Getting Your Home Back After a Rhode Island Property Tax Sale

After a tax sale, Rhode Island law allows for a redemption time.

If you do not pay your Rhode Island property taxes, you may lose your house to a tax sale. Fortunately, you’ll have a year following the sale to pay off any outstanding debts before permanently losing possession of the house.

However, if you fail to pay the outstanding sums, plus interest, penalties, and expenses, within the redemption period (see below), the purchaser may take possession of your house.

How Property Tax Sales Work in General

If you do not pay your property taxes on time, the amount owed becomes a lien on your house. This form of lien nearly often takes precedence over other types of liens, including mortgages.

In general, if taxes are not paid, the taxation authorities will eventually:

Sell the lien (and if you do not pay the past-due sum to the lien purchaser, that party may foreclose or use another mechanism to get title to the house), or sell the property itself in a tax sale.

In certain areas, however, no auction is made; instead, the taxation body enforces its lien by acquiring ownership to the residence. The taxation body is then required by state law to dispose of the property, typically by selling it.

Before conducting a sale, the taxation authority in some countries utilizes a foreclosure procedure.

How Property Tax Sales Work in Rhode Island

If you go behind on your real estate taxes in Rhode Island, the tax collector has the authority to sell your house, or a part of it, at a public auction. (R.I. General Laws 44-9-8).

The smallest undivided portion of your land, but not less than 1%, or the whole parcel if no one wants to accept an undivided portion, will be auctioned at the auction for the owing amount of late taxes, assessments, rates, liens, interest, and required intervening costs. (R.I. General Laws 44-9-8).

Following the auction, the successful bidder receives a deed to the residence or, depending on the scenario, a piece of the lot, subject to the redemption term. After the redemption time has expired, the winning bidder must foreclose the right to redeem in order to obtain title to the property. (R.I. General Laws 44-9-12).

How Long Do You Have to Redeem Your Property After a Property Tax Sale in Rhode Island?

In most situations, the successful bidder must wait one year after the tax auction before filing a petition with the court to foreclose your right to redeem the property. (R.I. General Laws 44-9-21, 44-9-25). However, a petition to foreclose redemption may not be filed for five years following the sale of certain owner-occupied property acquired by the Rhode Island Housing and Mortgage Corporation. (R.I. General Laws 44-9-25.)

You have the right to redeem the property under Rhode Island law at any time until the successful bidder files the foreclosure petition. (R.I. General Laws 44-9-21). As a result, the redemption time is normally at least one year following the transaction.

Extra Time to Redeem Following a Rhode Island Property Tax Sale

Again, Rhode Island law affords you the opportunity to redeem until the purchaser files the foreclosure petition. (R.I. General Laws 44-9-21). You may still be possible to redeem after the foreclosure process has begun, but you must submit an answer to the foreclosure petition or a motion with the court by the scheduled return date. The court may then grant you the right to redeem. (R.I. General Laws 44-9-29, 44-9-30).

However, after the foreclosure is finalized, the winning bidder receives a title to your property (or a part of it), and you are unable to redeem. (R.I. General Laws 44-9-24). Talk to an attorney as soon as possible if you wish to redeem your house during the foreclosure process. A lawyer can make certain that you follow the necessary measures to finish the redemption.

Under unusual circumstances, you may be able to remove the decision denying the right to redemption. The only permitted explanations are that the petition was not properly served, or that the taxes for which the property was sold had been paid or were not due and overdue because the property was exempt from payment of such taxes. However, you must bring a separate action within six months after the court’s entry of the decree. (R.I. General Laws 44-9-24). Consult a lawyer if you wish to challenge the decree.

How Much Money Will You Need to Pay to Redeem Your Property?

If a third party, such as an investor, wins the tax auction, you must normally pay:

the purchase price any intervening taxes that the purchaser paid to the municipality\s interest at the rate of 1% per month\s costs the purchaser paid\s a penalty of 10% of the purchase price, in most cases, if you redeem within six months after the sale date, and\s an additional 1% of the purchase price for each following month. (R.I. General Laws 44-9-21).

If the city or town wins the tax auction, you will be required to pay equivalent fees. (R.I. General Laws 44-9-19).

How to Lower Your Rhode Island Property Taxes Before You Fall Behind

While Rhode Island law allows for a redemption time after a tax sale, it is preferable to take efforts to make your taxes reasonable before falling behind. For example, you could:

Determine if you qualify for a property tax abatement, or submit an appeal to contest the assessed value of your house if you believe it is inaccurate.