Rhode Island Supreme Court Allows Claim to Proceed After Excessive Delay in Foreclosure Sale

When properties are sold at auction after a foreclosure or other court-ordered liquidation, the terms and conditions of the sale are generally outlined in a contract that is known to potential bidders before the sale takes place. The party who is required to pay the costs, taxes, and fees related to the property and have accrued or continue to accrue before the title is exchanged should be discussed in the auction and purchase agreements. The Rhode Island Supreme Court recently ruled in favor of the purchaser of an auctioned home, who claimed that an unreasonable 17-month delay by the seller before closing should invalidate the terms of the contract requiring the buyer to pay all of the accruing costs before the closing.

The plaintiff in the recently decided case is an organization that purchased a home from the defendants at a foreclosure sale. According to the facts discussed in the judicial opinion, the parties entered into a contract after the sale that stated the closing should be within 30 days of the auction, and that while delays can and should be granted for good cause, that “time was of the essence.” Additionally, the contract stated that the buyer was responsible for any accruing taxes, fees, or costs associated with the home between the time of the sale and the closing. According to the buyer’s complaint, the seller delayed the closing for over 17 months, and although the buyer cooperated and allowed the delay to occur, when the seller notified the buyer of their responsibility to pay the costs that accrued over the 17 months, the buyer refused and filed a claim in the Superior Court.

The Superior Court judge summarily ruled against the buyer’s claim, finding that the contract language was clear that the buyer was responsible for accruing costs, and ruling that the buyer’s decision to allow the seller to delay the closing made it clear that the buyer was assuming responsibility for the costs. The buyer appealed the Superior Court decision to the Rhode Island Supreme Court, which disagreed with the lower court’s determination that the contract clearly required the buyer to pay all of the accruing costs under any circumstances. The court reversed the lower court’s ruling on the case, holding that there was a factual question of whether the defendant could be held responsible for payment of the fees if the 17-month delay was unreasonable, as the plaintiff claimed. As a result of the appellate ruling, the case will proceed toward a trial on the issues.

Handling Disputes After a Foreclosure Sale

If you are looking to buy a home in Rhode Island at a foreclosure sale, whether for personal occupancy or as an investment, there may be thousands of dollars of unanticipated costs and expenses that come up in the course of the transaction. Banks and other sellers have experienced legal teams drafting contracts and negotiating terms to benefit their clients. Some of these contract terms can be unfair, and even illegal under state law. Without a qualified Rhode Island real estate lawyer on your side, you may not have a chance to seriously contest the terms of the sale. The experienced Rhode Island real estate attorneys at Bilodeau Capalbo can represent you diligently through the process, and ensure that you aren’t taken advantage of. Contact our offices today at 401-300-4055 to schedule a free obligation consultation and discuss your case.