2019 -- H 5583

========

LC001503

========

     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

____________

A N   A C T

RELATING TO TAXATION -- TAX SALES

     Introduced By: Representatives Vella-Wilkinson, Jackson, and Williams

     Date Introduced: February 27, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-5.1-3 of the General Laws in Chapter 44-5.1 entitled "Real

Estate Nonutilization Tax" is hereby amended to read as follows:

     44-5.1-3. Imposition of tax.

     (a) Providence. The city of Providence is empowered to impose a tax upon the privilege

of utilizing property as vacant and abandoned property within the city during any privilege year

commencing with the privilege year beginning January 1, 1984, and every privilege year

thereafter. The tax shall be in addition to any other taxes authorized by the general or public laws.

     (b) Pawtucket. The city of Pawtucket is empowered to impose a tax upon the privilege of

utilizing property as vacant and abandoned property within the city during any privilege year

commencing with the privilege year beginning January 1, 1997, and every privilege year

thereafter. The tax shall be in addition to any other taxes authorized by the general or public laws.

     (c) Cranston. The city of Cranston is empowered to impose a tax upon the privilege of

utilizing property as vacant and abandoned property within the city during any privilege year

commencing with the privilege year beginning January 1, 1997, and every privilege year

thereafter. The tax shall be in addition to any other taxes authorized by the general or public laws.

     (d) North Providence. The town of North Providence is empowered to impose a tax upon

the privilege of utilizing property as vacant and abandoned property within the town during any

privilege year commencing with the privilege year beginning January 1, 2001, and every

privilege year thereafter. The tax shall be in addition to any other taxes authorized by the general

or public laws.

     (e) East Providence. The city of East Providence is empowered to impose a tax upon the

privilege of utilizing property as vacant and abandoned property within the city during any

privilege year commencing with the privilege year beginning January 1, 2000, and every

privilege year thereafter. The tax shall be in addition to any other taxes authorized by the general

or public laws.

     (f) Woonsocket. The city of Woonsocket is empowered to impose a tax upon the

privilege of utilizing property as vacant and abandoned property within the city during any

privilege year commencing with the privilege year beginning January 1, 2000, and every

privilege year thereafter. The tax shall be in addition to any other taxes authorized by the general

or public laws.

     (g) Cities and towns. Any city or town not previously empowered is empowered to

impose a tax upon the privilege of utilizing vacant and abandoned property within the city or

town during any privilege year commencing with the privilege year beginning January 1, 2002,

and every privilege year thereafter. The tax shall be in addition to any other taxes authorized by

the general or public laws.

     (h) Implementing ordinance. Cities and towns that are empowered to impose this tax and

who choose to impose this tax shall adopt an implementing ordinance. The ordinance shall:

     (1) Designate a municipal entity responsible for determining which properties are vacant

and abandoned;

     (2) Establish the mechanism by which the tax is imposed and how the tax is removed

from the property once the property has been rehabilitated;

     (3) Designate a reviewing entity to review and approve a development plan submitted by

a nonprofit housing organization or an abutter;

     (4) Empower the tax assessor to abate the tax if it is imposed in error or if a nonprofit

housing organization or an abutter acquires the property for rehabilitation and submits a

development plan that complies with the provisions of subdivision (i)(2) of this section;

     (i) Exemptions.

     (1) The non-utilization tax authorized by this chapter shall not be imposed on property

owned by an abutter or a nonprofit housing organization if:

     (i) The abutter or nonprofit housing organization submits a proposed development plan

which has been approved by the Rhode Island housing resources commission or Rhode Island

housing and mortgage finance corporation to the reviewing entity;

     (ii) The proposed development plan contains a reasonable timetable for the development

LC001503 - Page 2 of 7

or reuse of the property; and

     (iii) The reviewing entity determines that the proposed development plan is in accordance

with the approved comprehensive plan of the city or town and approves it.

     (2) The reviewing entity shall deliver a copy of the approved development plan to the tax

assessor who shall certify the property as exempt from the non-utilization tax.

