The Equity of Redemption

By: Jonathan H. Freiberger

The end result of the long and drawn-out mortgage foreclosure process in New York is the foreclosure sale – a public auction at which the foreclosed property is sold to the highest bidder. A question frequently asked by borrowers during the foreclosure process is: “Is there anything I can do to keep my house.” Although there are many answers to that question, the one relevant to todays article is: “You can exercise your equity of redemption.”

The United States Supreme Court has stated that:

It is also an established doctrine that an equity of redemption is inseparably connected with a mortgage; that is to say, so long as the instrument is one of security, the borrower has in a court of equity a right to redeem the property upon payment of the loan. This right cannot be waived or abandoned by any stipulation of the parties made at the time, even if embodied in the mortgage. This is a doctrine from which a court of equity never deviates. Its maintenance is deemed essential to the protection of the debtor, who, under pressing necessities, will often submit to ruinous conditions, expecting or hoping to be able to repay the loan at its maturity, and thus prevent the conditions from being enforced and the property sacrificed.

Peugh v. Davis, 96 U.S. 332, 337 (1877). Relying on, inter alia, Peugh, the New York Court of Appeals has also recognized that the equity of redemption is a protective right that cannot be waived. Hughes v. Harlam, 166 N.Y. 427, 432 (1901).

The right to redeem the equity of redemption can be exercised “at any time before an actual sale under a judgment of foreclosure.” Belsid Holding Corp. v. Dahm, 12 A.D.2d 91, 92 (2nd Dept. 1960); see also Deutsche Bank Co. of Ca., N.A. v. DePalo, 38 A.D.3d 490, 490 (2nd Dept. 2007). To exercise the equity of redemption one need only tender the “full sum due”. Wilmington Sav. Fund Society, FSB v. Thomas, 226 A.D.3d 1064, 1067 (2nd Dept. 2024); see also Virkler v. V.S. Virkler & Son, Inc., 196 A.D.3d 1127, 1129 (4th Dept. 2021). The equity of redemption is extinguished by the foreclosure sale. Deutsche Bank, 38 A.D.3d at 490. This is so even if the referee’s deed has not yet been transferred to the purchaser at the sale. Bank of New York v. Ortiz, 30 A.D.3d 551, 551 (2nd Dept. 2006).

Against this backdrop, we discuss Shorehaven Homeowners Assn., Inc. v. Campbell, a case decided on April 14, 2026, by the Appellate Division, First Department.[1] While Shorehaven involves the foreclosure of a homeowner’s association lien, the same principles apply. The plaintiff in Shorehaven, a homeowner’s association, commenced an action to foreclose a lien for, inter alia, unpaid common charges. In 2024, the motion court “issued an order for final judgment of foreclosure and sale and a money judgment in the amount of $40,484.59, together with interest, current common charges, special assessments and late charges.” After the defendant made two payments to the plaintiff, in lieu of bringing the foreclosure to sale pursuant to the judgment of foreclosure, the parties executed an agreement by which the plaintiff agreed to stay proceedings while the defendant made monthly payments for two years to satisfy the remainder of her outstanding obligations. The agreement, however, did not address legal fees and costs, which were otherwise recuperable under the HOA’s bylaws. Further, the HOA Bylaws were not incorporated into the parties’ agreement. While the defendant made an alleged technical default in her payment obligations under the agreement, she was ahead of schedule in her payments and ultimately paid her entire obligation twenty-two months early.

Nonetheless, the plaintiff added legal fees and costs to the amounts due under the agreement and resumed the foreclosure process by advertising the sale of the property due to the alleged default. The defendant moved to stay the sale, to obtain a determination that she did not owe attorney’s fees and costs and that her obligations to the plaintiff were satisfied. The motion court found that the defendant did not owe attorney’s fees and costs and directed that the notice of pendency filed by the plaintiff be cancelled. The Plaintiff appealed.

The First Department affirmed and concluded that the defendant “effectively cured [her] initial default by paying off the entire sum owed under the agreement nearly two years ahead of schedule.” The Court found that the defendant effectively exercised her right of redemption and stated:

The Court of Appeals has made clear that "[t]he equity of redemption, which long predates the RPAPL, allows property owners to redeem their property by tendering the full sum at any point before the property is actually sold at a foreclosure sale . . . An unconditional tender of the full amount due is all that is required (citations omitted)" (see NYCTL 1999-1 Trust v 573 Jackson Ave. Realty Corp., 13 NY3d 573, 579 [2009], cert denied 561 US 1006 [2010] [internal citations omitted]), and that is exactly what [the defendant] did. Accordingly, plaintiff's acceptance of the full amount of arrears without objection waived any right to continue the foreclosure sale. [Hyperlink added.] [2]

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] Some of the facts recited herein, which are abridged for editorial purposes, were taken from the appellate record available on the Court’s NYSCEF system.

[2] The Court also determined that the motion court was within its discretion to disallow the plaintiff’s claim for attorney’s fees and costs.