The Equity of Redemption Revisited – Timing is Everything
In our recent article: “The Equity of Redemption,” we discussed, not surprisingly, the equity of redemption -- a homeowner’s right to tender to a foreclosing lender the full amount due on a defaulted loan at any time before the foreclosure sale.[1]
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); see also Hammerstein v. Henry Mountain Corp., 11 A.D.3d 836, 839 (3d Dept. 2004).
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 (2d Dept. 1960); see also Deutsche Bank Co. of Ca., N.A. v. DePalo, 38 A.D.3d 490, 490 (2d Dept. 2007); Shorehaven Homeowners Association, Inc. v. Campbell, 248 A.D.3d 530, 530-31 (1st Dept. 2026). To exercise the equity of redemption one need only tender the “full sum due” to the party foreclosing the lien. Wilmington Sav. Fund Society, FSB v. Thomas, 226 A.D.3d 1064, 1067 (2d Dept. 2024); see also Virkler v. V.S. Virkler & Son, Inc., 196 A.D.3d 1127, 1129 (4th Dept. 2021); Shorehaven, 248 A.D.3d at 231. In NYCTL 1999, for example, the property owner paid into court the sums due to the foreclosing tax lienor instead of tendering them to the lienor; incorrectly believing that the sale would be stayed by doing so. In rejecting the property owner’s position, the Court stated that because the property owner “did not redeem the property by unconditionally tendering the total amount owed [to the lender], the parcel was properly sold at auction.” NYCTL 1999, 13 N.Y.3d at 579.
The “right to redeem is extinguished as a matter of law upon the foreclosure sale, whether or not the deed has been delivered, and once the right to redeem is lost, it cannot be revived, even by court order.” Wilmington Sav. Fund Society, FSB v. Zaman, 246 A.D.3d 1142, 1144 (2d Dept. 2026) (citations omitted); see also Deutsche Bank, 38 A.D.3d at 490; Liberty Dabar Associates v. Mohammed, 183 A.D.3d 880, 882 (2d Dept. 2020); Bank of New York v. Ortiz, 30 A.D.3d 551, 551 (2d Dept. 2006).
Against this backdrop, we discuss JPMorgan Chase Bank, N.A. v. Gezlev, a mortgage foreclosure action decided by the Appellate Division, Second Department, on September 23, 2026. In 2022, the lender commenced an action to foreclose borrower’s mortgage. In 2024, a judgment of foreclosure and sale was entered which, inter alia, confirmed the referee’s calculation of the amount due to the lender as $43,368.84. A sale was conducted on June 21, 2024, and the successful bidder (“Buyer”) purchased the property for $53,000. The Buyer and the sale referee executed a memorandum of sale the same day.
In July of 2024, Ore (“Intervenor”) moved to intervene in the action and vacate the judgment, claiming that she purchased the property from the borrower at a closing that occurred on the same day as the foreclosure sale. Intervenor also submitted evidence that, in an attempt to redeem the property being foreclosed, the borrower wired the lender the payoff sums on the day of the sale. The Buyer also moved to intervene and to compel the referee to close title pursuant to the terms of sale. The motion court granted Intervenor’s motion and denied Buyer’s motion.
On the Buyer’s appeal, the Second Department reversed finding that the borrower’s attempt to redeem was untimely (by about an hour). The Court explained:
Here, the record demonstrates that the foreclosure sale of the property at which [Buyer] was the successful bidder concluded at 3:15 p.m. on June 21, 2024, and that the payoff sum was wired to the [lender] during [Intervenor] and the [borrower’s] closing more than one hour later, at 4:23 p.m. on June 21, 2024. Under these circumstances, [Buyer] became the equitable owner of the property upon the completion of the foreclosure sale, and any right to redeem the mortgage had already been extinguished by the time [Intervenor] and the [borrower] purported to close on the property.
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] The equity of redemption is available in other types of foreclosure actions. See, e.g., Shorehaven, supra, (foreclosure of a lien for homeowner’s association charges); NYCTL 1999-1Trust v. 573 Jackson Ave. Realty Corp., 13 N.Y.3d 573 (2009) (tax lien foreclosure).
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