2018 -- S 2091 SUBSTITUTE A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2018

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A N   A C T

RELATING TO TAXATION -- TAX SALES

     

     Introduced By: Senators Archambault, Lombardi, McCaffrey, Lynch Prata, and
Ciccone

     Date Introduced: January 18, 2018

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 44-9-1, 44-9-5, 44-9-12, 44-9-13, 44-9-21, 44-9-24, 44-9-28, 44-9-

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29, 44-9-30, 44-9-31 and 44-9-43 of the General Laws in Chapter 44-9 entitled "Tax Sales" are

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hereby amended to read as follows:

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     44-9-1. Tax liens on real estate Tax titles on real estate.

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     (a) Taxes assessed against any person in any city or town for either personal property or

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real estate shall constitute a lien on the real estate. The lien shall arise and attach as of the date of

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assessment of the taxes, as defined in § 44-5-1.

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     (b) The lien shall terminate at the expiration of three (3) years thereafter after it first

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arises if the estate has in the meantime been alienated and the instrument alienating the estate has

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been recorded and no action for the enforcement of the lien has commenced; otherwise, it shall

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continue until a recorded alienation of the estate. The lien shall be superior to any other lien,

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encumbrance, or interest in the real estate whether by way of mortgage, attachment, receivership

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order, or otherwise, except easements, and restrictions and prior tax title(s) held by Rhode Island

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Housing and Mortgage Finance Corporation. A final decree foreclosing all rights of redemption

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under this title shall constitute an alienation within the meaning of this section. The tax sale shall

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constitute an enforcement of the lien, but itself shall not constitute an alienation.

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     44-9-5. Agreements between cities or towns and fire districts, water districts, sewer

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districts, road districts, lighting districts, and lien priorities.

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     (a) Cities and towns and fire districts, water districts, sewer districts, road districts and

 

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lighting districts are authorized to make agreements with respect to the parcel of property upon

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which they respectively own tax liens titles in respect to the disposition of the liens, of the parcel

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of property subject to the liens, and of the proceeds of a tax sale of the property.

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     (b) If no agreement is in place, liens arising under § 44-9-1 shall be superior to any other

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lien.

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     44-9-12. Collector's deed -- Rights conveyed to purchaser -- Recording.

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     (a) The collector shall execute and deliver to the purchaser a deed of the land stating the

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cause of sale; the price for which the land was sold; the places where the notices were posted; the

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name of the newspaper in which the advertisement of the sale was published; the names and

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addresses of all parties who were sent notice in accordance with the provisions of § 44-9-10 and

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44-9-11; the residence of the grantee; and if notice of the sale was given to the Rhode Island

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housing and mortgage finance corporation and/or to the department of elderly affairs under the

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provisions of § 44-9-10. The deed shall convey the land to the purchaser, subject to the right of

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redemption. The conveyed title shall, until redemption or until the right of redemption is

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foreclosed, be held as security for the repayment of the purchase price with all intervening costs,

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terms imposed for redemption, and charges, with interest; and the premises conveyed, both before

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and after either redemption or foreclosure, shall also be subject to, and have the benefit of, all

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easements and restrictions lawfully existing in, upon, or over the land or appurtenant to the land.

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The deed is not valid against any intervening interests unless recorded within sixty (60) days after

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the sale. If the deed is recorded, it is prima facie evidence of all facts essential to the validity of

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the title conveyed by the deed. It shall be the duty of the collector to record the deed within sixty

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(60) days of the sale and to forward said deed promptly to the tax sale purchaser. The applicable

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recording fee shall be paid by the purchaser. The purchaser shall be reimbursed for said fee upon

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redemption by the redeeming party, if any. Except as provided, no sale shall give to the purchaser

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any right to either the possession, or the rents or profits of the land until the expiration of one year

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after the date of the sale, nor shall any sale obviate or transfer any responsibility of an owner of

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property to comply with any statute of this state or ordinance of any municipality governing the

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use, occupancy, or maintenance or conveyance of property until the right of redemption is

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foreclosed.

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     (b) The rents to which the purchaser shall be entitled after the expiration of one year and

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prior to redemption shall be those net rents actually collected by the former fee holder or a

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mortgagee under an assignment of rents. Rents shall not include mere rental value of the land, nor

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shall the purchaser be entitled to any rent for owner-occupied, single-unit residential property.

