Chapter 06-537

Chapter 537

2006 -- H 7364 SUBSTITUTE A

Enacted 07/10/06

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- TAXATION -- TAX SALES

Introduced By: Representatives Almeida, Ehrhardt, Faria, Diaz, and Slater

Date Introduced: February 16, 2006

It is enacted by the General Assembly as follows:

SECTION 1. Section 44-5-73 of the General Laws in Chapter 44-5 entitled "Levy and

Assessment of Local Taxes" is hereby amended to read as follows:

44-5-73. ~~Authority granted to city and town collector's to assign and transfer tax~~

~~liens in bulk~~. – Authority granted to city and town collectors to sell, assign and transfer tax

liens and tax titles in bulk. -- (a) Notwithstanding any of the provisions of chapter 9 of this title,

any city or town may by resolution of its legislative body authorize its collector to sell and assign

for consideration to the Rhode Island housing and mortgage finance corporation pursuant to

section 44-9-8.3 of the general laws, any and all liens for taxes assessed against any ~~person in the~~

~~city or town~~ owner-occupied residential property of three (3) units or less on real estate as

constituted pursuant to section 44-9-1. together with the right to receive the taxes, penalties, and

other charges secured by the lien, and to sell and assign any real estate liable for overdue taxes

and deliver a collector's deed granting tax title thereto, and to sell and assign any other tax titles

on owner-occupied residential property of three (3) units or less previously acquired by the city or

town. Sections 44-9-8 and 44-9-9 of the general laws shall not apply to the sale, assignment and

transfer of real estate liable for overdue taxes pursuant to section 44-5-73.

(b) The cities and towns may make regulations for the possession, management and sale

or assignment, either individually or in bulk, of land purchased or taken for taxes, not inconsistent

with law or the right of redemption.

due, plus accrued interest and expenses of collection or at a rate which may be discounted to

reflect uncollectible factors.

~~(c)~~ (d) The collector of any city or town holding a tax title may assign and transfer the

tax title, individually or in bulk, with other tax titles, either by public auction to the highest bidder

or by direct sale.~~, provided that the~~

(e) After complying with the provisions of section 44-9-8.3, the minimum sum paid for

the assignment is of a tax title may not be less than the total amount necessary for the redemption

of each individual tax title sold and assigned or at a rate which may be discounted to reflect

uncollectible factors.

~~(d)~~ (f) The collector may execute and deliver on behalf of the city or town any

instrument necessary ~~therefore~~ in connection with the sale and assignment of the tax liens or tax

titles, including, but not limited to, purchase and sale agreements, servicing agreements and trust

agreements and accept on behalf of the city or town appropriate consideration pursuant to the

regulations.

~~(e)~~ (g) The assignee ~~or assignees~~ of the liens or tax titles shall have and possess the same

powers and rights at law and in equity as the city or town collector would have if the lien had not

been assigned with regard to the collection of taxes, the precedence and priority of the lien, the

accrual of interest and the fees and expenses of collections and the exemption from liability for

enforcement or penalties arising from violations of environmental or minimum housing standards.

~~; and~~

~~(f)~~ (h) The assignee has the same rights to enforce the liens as any private party holding a

lien on real property.

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

by adding thereto the following section:

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

section 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 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 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.

SECTION 3. Sections 44-9-10, 44-9-11, 44-9-12, 44-9-25 and 44-9-27 of the General

Laws in Chapter 44-9 entitled "Tax Sales" are hereby amended to read as follows:

44-9-10. Notice of sale to taxpayer. -- (a) Whether or not the person or general

partnership to whom the estate is taxed as of December 31st prior to the tax sale is a resident of

this state, the collector shall, in addition to the foregoing, notify the taxpayer of the time and place

of sale first by first-class mail not less than ninety (90) days before the date of sale or any

adjournment of the sale, and again by certified mail not less than forty (40) days before the date

of sale or any adjournment of the sale, ~~either by registered or certified mail~~ sent postpaid to the

street address of the real estate liable for payment of taxes, and, if different, to the taxpayer's

address listed with the tax assessor's office of the city or town where the real estate is located or

to any other address which the taxpayer designates by written notice to the tax assessor, or to the

address of the taxpayer stated on the deed recorded in the land evidence records of the city or

town where the real estate is located or to the last known address of the taxpayer ~~not less than~~

~~twenty (20) days before the date of sale or any adjournment of the sale,~~ or be left at the taxpayer's

last known address or personally served on the taxpayer not less than ~~twenty (20)~~ thirty (30) days

before the date of sale or any adjournment of the sale, but no notice of adjournments shall be

necessary other than the announcement made at the sale. Copies of such notices shall also be sent

or hand delivered at the same time as prescribed above, to the Rhode Island Housing and

Mortgage Finance Corporation. Failure to notify the Rhode Island Housing and Mortgage

Finance Corporation as prescribed herein shall nullify any tax sale of any property with respect to

which such notice was not given.

