Chapter
238
2008 -- H 7149 SUBSTITUTE A AS AMENDED
Enacted 07/04/08
A N A C T
RELATING TO PROPERTY
- MORTGAGE FORECLOSURE AND SALE
Introduced By: Representatives Kilmartin, E Coderre, Rose, Dennigan, and San Bento
Date Introduced: January 16, 2008
It is
enacted by the General Assembly as follows:
SECTION
1. Chapter 34-27 of the General Laws entitled "Mortgage Foreclosure and
Sale"
is hereby amended by adding thereto the following section:
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) 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. Section 19-9-2 of the General Laws in Chapter 19-9 entitled "Community
Obligations
and Banking Offenses" is hereby amended to read as follows:
19-9-2.
Escrow accounts -- Interest. -- (a) Every mortgagee holding funds of a
mortgagor
in escrow for the payment of taxes and insurance premiums with respect to
mortgaged
property
located in this state shall pay or credit interest on those funds at a rate of
not less than
four
percent (4%) per annum, which shall be credited annually on December 31. equal to the rate
paid
to the mortgagee on its regular savings account, if offered, and otherwise at a
rate not less
than
the prevailing market rate of interest for regular savings accounts offered by
local financial
institutions
as determined by the director, said determination to be made within thirty (30)
days of
the
effective date of this provision and thereafter annually on the first business
day of the year.
Said
credit of interest shall accrue on the daily balance and be made annually on
December 31. If
the
mortgage debt is paid prior to December thirty-first in any year, the interest
to the date of
payment
shall be paid to the mortgagor. The provision of this section shall apply only
with
respect
to mortgages on owner-occupied residential property consisting of not more than
four (4)
living
units. The provisions of this section shall not be waived. No mortgagee holding
the
mortgagor's
funds in escrow for the payment of taxes shall also charge an annual "tax
service fee"
or other
annual fee for ascertaining whether or not the real estate taxes have in fact
been paid.
Any
mortgagee violating the provisions of this section shall be fined not more than
one hundred
dollars
($100) for each offense.
(b) Mortgages insured or guaranteed by the farmer's home loan administration,
federal
housing
administration, or the veterans' administration, or a private mortgage insurer
licensed to
do
business in the state of Rhode Island or made pursuant to the provisions of
chapter 55 of title
42 shall
be exempt from the requirements of this section.
(c) The director or the director's designee shall adopt any regulations that
are necessary
to carry
out the provisions of this section.
SECTION
3. Section 1 of this act shall take effect sixty (60) days after passage and
shall
apply
to foreclosure auction sales occurring after the date on which section 1 takes
effect.
Sections
2 and 3 of this act shall take effect upon passage, provided that the rate of
interest
payable
under section 19-9-2 shall change as of the date of determination by the
director of the
prevailing
market rate of interest.
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LC00524/SUB A/2
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