Since the mid-1800’s, the Kansas legislature has recognized the importance of the family farm and home. Kansas’ homestead provisions are among the most favorable in the nation. And, unlike many other states, Kansas law provides the owner with the rights to their property even though a foreclosure action has been completed and the property sold at sheriff’s sale.
In a typical scenario, a bank or mortgage company files a lawsuit to foreclose on a home due to a default in payment on the mortgage note. The lawsuit ends with the mortgage being foreclosed and the sheriff selling the property at an open auction. From the date of the auction the homeowner has three months, typically, to pay the amount bid at the sheriff’s sale and “redeem” the property. This process, called redemption, places the property back into the homeowner's name free and clear of the mortgage that was foreclosed upon. During this period the owner has no obligation to pay the mortgage note and can list the home for sale or sell the redemption rights to another person or entity.
The foregoing is legally referred to as the “equitable” right of redemption. Equitable means “fair.” The equitable right of redemption gives the homeowner an opportunity to sell the property or the redemption rights to the property and capture some or all of the equity in the property. The equity in the property is created by a combination of increases in value over time and reduction of debt as the mortgage has been paid.
There are many people and entities, similar to Cherry Park Properties, in the business of purchasing rights of redemption. The homeowner whose residence is in foreclosure may be approached several times with offers to purchase their redemption rights. A wise homeowner will consider such offers carefully and do basic background checking before signing any documents. A consultation with an attorney who is familiar with the redemption laws is advisable.