(b) Persons aged sixty-five (65) years and over or persons suffering from a disability

may designate a third party to whom notice may be sent as required pursuant to this section by

advising the tax assessor of the name and address of the person.

certified mail to its place of business or left at the business office of the corporation with some

person employed there.

(d) In the event the person to whom the estate is taxed is listed in the records of the

assessor and/or collector as having applied for and been granted a property tax abatement based

wholly or partially on the age of the taxpayer, then the collector shall also notify the department

of elderly affairs by ~~registered or~~ certified mail or hand delivery ~~postage prepaid not less than~~

~~twenty (20) days before the date of the sale.~~ as described herein. Failure to notify the department

of elderly affairs as prescribed herein shall ~~not affect the validity of a tax sale.~~ nullify any tax sale

of any property with respect to which such notice was not given.

(e) Within ninety (90) days after the end of each calendar year, the department of elderly

affairs shall prepare and submit an annual report to the governor, the speaker of the house of

representatives, the president of the senate and the secretary of state. The report shall contain

information concerning the number of notices received by the department of elderly affairs

pursuant to this section of law during the calendar year, and information concerning the identity

of the specific parcels that might be sold in each city or town as well as a description of exactly

what action followed on each such notice. The report shall conclude by indicating the present

status of each case in which the department received such a notice as well as an indication as to

whether each such case is open or closed.

44-9-11. Notice to mortgagees and other parties in interest. -- (a) In case the collector

shall advertise for sale any property, real, personal, or mixed, in which any person other than the

person to whom the tax is assessed has an interest, it shall not be necessary for the collector to

notify the interested party, except for the following interested parties, provided that their interest

was of record at least ninety (90) days prior to the date set for the sale: the present owner of

record, mortgagees of record and mortgage assignees of record, former fee holders whose right to

redeem has not been foreclosed, holders of tax title, federal agencies having a recorded lien on the

subject property, holders of life estates of record, and vested remainder whose identity can be

ascertained from an examination of the land or probate records of the municipality conducting the

sale, and/or their assignees of record who shall be notified by the collector either by registered or

certified mail sent postpaid not less than twenty (20) days before the date of sale or any

adjournment of the sale, to an agent authorized by appointment or by law to receive service of

process, or to the address of the party in interest set forth in the recorded mortgage document or

the recorded assignment, or to the last known address of the party in interest, but no notice of

adjournments shall be necessary other than the announcement made at the sale. The posting and

publication of the notice of the time and place of sale in the manner provided by section 44-9-9

shall be deemed sufficient notice to all other interested parties. This provision shall apply to all

taxes levied prior to and subsequent to 1896. This provision shall be subject to the notice

requirements of section 44-9-10. It shall not be necessary, however, to provide the names of the

mortgagees and other parties in interest under this section to the Rhode Island Housing and

Mortgage Finance Corporation or to the department of elderly affairs.

(b) Only a person or entity failing to receive notice in accordance with the provisions of

this section and sections 44-9-9 and 44-9-10 shall be entitled to raise the issue of lack of notice or

defective notice to void the tax sale. The right to notice shall be personal to each party entitled to

it and shall not be asserted on behalf of another party in interest. If there is a defect in notice, the

tax sale shall be void only as to the party deprived of adequate notice, but shall be valid as to all

other parties in interest who received proper notice of the tax sale.

notice of the tax sale receives actual notice of the pendency of the petition to foreclose, the party

must raise the notice defense in accordance with the provisions of section 44-9-31 or be estopped

from alleging lack of notice in any action to vacate a final decree entered in accordance with

section 44-9-30.

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, ~~and~~ the residence of the grantee,

and if notice of the sale was given to the Rhode Island Housing and Mortgage Finance

Corporation and or to the department of elderly affairs under the provisions of section 44-9-10,

the collector shall include an affirmative certification as to which entity/entities received notice

and the date(s) on which each such notice was given which shall set forth in the collector's deed.

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

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 there deeming party. 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.

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

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.

(b) 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, except for violations which are the result of intentional acts by

the tax sale purchaser or his or her agents.

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. Nothing in this section shall be construed to confer any

liability upon a city or town, which 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.

(d) In the event that the tax lien is acquired by the Rhode Island Housing and Mortgage

Finance Corporation, and said 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.

44-9-25. Petition for foreclosure of redemption. -- (a) After one year from a sale of

land for taxes, except as provided in sections 44-9-19 -- 44-9-22, whoever then holds the acquired

title may bring a petition in the superior court for the foreclosure of all rights of redemption under

the title. The petition shall set forth a description of the land to which it applies, with its assessed

valuation, the petitioner's source of title, giving a reference to the place, book, and page of record,

and other facts as may be necessary for the information of the court. Two (2) or more parcels of

land may be included in any petition brought by any purchaser of a title or titles, if the parcels are

in the same record ownership at the time of bringing the petition (Form 5).

