2012 -- H 7987

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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 TOWNS AND CITIES

     Introduced By: Representatives Lima, Carnevale, Diaz, DaSilva, and DeSimone

     Date Introduced: March 22, 2012

     Referred To: House Judiciary

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 45 of the General Laws entitled "TOWNS AND CITIES" is hereby

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amended by adding thereto the following chapter:

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     CHAPTER 24.6

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FORECLOSED PROPERTY UPKEEP ACT

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     45-24.6-1. Short title. -- This chapter shall be known and may be cited as the "Rhode

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Island Foreclosed Property Upkeep Act."

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     45-24.6-2. Legislative findings. -- (a) The number of mortgage foreclosures in Rhode

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Island has increased dramatically, and as a consequence, the upkeep of many foreclosed

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residential properties has been neglected. These neglected properties have a detrimental effect on

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the neighborhoods and the municipalities in which they are located.

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     (b) Neglected properties are often occupied by individuals for illicit purposes subjecting

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the neighborhood to increased crime and a host of other social ills.

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     (c) As a foreclosed property falls deeper into disrepair, the value of nearby property

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decreases.

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     (d) Municipalities are required to spend an excessive and disproportionate amount of

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public funds for police protection, fire protection, code enforcement, and other purposes directly

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and indirectly related to the presence of neglected foreclosed properties.

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     (e) The presence of neglected foreclosed properties is detrimental to the public's health,

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safety, and welfare.

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     (f) Enactment and enforcement of this chapter is therefore declared to be essential to the

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protection and preservation of the public's health, safety, and welfare. It is intended that the

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provisions of this chapter be liberally construed to effectuate its stated purposes.

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     45-24.6-3. Foreclosed property upkeep bond. -- (a) A financial institution or other

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business entity that purchases, by foreclosure, a residential property upon which that financial

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institution or other business entity holds a mortgage shall maintain the property in compliance

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with chapter 45-24.3, the Rhode Island housing maintenance and occupancy code, or in

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compliance with a municipal ordinance enacted pursuant to chapter 45-24.2.

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     (b) A financial institution or business entity that purchases, by foreclosure, a residential

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property upon which that financial institution or business entity holds a mortgage shall post with

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the municipality in which the foreclosed property is located, a bond in the amount of twenty-five

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percent (25%) of the assessed value of the property. The bond shall be in a form approved by the

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municipality. A document evidencing the posting of the bond shall be recorded together with the

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foreclosure deed, and no recorder of deeds shall accept a foreclosure deed for recording that is not

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accompanied by such a document.

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     (c) If the municipality determines that the foreclosed property is in violation of chapter

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45-24.3, or in violation of any municipal ordinance enacted pursuant to chapter 45-24.2, and the

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violation is not abated within thirty (30) days of the date the financial institution or other business

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entity receives written notice of the violation, the bond posted for that property shall be forfeited,

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and the municipality shall have the right to use any part of the proceeds to correct the violation.

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     (d) If the municipality uses the entire proceeds of the bond to correct the violation, it shall

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notify the financial institution or other business entity by certified mail, and the financial

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institution or other business entity shall post another bond in the same amount as the original

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bond within ten (10) days of the receipt of such a notice. If the financial institution or other

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business entity fails to post the replacement bond within ten (10) days of the receipt of the notice,

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the municipality shall have the right to sell the property by public auction for the amount of the

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bond not posted according to the procedure required by chapter 44-9 for tax sales.

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     (e) Upon transfer of ownership of the property by the financial institution or other

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business entity, the municipality shall release the bond, or return any unused portion of the bond

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proceeds to the entity that posted the bond.

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     45-24.6-4. Foreclosed property – Agent for service. -- A financial institution or other

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business entity that purchases by foreclosure a residential property upon which that financial

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institution or other business entity holds a mortgage shall record in the land evidence records of

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the municipality in which the property is located, a document identifying an agent in Rhode

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Island to accept service of any process, notice or demand.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TOWNS AND CITIES

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     This act would establish the Rhode Island Foreclosed Property Upkeep Act to require a

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purchaser of a foreclosed property to maintain the property and also to identify an agent in Rhode

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Island for service of process.

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     This act would take effect upon passage.

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