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Redemption Rights

In Kansas, a borrower is not immediately removed from a property after the foreclosure sale.  Instead, the borrower is provided a redemption period, which is a period of time that the borrower can continue to live in the home or rent the home to other parties.  The purpose of the redemption period is to provide the borrower with an opportunity to pay in order to stay in the home.  During this redemption period, the purchaser at the foreclosure sale does not own the home, but rather is the holder of the certificate of purchase that provides that he or she shall own the home after the end of the redemption period.  When the property is abandoned, the court may extinguish redemption rights held by the borrower or in other words, order that the ownership of the property is transferred to the purchaser prior to the end of the redemption period.

Purchasing Redemption Rights

Kansas allows the borrower to transfer or sell his or her redemption rights.  When this happens, the purchaser of the redemption rights steps into the shoes of the owner.  In other words, the purchaser of the redemption rights can move into the property, lease the property to others, or redeem the property.  In order to redeem the property, the borrower (or assigns) must pay to the purchaser at the foreclosure sale, the entire amount paid, plus interest and expenses incurred by the purchaser.

In order to extinguish redemption rights held by the borrower, the purchaser must file a motion to shorten or extinguish the redemption rights with the court.  The matter will then be set for a hearing.  If the home is located in Johnson County, Kansas, this is a non-appearance hearing, meaning that no one needs to appear unless they object to the shortening of the rights.  In other Kansas counties, the hearing is a regular hearing and the purchaser (or his or her attorney) must appear at the hearing.  If no one appears or objects, the court will generally grant the request to extinguish the redemption rights.

Special Rules for Johnson County

The redemption rights market in Johnson County, Kansas is ultra- competitive and the courts in Johnson County have enacted rules to address this competitive market. To read more about these rules, please see our blog post on the topic at Changes to the Rules for Johnson County, Kansas Redemption Rights.

How to Transfer Redemption Rights

Redemption rights are transferred with an assignment, similar to the transfer of a mortgage from lender to lender. With that being said, there are specific disclosures that must be given to the party transferring the redemption rights and notice must be filed with the court at the time of transfer. We are happy to assist with drafting this paperwork for a flat fee of $250 per property.

Process for Terminating Redemption Rights

The process for terminating redemption rights is fairly straight forward and an overview of this process is below. The important part is that if a buyer wants to terminate the redemption rights, the borrower must have abandoned the property and left it vacant for the court to approve the same.

Step 1: Sign up for Guarded Pockets™

If you are not yet a member of Guarded Pockets™, the first step is to become a member. In addition to allowing us to help with your business planning, Guarded Pockets™ also provides many other benefits, including unlimited scheduled phone calls with a real estate attorney, registered agent and deed of trust trustee services, state compliance monitoring, daily REO and distressed MLS listing emails, and discounted title and real estate brokerage services. You can learn more about Guarded Pockets™ or sign up for a free trial by clicking on this link.

Step 2: Sign up for Services

Once you are a member of Guarded Pockets™, you can sign up for our services including our foreclosure-related services.

Step 3: Intake Form

At this point in the process, we ask that you complete a short intake form providing us the necessary information, including the property address, how you determined the property was vacant, etc. This form helps us to quickly draft and file the paperwork to request the extinguishment of the redemption rights.

Step 4: Attorney Review

Once we have the information from you and you have officially retained the firm, we will prepare the paperwork to extinguish the rights and will contact the court for a hearing date.

Step 5: Client Review/Signature

As part of the paperwork, we will need you to attest that the property is vacant.  Therefore, we will send these documents to you to review and sign.  The documents will need to be notarized, which you can do at any notary that is convenient to you or at our offices. 

Step 6: Hearing

The next stage in the process is for the court to hold a hearing.  In Johnson County this is a non-appearance hearing meaning that no one is required to appear.  In other Kansas counties, we will need to appear on your behalf but you are not required to come.  In most instances when the property is vacant, the borrower does not show up.

Step 7: Order Entered

After the hearing, the court will enter an order extinguishing the redemption rights.  This order is effective the minute it is filed and you can thereafter request the sheriff issue a deed to the property.

What is the Process for Getting Paid if the Property is Redeemed?

This process is similar to the process for getting redemption rights shortened and is outlined below.

Step 1: Sign up for Guarded Pockets™

If you are not yet a member of Guarded Pockets™, the first step is to become a member. In addition to allowing us to help with your business planning, Guarded Pockets™ also provides many other benefits, including unlimited scheduled phone calls with a real estate attorney, registered agent and deed of trust trustee services, state compliance monitoring, daily REO and distressed MLS listing emails, and discounted title and real estate brokerage services. You can learn more about Guarded Pockets™ or sign up for a free trial by clicking on this link.

Step 2: Sign up for Services

Once you are a member of Guarded Pockets™, you can sign up for our services including our litigation and dispute resolution services.

Step 3: Intake Form

At this point in the process, we ask that you complete a short intake form providing us the necessary information, including the property address, the date of the sale and amount paid, any reimbursable costs you incurred, etc.

Step 4: Attorney Review

Once we have the information from you and you have officially retained the firm, we will prepare the paperwork to extinguish the rights and will contact the court for a hearing date.

Step 5: Answer/Response Period

During this period we are waiting for the hearing and to see if anyone files a response to the motion.

Step 6: Hearing

The next stage in the process is for the court to hold a hearing.  In Johnson County this is a non-appearance hearing meaning that no one is required to appear.  In other Kansas counties, we will need to appear on your behalf but you are not required to come. 

Step 7: Order Entered

After the hearing, the court will enter an order directing the court clerk to release the funds to you.  You can then contact the clerk to arrange payment.

How Much Does it Cost to Extinguish Redemption Rights or to Get Money Back When the Property is Redeemed?

We charge fair, honest, and transparent flat rates for our services. You can view our rates for foreclosure-related services, including extinguishing redemption rights and requesting payment of redemption funds and sign up for services, by clicking on this link, which is the same link that you will use to sign up for services after you are a member of Guarded Pockets™.

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