In a secured transaction, what must be paid to redeem collateral before a foreclosure sale?

• A. Pay all past due amounts, including any accelerated sums, plus costs and expenses (including legal fees)
• B. Pay only the outstanding principal
• C. Pay only the costs of collection
• D. Pay the fair market value of the collateral

Answer: (A)

Redemption before a foreclosure sale requires tendering the entire amount due under the security agreement. When a default occurs, the secured party can seek enforcement, and to redeem the collateral the debtor must cure the default by paying every sum that is secured by the lien as of that moment. That includes past-due principal, all interest and other charges that have accrued, and any sums that have been accelerated due to the default, plus the costs and expenses incurred by the secured party in enforcing the security interest, such as attorney’s fees and other collection costs.

That is why the correct approach is to pay all past-due amounts, including any accelerated sums, plus costs and expenses (including legal fees). Paying only the outstanding principal would ignore accrued interest and any acceleration; paying only the costs of collection would not satisfy the debt; paying the collateral’s fair market value would not discharge the lien or cure the default. Redemption is about satisfying the secured obligation in full, not appraising the collateral.