2014 -- H 7504

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LC004130

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO TOWNS AND CITIES

     Introduced By: Representatives Lima, Almeida, Costantino, Carnevale, and O`Neill

     Date Introduced: February 13, 2014

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

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

amended by adding thereto the following chapter:

CHAPTER 24.6

FORECLOSED PROPERTY UPKEEP ACT

     45-24.6-1. Short title. -- This chapter shall be known as the "Rhode Island Foreclosed

Property Upkeep Act."

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

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

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

the neighborhoods and the municipalities in which they are located.

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

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

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

decreases.

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

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

and indirectly related to the presence of neglected foreclosed properties.

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

safety, and welfare.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

accompanied by such a document.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

proceeds to the entity that posted the bond.

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

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

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

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.

     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 and would

require a purchaser of foreclosed property to maintain the property in accordance with the Rhode

Island housing and maintenance and occupancy code and also to identify an agent in Rhode

Island for service of process.

     This act would take effect upon passage.

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