(b) No more than one foreclosure petition may be filed for each tax deed regardless of

the number of tax title holders having an interest under such deed. If more than one petition is

filed, the petitions shall be consolidated for hearing by the court. The court shall not award more

than one attorneys' fee to the petitioners.

foreclosure of redemption shall be filed or entertained by any court with respect to any property

or title acquired by the Rhode Island Housing and Mortgage Corporation pursuant to section 44-

9-8.3 of the general laws until after five (5) years from the sale of said property or title for taxes.

44-9-27. Examination of title -- Notice to interested parties of foreclosure petition. --

(a) Upon the filing of a petition, the petitioner shall, at his or her own cost, select, with the

approval of the court, a title company or an attorney familiar with the examination of land titles.

This company or attorney shall make an examination of the title sufficient only to determine the

persons who may be interested in the title, and the petitioner shall, upon the filing of the

examiner's report, notify all persons appearing to be interested, whether as equity owners,

mortgagees, lienors, attaching creditors, or otherwise, as well as the tax collector in the

municipality where the subject property is located, of the pendency of the petition, the notice to

be sent to each by registered or certified mail and return of receipt required. In the event that any

item mailed by certified mail is returned unopened, the petitioner shall send that notice to the

addressee at the same address by first class regular mail, postage prepaid, and also, if the subject

property is residential, petition the court for leave to serve the addressee by tacking said notice to

the front door of the subject property. Other and further notice by publication or otherwise shall

be given as the court may at any time order.

(b) The notice, to be addressed "To all whom it may concern," shall contain the name of

the petitioner, the names of all known respondents, a description of the land, and a statement of

the nature of the petition, shall fix the time when appearance may be entered, and shall contain a

statement that, unless the notified party shall appear within the fixed time, a default will be

recorded, the petition taken as confessed, and the right of redemption forever barred (Form 6).

SECTION 4. Sections 44-9-8.2, 44-9-24 and 44-9-43 of the General Laws in Chapter 44-

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

44-9-8.2. Deed of taking. -- The instrument of taking shall be under the hand and seal of

the collector and shall contain a statement of the cause of taking, a substantially accurate

description of each parcel of land taken, the name of the person to whom the tax was assessed, the

amount of the tax, and the incidental expenses and costs to the date of taking., and if notice of the

sale was given to the Rhode Island Housing and Mortgage Finance Corporation and/or to the

department of elderly affairs under the provisions of section 44-9-10, an affirmative certification

as to which entity received notice and the date(s) on which each such notice was given shall be

set forth in the instrument. This instrument of taking is not valid unless recorded within sixty (60)

days of the date of taking. If recorded, it is prima facie evidence of all facts essential to the

validity of the title taken. Title to the land taken shall vest in the city or town, subject to the right

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

held as security for the repayment of the taxes with all intervening costs, terms imposed for

redemption, and charges, with interest. The premises taken, both before and after either

redemption or foreclosure, is also subject to and has the benefit of all easements and restrictions

lawfully existing in, upon or over the land or appurtenant to the land, and all covenants and

agreements running with the premises either at law or in equity, when taken.

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

proceedings. -- The title conveyed by a tax collector's deed shall be absolute after foreclosure of

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

Notwithstanding the rules of civil procedure or the provisions of chapter 21 of title 9, no decree

shall be vacated except in a separate action instituted within one year following entry of the

decree and in no event for any reason, later than one year following the entry of decree.

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

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

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

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

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

foreclosure proceedings shall follow the course of equity in a proceeding provided for in sections

44-9-25 -- 44-9-33.

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

assignment, or sale without foreclosure adjudged invalid. -- If, as the result of a petition, the

petitioner's title based on a collector's sale, treasurer's assignment, or sale without foreclosure is

determined to be invalid by the superior court because of errors or irregularities in the tax

proceedings upon which it was based, the clerk, upon request, shall issue a certificate to that

effect. The treasurer of the city or town where the land affected by the title is situated, upon

receipt of a deed from the petitioner conveying all of the interest which he or she may have under

it, together with the certificate, shall refund to the holder the amount paid, ~~but not exceeding the~~

~~amount received by the city or town~~ therefore plus statutory interest at the rate of one percent

(1%) per month from the date of payment until the date of refund, notwithstanding the provisions

of section 45-15-5. The taxing authority may recover any interest paid to a tax sale purchaser

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

property had not been held.

SECTION 5. This act shall take effect on January 1, 2007.

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LC01662/SUB A/2

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