Prior Owner of Foreclosed Property Denied Right to Redeem Based on Procedural Error

If a Rhode Island property owner fails to pay their bills (mortgage, tax, utility, etc.), they may be subject to the foreclosure of the property, and they may lose title and ownership permanently. In the event of a foreclosure, the original owner does have a right to redeem their nonpayment by asking the court to set a fair price for the redemption to occur and the foreclosure to be vacated. Although it is generally cheaper for a property owner to simply pay their bills rather than wait for an opportunity to redeem a property, the right of redemption exists to protect owners who may have been negligent in the past from losing their property entirely. The Rhode Island Supreme Court recently reversed a trial court decision that permitted the owner to redeem ownership of the property.

The Respondent in the recently decided case purchased a property in Providence in 2009. As a result of unpaid taxes, the city of Providence took possession of the property and sold it at auction to the Petitioner. Acting within the standard procedure, the Petitioner filed an action to foreclose on the Respondent’s property rights in the Superior Court. Under state law, the Respondent had 20 days to answer the petition and make an offer to redeem the property. The Respondent filed an answer to the petition within the 20-day period, however, the answer contained no offer or request to redeem the property. Because the Respondent’s answer contained no offer to redeem the property, the Petitioner requested that the court enter a final order foreclosing on the Respondent’s right to redeem the property.

The state court rejected the petitioner’s request, instead allowing the Respondent to amend their answer to include a redemption offer. As a result of the ruling, a redemption figure was set, the Respondent began to take action to redeem the property, and the Petitioner appealed the ruling to the state Supreme Court. On Appeal, the Petitioner argued that the statute setting the 20 day deadline for making an offer to redeem a property establishes a mandatory deadline, which cannot be extended by allowing a party to amend their court pleadings. The Supreme Court agreed with the Petitioner, ruling that the redemption statute must be strictly construed, and absolutely requires any person seeking to redeem the property to make an offer to redeem the property within the statutory timeframe. Because the Respondent failed to timely make an offer to redeem the property, the law must be applied as written, and the Respondent will not be able to regain ownership of the property.

How Should You Respond to a Rhode Island Foreclosure?

The laws of Rhode Island are designed to give property owners a fair opportunity to avoid losing their property in the event of a foreclosure. Although property owners are to be given a fair chance to retake possession of their property in the event of a foreclosure, the proper procedures must be followed, or the opportunity to redeem a property could be permanently sacrificed. If you have been notified of an ensuing foreclosure action on a property that you own, it is essential to have qualified legal counsel at your side to ensure that the proper procedures are followed in addressing the foreclosure. The qualified Rhode Island real estate attorneys with Bilodeau Capalbo, LLP are experienced in handling tax sale and foreclosure issues, and we can help you ensure that your interests are protected while simultaneously challenging the substance of the claims against you. If you have questions about a Rhode Island property law issue, we’re here to help. Call us at 401-300-4055 for a free consultation.