Right of Redemption

The right of redemption is the legal right of a defaulted borrower to reclaim their property by paying all outstanding amounts owed — including the debt, interest, costs, and fees — before or (in some jurisdictions) after the foreclosure sale. Texas does not provide a post-sale right of redemption for the borrower in non-judicial foreclosures, which is one of the reasons the Texas foreclosure market is considered highly efficient for investors.

Texas Context

While Texas borrowers do not have a post-sale right of redemption in standard non-judicial foreclosures, there are two important exceptions: (1) the IRS has a 120-day right of redemption for federal tax liens after a foreclosure sale, which can unwind an investor's purchase, and (2) certain municipal utility district liens may carry redemption rights. Investors purchasing at First Tuesday auctions must conduct a thorough title search to identify any federal tax liens before bidding.