     (3) Failure of the nonprofit housing organization or abutter, without good cause, to carry

out the development or reuse of the property in accordance with the timetable set forth in the

approved development plan shall result in the property being subject to the non-utilization tax as

of the first date of assessment following the expiration of the timetable in the approved

development plan.

     (4) The decision of the reviewing entity denying approval of a development plan may be

appealed as provided in § 44-5.1-6.

     (5) The property is acquired by the Rhode Island housing and mortgage finance

corporation pursuant to the provisions of §§ 44-9-8.3, 44-9-10 and 44-9-11.

     SECTION 2. Sections 44-9-8.3 and 44-9-12 of the General Laws in Chapter 44-9 entitled

"Tax Sales" are hereby amended to read as follows:

     44-9-8.3. Sale of owner-occupied residential property to housing agency.

     (a) Where the property subject to tax sale is owner-occupied residential and contains

three (3) or less units, the Rhode Island Housing and Mortgage Finance Corporation shall have a

right of first refusal to acquire the tax lien at tax sale, and may assist the owner to discharge the

lien or take title and acquire the property in its own name pursuant to regulations to be developed

by the corporation, consistent with its purposes. The corporation shall notify the collector of its

intention to exercise this right by the later of: (i) thirty (30) days from its receipt of the certified

mail notice set forth in § 44-9-10; or (ii) ten (10) days before the date of sale or any adjournment

of the sale. Failure of the corporation to notify the collector as provided herein shall extinguish

the right of first refusal provided in this section.

     (b) There shall be an advisory board consisting of six (6) members: one person appointed

by the Rhode Island League of Cities and Towns; one person appointed by the Consumer Credit

Counseling Services of Rhode Island; one person appointed by Rhode Island Legal Services; one

person appointed by the Housing Network of Rhode Island, one appointed by the Urban League

of Rhode Island; one person appointed by the Rhode Island Housing Resources commission; one

person by LISC Rhode Island and one appointed by the Center for Hispanic Policy and

Advocacy. The advisory committee shall provide advice and recommendations to the governing

board of the Rhode Island Housing and Mortgage Finance Corporation regarding that

LC001503 - Page 3 of 7

corporation's activities under this section. The members of the advisory board shall receive no

compensation for the performance of their duties, but may be reimbursed for reasonable expenses

incurred in carrying out their duties.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

foreclosed.

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

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

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

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

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

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

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

LC001503 - Page 4 of 7

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

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

expenses in the computation of the rent.

     (c)(1) This tax title purchaser shall not be liable for any enforcement or penalties arising

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

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

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

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

agents.

     (2) The Rhode Island housing and mortgage finance corporation as the tax title purchaser

pursuant to § 44-9-8.3 shall have the right to petition for foreclosure of the right of redemption of

tax liens one year from the date of the tax in the following situations:

     (i) The mortgage has been foreclosed upon; or

     (ii) The property is abandoned pursuant to the provisions of § 34-44-2.

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

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

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

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

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

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

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

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

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

charges.

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

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

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

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

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

herein provided.

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

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

being superior to earlier tax titles.

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

LC001503 - Page 5 of 7

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

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

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

redemption with respect to a subsequent tax title.

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

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

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

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

been foreclosed.

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

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

subsequent tax title is not a necessary party.

     SECTION 3. This act shall take effect upon passage.

========

LC001503

========

LC001503 - Page 6 of 7

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- TAX SALES

***

     This act would:

     (1) Exempt property acquired by the Rhode Island housing and mortgage finance

corporation (RIHMFC) pursuant to unpaid tax liens from the nonutilization tax;

     (2) Allow RIHMFC to foreclose on tax liens after one year if the mortgage is foreclosed

or the property is abandoned; and

     (3) Replace two (2) defunct organization members to the advisory board with members of

existing organizations.

     This act would take effect upon passage.

========

LC001503

========

LC001503 - Page 7 of 7