expiration of 2 years pursuant to Sec 119 of Public Land Act within 5 years

2. If land is mortgaged to parties other than rural banks, the mortgagor may redeem the property within 1 years and if he fails he or his heirs may repurchase from the expiration of 2 years from the same law within 5 years.

References:

Act No. 3135, “An Act to Regulate the Sale of PropertyUnder Special Powers Inserted in or Annexed to Real-Estate Mortgages”

Hi-Yield Realty, Inc. v. CA, etc. GR 138978, Sep. 12, 2002

Paras, E. (2013). Civil Code Volume V (Special Contracts). Quezon City: Rex Printing Company, Inc.

The New Civil Code

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