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For purposes of redemption, net rents shall be computed by deducting from gross rents actually

 

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collected any sums expended directly or on behalf of the tenant from whom the rent was

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collected. Such expenditure shall include utilities furnished, repairs made to the tenanted unit, and

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services provided for the benefit of the tenant. However, mortgagee payments, taxes, and sums

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expended for general repair and renovation (i.e. capital improvements) shall not be deductible

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expenses in the computation of the rent.

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     (c) This tax title purchaser shall not be liable for any enforcement or penalties arising

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from violations of environmental or minimum-housing standards prior to the expiration of one

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year from the date of the tax sale, or five (5) years from the date of the tax sale if the Rhode

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Island housing and mortgage finance corporation is the tax title purchaser pursuant to § 44-9-8.3,

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except for violations that are the result of intentional acts by the tax sale purchaser or his or her

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agents.

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     (d) Upon the expiration of one year after the date of the sale, the tax title holder shall be

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jointly and severally liable with the owner for all responsibility and liability for the property and

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shall be responsible to comply with any statute of this state or ordinance of any municipality

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governing the use, occupancy, or maintenance or conveyance of the property even prior to the

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right of redemption being foreclosed; except, however, that if the Rhode Island housing and

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mortgage finance corporation is the tax title holder pursuant to § 44-9-8.3, then joint and several

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liability shall arise upon the expiration of five (5) years after the date of the sale. Nothing in this

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section shall be construed to confer any liability upon a city or town that receives tax title as a

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result of any bids being made for the land offered for sale at an amount equal to the tax and

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charges.

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     (e) In the event that the tax lien title is acquired by the Rhode Island housing and

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mortgage finance corporation, and said corporation has paid the taxes due, title shall remain with

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the owner of the property, subject to the right of the corporation to take the property in its own

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name, pursuant to applicable statutes and any regulations duly adopted by the corporation. Upon

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such notice by the corporation, the collector shall execute and deliver a deed to the corporation as

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herein provided.

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     (f) The priority of any tax title with respect to other tax titles shall be determined by the

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chronological order in which the underlying tax sales were conducted, with subsequent tax titles

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being superior to earlier tax titles.

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     (g) The holder of an earlier tax title shall be entitled to exercise the right of redemption

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with respect to any subsequent tax title, in the manner provided in this chapter, unless and until

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the right to redeem the subsequent tax title is foreclosed in accordance with this chapter. The

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holder of an earlier tax title shall be entitled to notice of any proceedings to foreclose the right of

 

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redemption with respect to a subsequent tax title.

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     (h) The mere existence of a subsequent tax title shall have no effect upon:

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     (1) The existence or validity of an earlier tax title; or

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     (2) The validity of any proceedings to foreclose the right of redemption with respect to

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the earlier tax title, so long as the right of redemption with respect to a subsequent tax title has not

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been foreclosed.

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     (i) Any proceeding to foreclose the right of redemption with respect to an earlier tax title

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shall have no effect upon a subsequent tax title, and in any such proceeding, the holder of a

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subsequent tax title is not a necessary party.

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     44-9-13. Entry by collector not required -- Recording of tax sale list.

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     (a) No entry upon the land by the collector shall be deemed necessary, but the collector in

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all cases of sales of real estate shall deliver to the clerk's or recorder's office a list of those

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properties sold at tax sale which the clerk or recorder shall record or post in the land evidence

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records for their city or town within five (5) business days after the sale of real estate. The

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recorded or posted list shall include the assessed owner's name, the address of the property, and

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the assessor's plat and lot, and the recorded or posted list shall be conclusive evidence of the facts

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stated in the list.

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     (b) No properties shall be sold at tax sale to any bidder who is delinquent in the paying of

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taxes or is an officer, more than ten percent (10%) shareholder or owner of a partnership or

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corporation or limited liability company that is delinquent in the paying of taxes on any property

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located within the city or town in which the tax sale is held, unless the bidder has agreed to a

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written payment plan approved by the collector and is current on any and all payments required

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by the plan; provided, however, that no bidder shall be deemed to be delinquent for the purposes

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of this subsection if that bidder owes property taxes solely on properties wherein the right of

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redemption under § 44-9-25 has not yet been foreclosed. The collector may require a bidder or an

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authorized officer or partner of the bidder to execute an affidavit that the bidder is qualified under

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this provision.

