2013 -- S 0412

=======

LC01129

=======

STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2013

____________

A N A C T

RELATING TO PROPERTY - RESIDENTIAL LANDLORD AND TENANT ACT

     Introduced By: Senators Metts, Pichardo, Crowley, and Jabour

     Date Introduced: February 26, 2013

     Referred To: Senate Judiciary

It is enacted by the General Assembly as follows:

1-1

     SECTION 1. Section 34-18-23 of the General Laws in Chapter 34-18 entitled

1-2

"Residential Landlord and Tenant Act" is hereby amended to read as follows:

1-3

     34-18-23. Limitation of liability upon sale or change of management. -- (a) (1) A

1-4

landlord who conveys premises that include a dwelling unit subject to a rental agreement in a

1-5

good faith sale to a bona fide purchaser is relieved of liability under the rental agreement and this

1-6

chapter as to events occurring after written notice to the tenant of the conveyance. In no event

1-7

may the relief from liability predate the conveyance itself.

1-8

      (2) Written notice, for purposes of this section, must include the name(s), address, and

1-9

telephone number of the person or persons purchasing the property and assuming liability. To be

1-10

effective, the written notice must also certify compliance with section 45-24.3-17 which prohibits

1-11

sale or lease of property until any outstanding housing code violations have been corrected or the

1-12

seller or lessor has provided to the buyer or lessee, as well as to the enforcing officer, all notices

1-13

regarding violations, as required by the statute.

1-14

      (b) A manager of premises that include a dwelling unit is relieved of liability under the

1-15

rental agreement and this chapter as to events occurring after written notice to the tenant of the

1-16

termination of his or her management. The written notice must include the name(s), address, and

1-17

telephone number of the person or persons assuming management and/or the person or persons

1-18

within the state exercising ownership or responsibility over the property.

1-19

      (c) Nothing in this section shall be construed to affect the tenant's rights and duties under

1-20

an existing rental agreement, and the purchaser of property or any successor in interest to a

2-1

mortgagor takes title subject to the same rights and responsibilities toward the tenant which the

2-2

seller or mortgagor had.

2-3

     SECTION 2. Chapter 34-18 of the General Laws entitled "Residential Landlord and

2-4

Tenant Act" is hereby amended by adding thereto the following section:

2-5

     34-18-38.1. Eviction of tenants in foreclosed properties only for just cause. – (a) As

2-6

used in this section, the following words shall, unless the context clearly requires otherwise, have

2-7

the following meanings:

2-8

     (1) “Bona fide lease” or “bona fide tenancy” means a lease or tenancy shall not be

2-9

considered bona fide unless:

2-10

     (i) The mortgagor, or the child, spouse or parent of the mortgagor under the contract, is

2-11

not the tenant; and

2-12

     (ii) The lease or tenancy was the result of an arms-length transaction.

2-13

     (2) “Entity” means a business organization, or any other kind of organization including,

2-14

without limitation, a corporation, partnership, trust, limited liability corporation, limited liability

2-15

partnership, joint venture, sole proprietorship or any other category of organization and any

2-16

employee, agent, servant or other representative of such entity.

2-17

     (3) “Eviction” means an action, without limitation, by a foreclosing owner of a housing

2-18

accommodation which is intended to actually or constructively evict a tenant or otherwise compel

2-19

a tenant to vacate such housing accommodation.

2-20

     (4) “Foreclosing owner” means an entity that holds title in any capacity, directly or

2-21

indirectly, without limitation, whether in its own name, as trustee or as beneficiary, to a housing

2-22

accommodation that has been foreclosed upon and either:

2-23

     (i) Held or owned a mortgage or other security interest in the housing accommodation at

2-24

any point prior to the foreclosure of the housing accommodation or is the subsidiary, parent,

2-25

trustee, or agent thereof; or

2-26

     (ii) Is an institutional mortgagee that acquires or holds title to the housing

2-27

accommodation within three (3) years of the filing of a foreclosure deed on the housing

2-28

accommodation; or

2-29

     (iii) Is the Federal National Mortgage Association or the Federal Home Loan Mortgage

2-30

Corporation.

2-31

     (5) “Foreclosure” means an action to terminate a mortgagor’s interest in property by sale

2-32

of property pursuant to a power of sale in a mortgage, as described in section 34-11-22 or

2-33

conveyance of the property by the mortgagor in lieu of foreclosure or an action filed in court

2-34

pursuant to section 34-27-1.

3-1

     (6) “Housing accommodation” means a building or structure, or part thereof of land

3-2

appurtenant thereto, and any other real or personal property used, rented or offered for rent for

3-3

living or dwelling purposes, together with all services connected with the use or occupancy of

3-4

such property.

3-5

     (7) “Institutional mortgagee” means an entity or an entity which is the subsidiary, parent,

3-6

trustee or agent thereof or otherwise related to such entity, that holds or owns mortgages or other

3-7

security interests in three (3) or more housing accommodations or that acts as a mortgage servicer

3-8

of three (3) or more mortgages of housing accommodations.

