2015 -- H 5465

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LC001053

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO PROPERTY - MORTGAGE FORECLOSURE AND SALE

     Introduced By: Representatives Edwards, Reilly, Canario, Gallison, and O`Grady

     Date Introduced: February 12, 2015

     Referred To: House Judiciary

     (Attorney General)

It is enacted by the General Assembly as follows:

     SECTION 1. Section 34-27-6 of the General Laws in Chapter 34-27 entitled "Mortgage

Foreclosure and Sale" is hereby amended to read as follows:

     34-27-6. Payment of outstanding taxes. -- (a) In connection with any sale by public

auction made under and according to the provisions of any mortgage of real estate or any power

of sale contained therein or annexed thereto, if the mortgagee or an affiliate of the mortgagee is

the successful bidder for the real estate or property offered for sale, the foreclosure deed shall be

recorded in the records of land evidence for the municipality where the real estate is located

within forty-five (45) fifteen (15) days after the date of the sale. The deed shall be captioned

"foreclosure deed" and the date of the foreclosure shall be stated in the deed. This subsection (a)

shall not apply to any such sale if, prior to the recording of the foreclosure deed: (1) the

mortgagor files a voluntary proceeding, or an order for relief is entered in any involuntary

proceeding against the mortgagor, under any federal or state bankruptcy or insolvency statute; or

(2) the mortgagee abandons or otherwise terminates such sale.

      (b) Notwithstanding any other general law or local ordinance to the contrary, the grantee

of real estate named in the foreclosure deed shall pay to the municipality, on or before the date

the foreclosure deed is recorded, all taxes and other assessments, including water charges, interest

and penalties, if any, which constitute liens on the real estate described in the foreclosure deed

and which are due and owing on the recording date (collectively, "taxes due and owing");

provided, however, that a grantee shall not be deemed in violation of this subsection (b) if the

grantee shall apply for a municipal lien certificate from the tax collector for the municipality

during the forty-five (45) fifteen (15) day period ending on the day on which the foreclosure deed

is recorded and shall pay the taxes due and owing within thirty (30) days after the date on which

the municipal lien certificate is mailed by the tax collector by the United States mail, postage

prepaid, certified, return receipt requested, and addressed to the grantee at the address therefor set

forth in the application for the municipal lien certificate. Taxes due and owing for purposes of

this section shall include only installments thereof required by law to be paid as of the date the

foreclosure deed is recorded.

      (c) Upon a violation of any one or more of the requirements of this section, a penalty

shall accrue at the rate of forty dollars ($40.00) one thousand dollars ($1,000) per month (in the

aggregate) for each month or part thereof during which such violation or violations continue. For

purposes of determining the penalty due hereunder, a month commences on the day on which the

first such violation occurs and a new month commences on the same day (or if there is no such

day, then on the last day) of each succeeding calendar month until all taxes due and owing are

paid. In the event of a violation of subsection (a), taxes due and owing shall be determined as of

the date required thereunder for the recording of a foreclosure deed.

      (d) As used in this section, the term "affiliate" shall mean, with respect to any

mortgagee, any individual or legal entity that controls, is controlled by or is under common

control with such mortgagee, and the term "foreclosure deed" shall mean the mortgagee's deed or

other conveyance of title to the successful bidder at any sale by public auction made under and

according to the provisions of any mortgage of real estate or any power of sale contained therein

or annexed thereto.

     SECTION 2. Chapter 34-27 of the General Laws entitled "Mortgage Foreclosure and

Sale" is hereby amended by adding thereto the following sections:

     34-27-8. Notice of intention to foreclose. -- (a) A mortgagee that serves a notice of

intention to foreclose on a mortgage on residential property in this state pursuant to this chapter,

shall serve the clerk of the city or town in which the property is located with a copy of the notice

at the same time that the mortgagee serves the notice on the mortgagor of the property.

(b) A mortgagee who is not a resident of this state shall designate and continuously

maintain an agent, who is a resident of this state, upon whom service may be made of any

process, notice, or demand required or permitted by law to be served. The mortgagee's

designation shall be in writing and it shall include the full name and address of the agent and the

street address of each property designated to said agent. The mortgagee's designation shall be

filed with the clerk of the city or town in which the property is located.

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(c) A mortgagee in violation of this section shall be subject to a fine of up to one

thousand dollars ($1,000) per month, for each violation, payable to the municipality.

     34-27-9. Maintenance of vacant and abandoned residential real property. -- (a) If the

director determines that a vacant and abandoned residential real property is in violation of

relevant housing codes, building codes, and other any applicable state or municipal laws

concerning maintenance, security, and upkeep of dwellings, the director shall notify the

mortgagee and/or their local agent of the violation(s), including potential penalties associated

with non-compliance as described below. It shall be the burden of the mortgagee and/or their

local agent to bring the vacant and abandoned residential real property into compliance and

inform the director that the required changes and/or repairs were made no more than thirty (30)

days after notification. If the specific violation is determined not to have been brought into

compliance at the time of re-inspection, the mortgagee and/or their local agent shall have five (5)

additional days to bring the property into compliance. If, after this time, the mortgagee and/or

their local agent have not rectified the violations in question, fines of up to one thousand dollars

($1,000) per violation shall be imposed on the mortgagee and/or their local agent.

(b) For purposes of this section, residential real property will be deemed "vacant and

abandoned" when at least three (3) monthly payments are past due on the mortgage loan or the

mortgagor has informed the mortgagee or loan servicing company in writing that the mortgagor

does not intent to occupy the property in the future; and there is reasonable basis to believe that

the property is not occupied which shall be determined in accordance with the requirements of

subsection (c) of this section.

(c) The residential real property will be deemed not occupied when the mortgagor has

manifested intent to abandon the residential real property through some act or omission. The

intent of the owner to abandon the residential real property can be inferred from the surrounding

facts and circumstances that include, but are not limited to, violations of relevant housing codes,

building codes, and any other applicable state or municipal laws concerning maintenance,

security, and upkeep of dwellings.

(d) A residential real property shall not be deemed vacant and abandoned where such

property is:

(1) An unoccupied building which is undergoing construction, renovation or

rehabilitation that is proceeding to completion, and the building is in compliance with all

applicable ordinances, codes, regulations and statutes;

(2) A building occupied on a seasonal basis that is otherwise secure;

(3) A building that is secure, but is the subject of a probate action, action to quiet title, or

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other similar ownership dispute;

(4) A building damaged by a natural disaster and one or more owner intends to repair and

reoccupy the property; or

(5) Occupied by the mortgagor, a relative of the mortgagor or a tenant lawfully in

possession.

(e) For purposes of this section, the "director" shall mean the person responsible for code

enforcement or its equivalent for the municipality in which the residential real property is located,

or his or her designee.

     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROPERTY - MORTGAGE FORECLOSURE AND SALE

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     This act would reduce the number of days within which a foreclosure deed must be filed

from forty-five (45) to fifteen (15). The act would also require mortgagees, upon giving notice of

intent to foreclose a mortgage, to file a copy of that notice with the city or town clerk and appoint

an agent for service of process within the state. The act would also require holders of vacant and

abandoned property to provide for the maintenance, security, and upkeep such property.

     This act would take effect upon passage.

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