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     44-9-21. Redemption from purchaser other than city or town.

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     Any person may redeem by paying or tendering to a purchaser, other than the city or

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town, his or her legal representatives, or assigns, or to the person to whom an assignment of a tax

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title has been made by the city or town, at any time prior to the filing of the petition for

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foreclosure, in the case of a purchaser the original sum and any intervening taxes which have

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been paid to the municipality plus interest thereon at the rate of one percent (1%) per month and

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costs paid by him or her, plus a penalty as provided in § 44-9-19, or in the case of an assignee of a

 

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tax title from a city or town, the amount stated in the instrument of assignment, plus the above-

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mentioned penalty. He or she may also redeem the land by paying or tendering to the treasurer the

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sum which he or she would be required to pay to the purchaser or to the assignee of a tax title, in

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which case the city or town treasurer shall be constituted the agent of the purchaser or assignee

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until the expiration of one year from the date of sale and not thereafter. The right of redemption

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may be exercised only by those entitled to notice of the sale pursuant to §§ 44-9-10 and 44-9-11.

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     44-9-24. Title absolute after foreclosure of redemption -- Jurisdiction of

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proceedings.

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     The title conveyed by a tax collector's deed shall be absolute after foreclosure of the right

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of redemption by decree of the superior court as provided in this chapter. Notwithstanding the

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rules of civil procedure or the provisions of chapter 21 of title 9, no decree shall be vacated

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except in a separate action instituted within one year six (6) months following entry of the decree

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and in no event for any reason, later than one year six (6) months following the entry of decree.

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Furthermore, the action to vacate shall only be instituted for inadequacy of notice of the petition

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amounting to a denial of due process or for the invalidity of the tax sale because the taxes for

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which the property was sold had been paid or were not due and owing because the property was

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exempt from the payment of such taxes. The superior court shall have exclusive jurisdiction of

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the foreclosure of all rights of redemption from titles conveyed by a tax collector's deed, and the

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foreclosure proceedings shall follow the course of equity in a proceeding provided for in §§ 44-9-

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25 -- 44-9-33.

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     44-9-28. Order as to parties in default.

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     After the fixed return day, to be at least twenty (20) days after the time of the actual

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issuance of notice, the court shall, if satisfied that the notice has been properly given, on motion

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of the petitioner shall enter an order defaulting all persons failing to appear file a timely answer,

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and decreeing that the petition as to them be taken as confessed (Form 8).

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     44-9-29. Redemption by party to foreclosure proceedings.

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     Any person claiming an interest, on or before the return day or within that further time as

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may on motion be allowed by the court, providing said motion is made prior to the fixed return

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day, shall, if he or she desires to redeem, file an answer setting forth his or her right in the land,

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and an offer to redeem upon the terms as may be fixed by the court. The Where an answer has

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been timely filed, the court shall hear the parties, and may in its discretion make a finding

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allowing the party to redeem, within a time fixed by the court, upon payment to the petitioner of

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an amount sufficient to cover the original sum, costs, penalties, and all subsequent taxes, costs,

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and interest to which the petitioner may be entitled, together with the costs of the proceeding and

 

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counsel fee as the court deems reasonable. The court may impose other terms as justice and the

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circumstances warrant.

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     44-9-30. Decree barring redemption.

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     If a default is entered under § 44-9-28, or if redemption is not made within the time and

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upon the terms fixed by the court under § 44-9-29, or if at the time fixed for the hearing the

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person claiming the right to redeem does not appear to urge his or her claim, after having filed a

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timely answer, or if upon hearing the court determines that the facts shown do not entitle the

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person to redeem, a decree shall be entered which shall forever bar all rights of redemption.

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     44-9-31. Contest of validity of tax title.

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     If a person claiming an interest desires to raise any question concerning the validity of a

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tax title, the person shall do so by answer filed in the proceeding on or before the return day, or

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within that further time as may on motion be allowed by the court, providing said motion is made

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prior to the fixed return date, or else be forever barred from contesting or raising the question in

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any other proceeding. He or she shall also file specifications setting forth the matters upon which

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he or she relies to defeat the title; and unless the specifications are filed, all questions of the

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validity or invalidity of the title, whether in the form of the deed or proceedings relating to the

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sale, shall be deemed to have been waived. Upon the filing of the specifications, the court shall

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hear the parties and shall enter a decree in conformity with the law on the facts found.

