2017 -- S 0388 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2017

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A N   A C T

RELATING TO PROPERTY - MORTGAGE FORECLOSURE

     Introduced By: Senators Quezada, Calkin, Ciccone, Metts, and Goodwin

     Date Introduced: March 02, 2017

     Referred To: Senate Judiciary

     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) 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) 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) three hundred dollars ($300) 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. The maximum aggregate

penalty shall not exceed two thousand dollars ($2,000), which shall be paid prior to the city or

town clerk accepting the foreclosure deed for recording.

     (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.

     (e) A mortgagee not licensed as a financial lending institution holding a mortgage by

private agreement with another party shall be exempt from the penalty requirements of this

section.

     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 PROPERTY - MORTGAGE FORECLOSURE

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     This act would impose a penalty of three hundred dollars ($300) per month up to an

aggregate total of two thousand dollars ($2,000) upon financial institutions failing to promptly

record foreclosure deeds and pay outstanding taxes. Most holders of a private mortgage would be

exempt from the penalty requirements.

     This act would take effect upon passage.

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