2012 -- H 7136 SUBSTITUTE A

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LC00361/SUB A

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO PROPERTY - RESIDENTIAL LANDLORD AND TENANT ACT

     Introduced By: Representatives Edwards, Cimini, O`Grady, Slater, and Diaz

     Date Introduced: January 17, 2012

     Referred To: House Judiciary

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 34-18-23 of the General Laws in Chapter 34-18 entitled

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"Residential Landlord and Tenant Act" is hereby amended to read as follows:

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     34-18-23. Limitation of liability upon sale or change of management. -- (a) (1) A

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landlord who conveys premises that include a dwelling unit subject to a rental agreement in a

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good faith sale to a bona fide purchaser is relieved of liability under the rental agreement and this

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chapter as to events occurring after written notice to the tenant of the conveyance. In no event

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may the relief from liability predate the conveyance itself.

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      (2) Written notice, for purposes of this section, must include the name(s), address, and

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telephone number of the person or persons purchasing the property and assuming liability. To be

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effective, the written notice must also certify compliance with section 45-24.3-17 which prohibits

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sale or lease of property until any outstanding housing code violations have been corrected or the

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seller or lessor has provided to the buyer or lessee, as well as to the enforcing officer, all notices

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regarding violations, as required by the statute.

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      (b) A manager of premises that include a dwelling unit is relieved of liability under the

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rental agreement and this chapter as to events occurring after written notice to the tenant of the

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termination of his or her management. The written notice must include the name(s), address, and

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telephone number of the person or persons assuming management and/or the person or persons

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within the state exercising ownership or responsibility over the property.

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      (c) Nothing in this section shall be construed to affect the tenant's rights and duties under

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an existing rental agreement, and the purchaser of property or any successor in interest to a

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mortgagor takes title subject to the same rights and responsibilities toward the tenant which the

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seller or mortgagor had.

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     SECTION 2. Chapter 34-18 of the General Laws entitled "Residential Landlord and

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Tenant Act" is hereby amended by adding thereto the following section:

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     34-18-38.1. Eviction of tenants in foreclosed properties only for just cause. – (a) As

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used in this section, the following words shall, unless the context clearly requires otherwise, have

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the following meanings:

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     (1) “Bona fide lease” or “bona fide tenancy” means a lease or tenancy shall not be

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considered bona fide unless:

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     (i) The mortgagor, or the child, spouse or parent of the mortgagor under the contract, is

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not the tenant; and

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     (ii) The lease or tenancy was the result of an arms-length transaction.

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     (2) “Entity” means a business organization, or any other kind of organization including,

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without limitation, a corporation, partnership, trust, limited liability corporation, limited liability

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partnership, joint venture, sole proprietorship or any other category of organization and any

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employee, agent, servant or other representative of such entity.

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     (3) “Eviction” means an action, without limitation, by a foreclosing owner of a housing

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accommodation which is intended to actually or constructively evict a tenant or otherwise compel

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a tenant to vacate such housing accommodation.

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     (4) “Foreclosing owner” means an entity that holds title in any capacity, directly or

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indirectly, without limitation, whether in its own name, as trustee or as beneficiary, to a housing

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accommodation that has been foreclosed upon and either:

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     (i) Held or owned a mortgage or other security interest in the housing accommodation at

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any point prior to the foreclosure of the housing accommodation or is the subsidiary, parent,

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trustee, or agent thereof; or

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     (ii) Is an institutional mortgagee that acquires or holds title to the housing

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accommodation within three (3) years of the filing of a foreclosure deed on the housing

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accommodation; or

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     (iii) Is the Federal National Mortgage Association or the Federal Home Loan Mortgage

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Corporation.

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     (5) “Foreclosure” means an action to terminate a mortgagor’s interest in property by sale

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of property pursuant to a power of sale in a mortgage, as described in section 34-11-22 or

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conveyance of the property by the mortgagor in lieu of foreclosure or an action filed in court

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pursuant to section 34-27-1.

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     (6) “Housing accommodation” means a building or structure, or part thereof of land

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appurtenant thereto, and any other real or personal property used, rented or offered for rent for

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living or dwelling purposes, together with all services connected with the use or occupancy of

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such property.

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     (7) “Institutional mortgagee” means an entity or an entity which is the subsidiary, parent,

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trustee or agent thereof or otherwise related to such entity, that holds or owns mortgages or other

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security interests in three (3) or more housing accommodations or that acts as a mortgage servicer

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of three (3) or more mortgages of housing accommodations.

