Rhode Island Tax Sale Properties: How to Clear Title and Foreclose the Right of Redemption
Buying a tax sale property in Rhode Island under R.I. Gen. Laws § 44-9-1 et seq. requires a mandatory one-year waiting period. To get a clean, insurable title, you must file a petition in Superior Court to foreclose the prior owner's right of redemption, which secures your permanent ownership.
Investing in Rhode Island Tax Sale Properties
Purchasing a property at a municipal tax sale in Rhode Island can be an incredibly lucrative investment strategy. Cities like Providence, Pawtucket, and Woonsocket frequently auction off properties when owners fail to pay property taxes or water bills. However, winning the auction and receiving a collector's deed does not mean you instantly own the home free and clear. Under Rhode Island law, specifically R.I. Gen. Laws § 44-9-1 et seq., the original owner retains a right to buy the property back. To obtain a marketable, insurable title, you must go through a strict legal process. We strongly suggest browsing our directory to hire a Rhode Island real estate lawyer who specializes in tax title litigation.
Understanding the Right of Redemption
When you buy a tax deed at a city auction, you are essentially buying a lien against the property that can eventually become full ownership. The most critical aspect of this process is the prior owner's 'Right of Redemption'.
The Mandatory 1-Year Waiting Period
Under R.I. Gen. Laws § 44-9-25, after purchasing a tax title, an investor generally must wait exactly one year from the date of the tax sale before they can take legal action to extinguish the prior owner's rights. During this one-year period, the original owner can redeem the property by paying you back your purchase price, plus interest, and any statutory fees. You cannot simply evict the current occupants or start renovating the property during this waiting period, as you do not yet have absolute ownership.
Why Standard Title Insurance Won't Cover Tax Deeds
If you try to sell or refinance a property with only a raw tax deed, you will quickly find that no reputable title insurance company in Rhode Island will write a policy for you. Tax sales are notorious for clerical errors, improper notifications, and constitutional due process issues. Title companies require absolute certainty. Until a judge in the Superior Court issues a final decree foreclosing the right of redemption, your title is considered 'clouded' and unmarketable.
Exemptions Involving Invalid Municipal Tax Notices
The Rhode Island Supreme Court takes the constitutional rights of property owners very seriously. In cases like Sycamore Properties, LLC v. Tabriz Realty, LLC, 870 A.2d 424 (RI Supreme Court 2005), courts have overturned tax sales because the city failed to provide proper, certified notice to the original owner before the auction. If the municipality made a mistake in their mailing process, your tax deed could be invalidated entirely. A skilled attorney will review the city's notice procedures to ensure your investment is safe before initiating the foreclosure.
Step-by-Step Legal Process to Foreclose the Right of Redemption
Once the one-year anniversary of the tax sale has passed, you must move aggressively to secure your title through the court system.
Step 1: File the Petition in Superior Court
Tax sale foreclosures have exclusive jurisdiction in the Superior Court. Your lawyer will draft and file a petition to foreclose the right of redemption under R.I. Gen. Laws § 44-9-25, accompanied by Form SC-223, Rhode Island, Superior Court, Civil Case Cover Sheet, in the county where the property sits, such as the Rhode Island Superior Court, Providence County, Providence or the Rhode Island Superior Court, Washington County, South Kingstown.
Step 2: Identify and Notify all Interested Parties
Your attorney must conduct an exhaustive title search to identify anyone with a legal interest in the property. This includes the former owner, mortgage companies, mechanics lien holders, and even the IRS. Every single party must be formally served with a notice of your petition.
Step 3: The Court Hearing
If an interested party responds and wants to redeem, the judge will calculate exactly how much they owe you (your purchase price plus statutory interest and legal fees). If they pay it, they get the house back, and you get a solid return on your money. If no one responds, or if they fail to pay the required amount, the court proceeds to the final step.
Step 4: Final Decree
The judge will issue a Final Decree forever barring the original owner and any lienholders from claiming an interest in the property. Once this decree is recorded in the local land evidence records, your title is clean, insurable, and ready to be flipped or rented.
How Much Does it Cost in Rhode Island?
Foreclosing a right of redemption requires court fees, title searches, and legal representation. However, if the owner redeems, they generally have to reimburse your legal costs.
| Superior Court Filing Fee | $180 per petition |
| Comprehensive Title Search | $200 to $400 |
| Legal Notice Publication | $150 to $300 (Newspaper fees) |
| Attorney Fees | $1,500 to $3,500+ depending on complexity |
How Long Does it Take?
You must wait 1 year just to file the petition. Once the petition is filed in Superior Court, the process of conducting a title search, serving notices, publishing warnings in the newspaper, and waiting for the court hearing typically takes an additional 4 to 8 months. In total, expect the process to take roughly 1.5 years from the date of the original municipal auction.
Frequently Asked Questions (FAQ)
What happens if the original owner pays the redemption amount?
Under R.I. Gen. Laws § 44-9-19 and R.I. Gen. Laws § 44-9-21, if the owner redeems the property, they must pay back the full purchase price plus a statutory penalty of 10% if redeemed within the first 6 months, plus an additional 1% for each subsequent month, along with intervening taxes, lawful costs, and reasonable attorney fees. You convey the property back but receive a protected statutory return.
Can I collect rent from tenants during the 1-year waiting period?
Generally, no. You do not have the right to possession or the right to collect rents during the statutory one-year redemption period, as the original owner still holds the right of possession.
Does foreclosing the right of redemption wipe out a mortgage?
Yes. A properly executed tax sale foreclosure that provides correct due process notice to the mortgage company will wipe out the prior mortgage, giving you a free and clear title.
Can the 1-year waiting period be waived?
In very rare cases involving vacant, abandoned, and heavily blighted properties, Rhode Island law allows for an expedited foreclosure process, but this requires specific municipal certifications.
No reviews yet. Be the first to share your experience!