Rhode Island Property Owner Permanently Loses Property Rights after Tax Sale and Foreclosure

Rhode Island property owners are required to pay taxes and utility bills to the state and municipality where the property is located. Failure to keep up to date on due tax and utility obligations can ultimately result in a property owner losing possession and ownership of their property. In the event that the state or a municipality seeks to collect tax or utility obligations from an owing party, the government may hold a tax sale of the property.

A tax sale is an auction where the purchaser of the property pays a certain amount for the property, and the amount owed by the original owner is taken from the purchase price to fulfill the obligations. After a tax sale, there are specific procedures and notice provisions in place to allow the original owner to redeem the right to the property by paying the past due amount and other fees. If an original owner does not utilize their right to redeem the property within the prescribed time, they can permanently lose all interest in the property. The Rhode Island Supreme Court recently heard an appeal by a property owner who challenged the foreclosure on his right to redemption of a piece of property that he had owned and was sold to an investment group at a tax sale.

According to the facts discussed in the appellate opinion, the petitioner in the recently decided case was an investment group who purchased the property in East Providence that had previously belonged to the respondent and was sold at a tax sale. The tax sale was held because the respondent had not paid water bills on the property for three years, and failed to respond to the municipality’s communications concerning his nonpayment. Under the statutory framework governing tax sales in Rhode Island, a person whose property is sold at a tax sale may redeem their right to the property within a certain period of time after the tax sale. Once this time period has passed, the purchaser can file an action in state court to foreclose on the former owner’s right of redemption, permanently taking ownership of the property to do with it as they see fit.

After one year had passed from the tax sale, the petitioner filed an action to foreclose on the respondent’s right of redemption. As part of that action, the respondent was entitled to answer the complaint and bring up any legal arguments to dispute the foreclosure. Additionally, the respondent could have exercised the right of redemption and regained possession of the property. The respondent failed to answer the petition in the prescribed time and was found in default. As a result of this ruling, the respondent’s right of redemption was foreclosed.

The respondent appealed the ruling to the Rhode Island Supreme Court, arguing that the petitioner did not follow the proper procedures in seeking to foreclose the right of redemption and that the ruling was therefore invalid. Although the respondent may have had a sound legal argument in response to the petition, the high court ruled in favor of the petitioner, finding that the respondent failed to answer the petition in time and that he could not bring up new arguments on appeal. As a result of the high court ruling, the respondent no longer has any interest in the property.

Are You Facing a Tax Sale or Foreclosure?

If you or a loved one has received a notice of a tax sale or a petition to foreclose on your property, it is essential to respond in time and follow the proper procedures. Failure to do so can result in any valid challenges to an action being waived. If you’re facing such an action, contacting an experienced Rhode Island real estate attorney from Bilodeau Capalbo can help prevent you from losing your property. Our skilled Rhode Island real estate lawyers understand how to challenge foreclosure actions, and with our help, you can ensure fair treatment by the courts. Contact us to schedule a free consultation with a qualified Rhode Island real estate attorney by calling 401-300-4055 today.