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     (8) “Just cause” means one of the following:

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     (i) The tenant has failed to pay rent in effect prior to the foreclosure or failed to pay use

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and occupancy charges, as long as the foreclosing owner notified the tenant in writing of the

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amount of rent or the amount of use and occupancy that was to be paid and to whom it was to be

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paid;

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     (ii) The tenant has materially violated either an express or legally required obligation or

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covenant of the tenancy or occupancy, other than the obligation to surrender possession upon

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proper notice, and has failed to cure such violation within thirty (30) days after having received

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written notice thereof from the foreclosing owner;

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     (iii) The tenant is committing a nuisance in the unit; is permitting a nuisance to exist in

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the unit; is causing substantial damage to the unit or is creating a substantial interference with the

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quiet enjoyment of other occupants;

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     (iv) The tenant is using or permitting the unit to be used for any illegal purpose;

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     (v) The tenant who had a written bona fide lease or other rental agreement which

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terminated, on or after August 10, 2011, has refused, after written request or demand by the

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foreclosing owner, to execute a written extension or renewal thereof for a further term of like

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duration and in such terms that are not inconsistent with this chapter;

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     (iv) The tenant has refused the foreclosing owner reasonable access to the unit for the

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purpose of making necessary repairs or improvement required by the laws of the United States,

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the state of Rhode Island or any subdivision thereof, or for the purpose of inspection as permitted

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or required by agreement or by law or for the purpose of showing the unit to a prospective

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purchaser or mortgagee;

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     (vii) The foreclosing owner: (A) Seeks to permanently board up or demolish the premises

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because the premises has been cited by a state or local minimum housing code enforcement

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agency for substantial violations affecting the health and safety of tenants and it is economically

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unfeasible for the foreclosing owner to eliminate the violations; or (B) Seeks to comply with a

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state or local minimum housing code enforcement agency that has cited the premises for

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substantial violations affecting the health and safety of tenants and it is unfeasible to so comply

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without removing the tenant; or (C) Seeks to correct an illegal occupancy because the premises

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has been cited by a state or local minimum housing code enforcement agency or zoning official

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and it is unfeasible to correct such illegal occupancy without removing the tenant; and provided

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further that nothing in this section shall limit the rights of a third-party owner to evict a tenant at

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the expiration of an existing lease.

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     (9) “Mortgagee” means an entity to whom property is mortgaged, the mortgage creditor

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or lender including, but not limited to, mortgage services, lenders in a mortgage agreement and

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any agent, servant or employee of the mortgagee or any successor in interest or assignee of the

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mortgagee’s rights, interests or obligations under the mortgage agreement.

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     (10) “Mortgage servicer” means an entity which administers or at any point administered

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the mortgage; provided, however, that such administration shall include, but not be limited to,

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calculating principle and interest, collecting payments from the mortgager, acting as escrow agent

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or foreclosing in the event of a default.

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     (11) “Tenant” means a person or group of persons, who at the time of foreclosure, is

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entitled to occupy a housing accommodation pursuant to a bona fide lease or tenancy or a tenancy

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at will. A person who moves into the housing accommodation owned by the foreclosing owner,

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subsequent to the foreclosure sale, without the express written permission of the foreclosing

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owner shall not be considered a tenant under this section.

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     (12) “Unit” or “residential unit” means the room or group of rooms within a housing

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accommodation which is used or intended for use as a residence by one household.

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     (13) “Use and occupancy charges” means a periodic payment charged by a foreclosing

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owner to a person or persons other than a “tenant” as defined in this section for use and

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occupancy of a housing accommodation.

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     (b) Notwithstanding any provision of the general or public laws to the contrary, a

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foreclosing owner shall not evict a tenant except for just cause, or unless a binding purchase and

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sale agreement has been executed for a bona fide third party to purchase the housing

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accommodation from a foreclosing owner, and the foreclosing owner has disclosed to the third-

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party purchaser that said purchaser may be responsible for evicting the current occupants of the

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housing accommodation after the sale occurs.