3-9

     (8) “Just cause” means one of the following:

3-10

     (i) The tenant has failed to pay rent in effect prior to the foreclosure or failed to pay use

3-11

and occupancy charges, as long as the foreclosing owner notified the tenant in writing of the

3-12

amount of rent or the amount of use and occupancy that was to be paid and to whom it was to be

3-13

paid;

3-14

     (ii) The tenant has materially violated either an express or legally required obligation or

3-15

covenant of the tenancy or occupancy, other than the obligation to surrender possession upon

3-16

proper notice, and has failed to cure such violation within thirty (30) days after having received

3-17

written notice thereof from the foreclosing owner;

3-18

     (iii) The tenant is committing a nuisance in the unit; is permitting a nuisance to exist in

3-19

the unit; is causing substantial damage to the unit or is creating a substantial interference with the

3-20

quiet enjoyment of other occupants;

3-21

     (iv) The tenant is using or permitting the unit to be used for any illegal purpose;

3-22

     (v) The tenant who had a written bona fide lease or other rental agreement which

3-23

terminated, on or after August 10, 2011, has refused, after written request or demand by the

3-24

foreclosing owner, to execute a written extension or renewal thereof for a further term of like

3-25

duration and in such terms that are not inconsistent with this chapter;

3-26

     (iv) The tenant has refused the foreclosing owner reasonable access to the unit for the

3-27

purpose of making necessary repairs or improvement required by the laws of the United States,

3-28

the state of Rhode Island or any subdivision thereof, or for the purpose of inspection as permitted

3-29

or required by agreement or by law or for the purpose of showing the unit to a prospective

3-30

purchaser or mortgagee;

3-31

     (vii) The foreclosing owner: (A) Seeks to permanently board up or demolish the premises

3-32

because the premises has been cited by a state or local minimum housing code enforcement

3-33

agency for substantial violations affecting the health and safety of tenants and it is economically

3-34

unfeasible for the foreclosing owner to eliminate the violations; or (B) Seeks to comply with a

4-1

state or local minimum housing code enforcement agency that has cited the premises for

4-2

substantial violations affecting the health and safety of tenants and it is unfeasible to so comply

4-3

without removing the tenant; or (C) Seeks to correct an illegal occupancy because the premises

4-4

has been cited by a state or local minimum housing code enforcement agency or zoning official

4-5

and it is unfeasible to correct such illegal occupancy without removing the tenant; and provided

4-6

further that nothing in this section shall limit the rights of a third-party owner to evict a tenant at

4-7

the expiration of an existing lease.

4-8

     (9) “Mortgagee” means an entity to whom property is mortgaged, the mortgage creditor

4-9

or lender including, but not limited to, mortgage services, lenders in a mortgage agreement and

4-10

any agent, servant or employee of the mortgagee or any successor in interest or assignee of the

4-11

mortgagee’s rights, interests or obligations under the mortgage agreement.

4-12

     (10) “Mortgage servicer” means an entity which administers or at any point administered

4-13

the mortgage; provided, however, that such administration shall include, but not be limited to,

4-14

calculating principle and interest, collecting payments from the mortgager, acting as escrow agent

4-15

or foreclosing in the event of a default.

4-16

     (11) “Tenant” means a person or group of persons, who at the time of foreclosure, is

4-17

entitled to occupy a housing accommodation pursuant to a bona fide lease or tenancy or a tenancy

4-18

at will. A person who moves into the housing accommodation owned by the foreclosing owner,

4-19

subsequent to the foreclosure sale, without the express written permission of the foreclosing

4-20

owner shall not be considered a tenant under this section.

4-21

     (12) “Unit” or “residential unit” means the room or group of rooms within a housing

4-22

accommodation which is used or intended for use as a residence by one household.

4-23

     (13) “Use and occupancy charges” means a periodic payment charged by a foreclosing

4-24

owner to a person or persons other than a “tenant” as defined in this section for use and

4-25

occupancy of a housing accommodation.

4-26

     (b) Notwithstanding any provision of the general or public laws to the contrary, a

4-27

foreclosing owner shall not evict a tenant except for just cause, or unless a binding purchase and

4-28

sale agreement has been executed for a bona fide third party to purchase the housing

4-29

accommodation from a foreclosing owner, and the foreclosing owner has disclosed to the third-

4-30

party purchaser that said purchaser may be responsible for evicting the current occupants of the

4-31

housing accommodation after the sale occurs.

