Rhode Island Foreclosure Laws
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Rhode Island was usually referred to as a lien theory state when it came to foreclosures wherein the property stays as guarantee for the loan in question. A property is placed under the lien through a document referred to as a mortgage. A non-judicial foreclosure can be followed in Rhode Island where various actions of a possessory nature are in place. These include deed-in-lieu, eviction and taking over the property’s possession. Actions of a non-judicial nature are now more prevalent in Rhode Island.
A judicial foreclosure process is followed in Rhode Island where a lender has to go through a court which in turn announces the foreclosure’s final ruling. The property then sells at a publicly notified sale. A complaint in conjunction with a lis pendens (a document that is recorded to provide a notice publicly about the property in foreclosure) needs to be filed in a court. An action to possess the property by the lender would need to take place in front of witnesses who would provide a statement that is notarized, referred to as a ‘certificate-of-possession’.
The legal documents are referred to as a mortgage or note, and a security agreement in cases of commercial transactions. They are both merged time and again. The filing of a mortgage is done to verify the loan in question and its repayment terms, which are included in the note.
It can take about 60 to 80 days, with the schedule of the court taken into consideration, for a foreclosure that is not contested to come into effect. If bankruptcy is filed for by the borrower, or if the action is contested and the hearing is sought to be postponed, there can be a delay in the process. A twenty one day notice prior to the sale is required for non-judicial foreclosures.
For non-judicial foreclosures, a statutory right of redemption, where the owner of a foreclosed property can lay claim to it by paying the costs and the remainder of the loan amount in full, does not exist in Rhode Island. In some cases of possessory judicial actions, up to three years are available to redeem the property.
If a foreclosure property sells for lesser than the amount that is secured by the mortgage in question, a deficiency judgment can be acquired. The borrower then ends up owing to the lender the difference between the amount on the loan in question and the amount the property sells for at the public auction.
Foreclosures in Rhode Island are governed by laws that are part of State of Rhode Island General Laws, Title 34 (Property), Chapter 34-27 (Mortgage Foreclosure and Sale).