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     44-9-43. Refund of purchase price when title based on collector's sale, treasurer's

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assignment, or sale without foreclosure adjudged invalid.

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     (a) If, as the result of a petition, the petitioner's title based on a collector's sale, treasurer's

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assignment, or sale without foreclosure is determined to be invalid by the superior court because

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of errors or irregularities in the tax proceedings upon which it was based, the clerk, upon request,

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shall issue a certificate to that effect. The treasurer of the city or town where the land affected by

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the title is situated, upon receipt of a deed from the petitioner conveying all of the interest which

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he or she may have under it, together with the certificate, shall refund to the holder the amount

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paid, therefore plus statutory interest at the rate of one percent (1%) per month from the date of

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payment until the date of refund, notwithstanding the provisions of § 45-15-5. The taxing

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authority may recover any interest paid to a tax sale purchaser under this section from the

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delinquent assessed owner of the property as if the tax sale of the property had not been held.

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     (b) If, prior to the filing of a petition, the title based on a collector's sale, treasurer's

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assignment, or sale without foreclosure is determined to be invalid by mutual agreement of the

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municipality and tax title holder, because of errors or irregularities in the tax proceedings upon

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which it was based, the treasurer of the city or town where the land affected by the title is

 

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situated, upon receipt of a deed from the tax title holder conveying all of the interest which they

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may have under it, shall refund to the holder the amount paid therefore plus statutory interest at

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the rate of one percent (1%) per month from the date of payment until the date of refund,

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notwithstanding the provisions of § 45-15-5. The taxing authority may recover any interest paid

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to a tax sale purchaser under this section from the delinquent assessed owner of the property as if

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the tax sale of the property had not been held. Nothing in this subsection shall abrogate the

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authority of a municipality’s tax collector to redeem from a tax sale purchaser, in accordance with

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§ 44-9-21, before an action to foreclose the right of redemption under section 25 of this chapter

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has been filed, any property sold at tax sale where the collector determines administrative error

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has occurred.

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     SECTION 2. Chapter 44-9 of the General Laws entitled "Tax Sales" is hereby amended

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by adding thereto the following section:

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     44-9-25.3. Expedited foreclosure of the rights of redemption on account of vacancy.

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     (a) Notwithstanding the provisions of §§ 44-9-25 and 44-9-25.1 following a sale of

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property for taxes or fees, whomever then holds the title thereby acquired may bring a petition to

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the superior court for the foreclosure of all rights of redemption after the passage of sixty (60)

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days from the date of recording of the tax sale deed upon a finding by the superior court that the

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structure(s) thereon are vacant and either vandalized and/or in a non-code compliant condition. A

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certificate from the local building official attesting to the vacant and vandalized and/or non-code

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compliant condition of such structure(s) shall be prima facie evidence of such condition, but

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additional evidence may be presented to the court to affirm the conditions alleged in the petition.

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A municipality, by and through its building official, may choose to issue a certificate as

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referenced in this section, however, neither a municipality nor its building official are obligated

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under this section to issue said certificate. The issuance of said certificate is discretionary and not

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mandatory.

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     (b) In the event that a petition to foreclose the right of redemption is filed under the

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provisions of this section, notice of the filing of said petition shall be given to the taxing authority

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that conducted the sale by in person service, upon the taxing authority's collector, thereby ending

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the period during which the taxpayer may redeem through the taxing authority.

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     (c) A petitioner who has utilized this expedited foreclosure process shall commence, or

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cause to be commenced, substantial rehabilitation of the structure(s) on such parcel within six (6)

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months following the entry of the final foreclosure decree or be immediately subject to the non-

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utilization penalty set forth in chapter 5.1 of title 44.

 

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     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 TAXATION -- TAX SALES

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     This act would expedite the foreclosure procedure on vacant property, and would amend

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the provisions of the general laws on tax sales in order to, among other things, establish priorities

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of tax liens, clarify the effect of late recordings and simplify procedures in the event of a void

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sale.

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     This act would take effect upon passage.

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