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WBK Industry News - State Regulatory Developments

Rhode Island Amends Penalty Provisions Related to Mortgage Foreclosures

Rhode Island recently enacted House Bill 5397 that amends the Rhode Island foreclosure statutes by increasing the penalty for failing to record foreclosure deeds and pay outstanding taxes within a timely manner.  The new penalty provisions became effective on July 7, 2017.

Rhode Island statutes require a foreclosure deed to be recorded in the land records for the municipality where the real estate is located within forty-five (45) days after the date of the sale to the successful bidder.  The statute contains specific timing requirements for the payment of taxes and other assessments, including water charges, interest and penalties, if any, which constitute liens on the real estate described in the foreclosure deed and which are due and owing on the recording date.  A violation of one or more of the requirements of the section requires a penalty to accrue at the rate of $300 per month (in the aggregate) for each month or part of the month during which the violations continue.  The maximum aggregate penalty is not to exceed $2,000, which shall be paid prior to the city or town clerk accepting the foreclosure deed for recording.  Prior to the amendment, the penalty was $40 per month and there was no maximum aggregate amount.

The new amendment exempts from the penalty requirements a mortgagee that is not licensed as a financial lending institution holding a mortgage by private agreement with another party.