4-32

     (c) Within thirty (30) days of the foreclosure, the foreclosing owner shall post in a

4-33

prominent location in the building in which the rental housing unit is located, a written notice

4-34

stating the names, addresses, telephone numbers and telephone contact information of the

5-1

foreclosing owner, the building manager or other representative of the foreclosing owner

5-2

responsible for the management of such building, and stating the address to which rent and use

5-3

and occupancy charges shall be sent. This requirement shall be satisfied if the foreclosing owner

5-4

or someone acting on his behalf has:

5-5

     (1) Posted in a prominent location in the building;

5-6

     (2) Mailed by first class mail to each unit; and

5-7

     (3) Slid under the door of each unit in the building a document stating the names,

5-8

addresses, and telephone contact information of the foreclosing owner, the building manager or

5-9

other representative of the foreclosing owner responsible for the management of such building

5-10

and stating the address to which rent and use and occupancy charges shall be sent.

5-11

     (d) A foreclosing owner shall not evict a tenant except for actions that constitute just

5-12

cause:

5-13

     (1) A foreclosing owner shall not evict a tenant for the following actions that constitute

5-14

just cause until thirty (30) days after the notice required by subsection (c) of this section is posted

5-15

and delivered:

5-16

     (i) The tenant has failed to pay the rent in effect prior to the foreclosure or failed to pay

5-17

use and occupancy charges, as long as the foreclosing owner notified the tenant in writing of the

5-18

amount of rent or the amount of use and occupancy that was to be paid and to whom it was to be

5-19

paid;

5-20

     (ii) The tenant has materially violated an obligation or covenant of the tenancy or

5-21

occupancy, other than the obligation to surrender possession upon proper notice;

5-22

     (iii) The tenant who had a written bona fide lease or other rental agreement which

5-23

terminated, on or after June 30, 2012, has refused, after written request or demand by the

5-24

foreclosing owner, to execute a written extension or renewal thereof for a further term of like

5-25

duration and in such terms that are not inconsistent with this section; and

5-26

     (iv) The foreclosing owner: (A) Seeks to permanently board up or demolish the premises

5-27

because the premises has been cited by a state or local minimum housing code enforcement

5-28

agency for substantial violations affecting the health and safety of tenants and it is economically

5-29

unfeasible for the foreclosing owner to eliminate the violations; or (B) Seeks to comply with a

5-30

state or local minimum housing code enforcement agency that has cited the premises for

5-31

substantial violations affecting the health and safety of tenants and it is unfeasible to so comply

5-32

without removing the tenant; or (C) Seeks to correct an illegal occupancy because the premises

5-33

has been cited by a state or local minimum housing code enforcement agency or zoning officials

5-34

and it is unfeasible to correct such illegal occupancy without removing the tenant.

6-1

     (2) A foreclosing owner shall not evict a tenant for the following actions that constitute

6-2

just cause until the notice required by subsection (c) is posted and delivered:

6-3

     (i) The tenant is committing a nuisance in the unit; is permitting a nuisance to exist in the

6-4

unit; is causing substantial damage to the unit or is creating a substantial interference with the

6-5

quiet enjoyment of other occupants;

6-6

     (ii) The tenant is using or permitting the unit to be used for any illegal purpose; and

6-7

     (iii) The tenant has refused the foreclosing owner reasonable access to the unit for the

6-8

purpose of making necessary repairs or improvements required by the laws of the United States,

6-9

the state of Rhode Island or any subdivision thereof, or for the purpose of showing the unit to a

6-10

prospective purchaser or mortgagee.

6-11

     (e) The following procedures shall be followed for the eviction of a tenant pursuant to

6-12

subsection (d) of this section:

6-13

     (1) For evictions brought pursuant to paragraph (d)(1)(i), the foreclosing owner shall

6-14

follow section 34-18-35;

6-15

     (2) For evictions brought pursuant to paragraph (d)(1)(ii) or subdivision (d)(2), the

6-16

foreclosing owner shall follow section 34-18-36;

6-17

     (3) For evictions brought pursuant to paragraphs (d)(1)(iii) or (d)(1)(iv) or for evictions

6-18

brought where a binding purchase and sale agreement has been executed for a bona fide third

6-19

party to purchase the housing accommodation from a foreclosing owner, the foreclosing owner

6-20

shall follow the procedures for terminating a month to month tenancy set forth in section 34-18-

6-21

37.

6-22

     (f) A foreclosing owner may evict any person other than a tenant by following the

6-23

procedures for terminating a month to month tenancy set forth in section 34-18-37.

6-24

     (g) If a foreclosing owner disagrees with the amount of use and occupancy charges paid

6-25

to the foreclosing owner, the foreclosing owner may bring a claim in district court to claim that

6-26

the charge is unreasonable and set a new use and occupancy rate. A bona fide lease between the

6-27

foreclosed upon owner and the lessee or proof of rental payment to the foreclosed upon owner

6-28

shall be presumed reasonable.

6-29

     SECTION 3. This act shall take effect upon passage.

=======

LC01129

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO PROPERTY - RESIDENTIAL LANDLORD AND TENANT ACT

***

7-1

     This act would provide a tenant of a foreclosed property greater protection against

7-2

eviction.

7-3

     This act would take effect upon passage.

=======

LC01129

=======