Alabama recently passed a law that reduces the amount of time that certain foreclosed homeowners get to redeem (reclaim) their home after a foreclosure sale. The revised law also shortens the time period during which a homeowner may file a lawsuit relating to a redemption period notice requirement.
A “redemption period” is a period of time after a foreclosure during which a foreclosed homeowner, or others, may reclaim the property by paying the foreclosure sale price or, sometimes, the full amount owed to the bank, plus certain other allowable charges. (To learn more, see Right of Redemption After Foreclosure: Getting Your Home Back.)
If the mortgage was taken out on or after January 1, 2016, the homeowner gets a 180-day redemption period after the foreclosure sale of a residential property on which a homestead exemption was claimed in the tax year during which the sale occurred. The foreclosing bank has to mail the borrower, by certified mail with proof of mailing, a notice about the right to redeem at least 30 days before the foreclosure sale.
Previously, the 180-day period didn’t start to run until the bank sent the homeowner the required notice, and lasted for up until two years if the bank didn't provide the notice. Now, under Act 2018-126 (HB 90), Alabama law says that while the redemption period doesn’t start until the bank provides the notice, homeowners can’t redeem—under any circumstances—more than one year after the foreclosure sale.
Also, Alabama law previously said that sending a defective notice or failing to send the notice about the right to redeem wouldn’t invalidate the foreclosure sale, and that a lawsuit related to the notice requirement had to be brought within two years after the foreclosure. The new law shortens this time period to one year after the foreclose sale.
To get more information about foreclosure laws in Alabama, see Summary of Alabama’s Foreclosure Laws.
Effective date: February 22, 2018