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     (c) Within thirty (30) days of the foreclosure, the foreclosing owner shall post in a

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prominent location in the building in which the rental housing unit is located, a written notice

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stating the names, addresses, telephone numbers and telephone contact information of the

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foreclosing owner, the building manager or other representative of the foreclosing owner

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responsible for the management of such building, and stating the address to which rent and use

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and occupancy charges shall be sent. This requirement shall be satisfied if the foreclosing owner

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or someone acting on his behalf has:

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     (1) Posted in a prominent location in the building;

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     (2) Mailed by first class mail to each unit; and

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     (3) Slid under the door of each unit in the building a document stating the names,

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addresses, and telephone contact information of the foreclosing owner, the building manager or

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other representative of the foreclosing owner responsible for the management of such building

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and stating the address to which rent and use and occupancy charges shall be sent.

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     (d) A foreclosing owner shall not evict a tenant for actions that constitute just cause,

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except:

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     (1) A foreclosing owner shall not evict a tenant for the following actions that constitute

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just cause until thirty (30) days after the notice required by subsection (c) of this section is posted

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and delivered:

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     (i) The tenant has failed to pay the rent in effect prior to the foreclosure or failed to pay

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use and occupancy charges, as long as the foreclosing owner notified the tenant in writing of the

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amount of rent or the amount of use and occupancy that was to be paid and to whom it was to be

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paid;

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     (ii) The tenant has materially violated an obligation or covenant of the tenancy or

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occupancy, other than the obligation to surrender possession upon proper notice;

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     (iii) The tenant who had a written bona fide lease or other rental agreement which

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terminated, on or after June 30, 2012, has refused, after written request or demand by the

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foreclosing owner, to execute a written extension or renewal thereof for a further term of like

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duration and in such terms that are not inconsistent with this section; and

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     (iv) The foreclosing owner: (A) Seeks to permanently board up or demolish the premises

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because the premises has been cited by a state or local minimum housing code enforcement

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agency for substantial violations affecting the health and safety of tenants and it is economically

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unfeasible for the foreclosing owner to eliminate the violations; or (B) Seeks to comply with a

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state or local minimum housing code enforcement agency that has cited the premises for

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substantial violations affecting the health and safety of tenants and it is unfeasible to so comply

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without removing the tenant; or (C) Seeks to correct an illegal occupancy because the premises

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has been cited by a state or local minimum housing code enforcement agency or zoning officials

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and it is unfeasible to correct such illegal occupancy without removing the tenant.

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     (2) A foreclosing owner shall not evict a tenant for the following actions that constitute

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just cause until the notice required by subsection (c) is posted and delivered:

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     (i) The tenant is committing a nuisance in the unit; is permitting a nuisance to exist in the

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unit; is causing substantial damage to the unit or is creating a substantial interference with the

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quiet enjoyment of other occupants;

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     (ii) The tenant is using or permitting the unit to be used for any illegal purpose; and

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     (iii) The tenant has refused the foreclosing owner reasonable access to the unit for the

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purpose of making necessary repairs or improvements required by the laws of the United States,

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the state of Rhode Island or any subdivision thereof, or for the purpose of showing the unit to a

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prospective purchaser or mortgagee.

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     (e) The following procedures shall be followed for the eviction of a tenant pursuant to

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subsection (d) of this section:

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     (1) For evictions brought pursuant to paragraph (d)(1)(i), the foreclosing owner shall

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follow section 34-18-35;

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     (2) For evictions brought pursuant to paragraph (d)(1)(ii) or subdivision (d)(2), the

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foreclosing owner shall follow section 34-18-36;

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     (3) For evictions brought pursuant to paragraphs (d)(1)(iii) or (d)(1)(iv) or for evictions

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brought where a binding purchase and sale agreement has been executed for a bona fide third

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party to purchase the housing accommodation from a foreclosing owner, the foreclosing owner

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shall follow the procedures for terminating a month to month tenancy set forth in section 34-18-

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37.

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     (f) A foreclosing owner may evict any person other than a tenant by following the

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procedures for terminating a month to month tenancy set forth in section 34-18-37.

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     (g) If a foreclosing owner disagrees with the amount of use and occupancy charges paid

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to the foreclosing owner, the foreclosing owner may bring a claim in district court to claim that

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the charge is unreasonable and set a new use and occupancy rate.

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     SECTION 3. This act shall take effect upon passage.

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LC00361/SUB A

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO PROPERTY - RESIDENTIAL LANDLORD AND TENANT ACT

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     This act would provide a tenant of a foreclosed property greater protection against

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eviction.

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     This act would take effect upon passage.

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LC00361/SUB A

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