Opinion ID: 1449690
Heading Depth: 1
Heading Rank: 1

Heading: clogging the equity of redemption

Text: The doctrine prohibiting clogs on the equity of redemption is of equitable origin. It is codified in Oklahoma in 42 Okla. Stat. 1981, § 11. [4] Simply stated, the doctrine voids any provision in an original mortgage agreement limiting or modifying the right of redemption by payment of the full mortgage debt after default for any reason. Osborne, Mortgages, 144-147 (2nd Ed. 1970). Examples of contract provisions which have been struck down as impermissible clogs are: limitations on the time period in which to redeem, warranties not to redeem, limitations on who may redeem, provisions giving the Mortgagee an option to purchase on default and limitations on the quantity of property that may be redeemed. Id. at 146. Mortgagor relies primarily on Coursey v. Fairchild [5] in arguing that due-on-sale clauses fall within the class of clogs. In Coursey, this Court struck down an agreement by the Mortgagor to transfer mineral interests in the mortgaged property to the Mortgagee in consideration for renewal of the mortgage after default. Such an agreement was held to clog the equity of redemption because it prevented the Mortgagor from reacquiring the entire mortgaged property on payment in full of the mortgage debt. We stated: In a jurisdiction such as ours, where the common law doctrine of mortgages has been abrogated and an equitable theory of mortgages prevails, what is meant by a right to redeem is that upon discharge of the debt within the maximum permissible time, the Mortgagor is entitled, by force of law, to have the mortgaged premises relieved from the lien and his entire estate restored to that extent which he would have had if the transaction had never taken place. 436 P.2d at 38 citing Worley v. Carter, 30 Okl. 642, 121 P. 669, 673 (1912). Mortgagor interprets the language right to redeem ... within the maximum permissible time as creating a right in mortgagors to make installment payments, after default, as set out in the mortgage. He argues that a provision giving the Mortgagee the option to accelerate the loan debt clogs both his and Buyers' rights to redeem because it prevents them from making installment payments over the life of the loan. We believe Mortgagor has misinterpreted Coursey and has failed to understand the nature both of the right to redeem and of acceleration clauses. The right to redeem means no more than a second opportunity for a Mortgagor in default to pay the mortgage debt in full, discharge the lien and acquire unencumbered title to the mortgaged property. This right is exercisable any time between default and confirmation of the sheriff's sale. [6] A precondition to curing a default is tender of the mortgage debt in full. Mid-State Homes, Inc. v. Jackson, 519 P.2d 472, 476 (Okl. 1974). An acceleration clause is an agreement between the parties to a mortgage advancing the due date of the mortgage indebtedness in the event of default or breach by the Mortgagor. Acceleration clauses have generally been held legal, valid and enforceable. Murphy v. Fox, 278 P.2d 820, 824 (Okl. 1955); Union Central Life Ins. Co. v. Adams, 169 Okl. 572, 38 P.2d 26 (1935); Bollenbach v. Ludlum, 84 Okl. 14, 201 P. 982 (1921). A due-on-sale clause is a particular type of acceleration clause: here, the default triggering acceleration of the mortgage debt is failure of the Mortgagor to obtain prior written consent by the Mortgagee to a transfer of an interest in the mortgaged property. The foregoing discussion makes clear that the language relied upon by Mortgagor in Coursey merely restates the general principle that mortgagors in default have a right to redeem the mortgaged property by tender of the full unpaid amount of the mortgage debt after default for the maximum time allowed by law, i.e. until confirmation of the sheriff's sale. Coursey does not establish the proposition that any mortgage provision altering the due date of the mortgage debt on default is invalid per se as a clog on the equity of redemption. Coursey does not give a right to continued enjoyment of the benefits of a mortgage agreement to one who has breached its terms. The instant due-on-sale clauses do not require forfeiture of the mortgaged property on unauthorized transfer; nor do they purport to nullify or limit Mortgagor's or Buyers' right to redeem on default. We hold that the due-on-sale clauses do not constitute a clog on the equity of redemption.