According to Rhode Island foreclosure laws, lenders may utilize judicial as well as non-judicial processes to handle mortgages and deeds of trust that appear in the foreclose listings. Foreclosure may also be done through the filing of a lawsuit seeking eviction, taking possession of the property, or making the defaulter voluntarily give up possession. Judicial foreclosures typically take about 60 days, with the primary security instruments being the deeds of trust and mortgages. Deficiency Judgments are allowed in the state and the foreclosure process used determines the Right of Redemption.
A piece of property is listed as foreclosure property when there is a consistent default of payments. Listing a property as foreclosure property entails that certain necessary legal procedures have to be resorted to. A critical feature of mortgage property agreements is the "Power of Sale" clause. This clause requires the borrower to sell his property to settle the loan balance if he is unable to make timely payments.
Procedure under Rhode Island foreclosure laws
A non-judicial foreclosure procedure is usually followed when the security instruments contain a Power of Sale clause. In such cases, a court order is not required to auction of the distressed property. The sale of the distressed property can be conducted by the lender or his authorized representative.
It is necessary that the terms specified therein, such as place, date, and time of auction, be strictly adhered to. In the absence of specific details, the sale can be held at the local county courthouse located in the distressed property's area.
The distressed property is sold by auctioning it for cash to the highest bidder. The bidding is open to everyone, including the lender. The auctioning has to be completed within a specified time period. The Rhode Island foreclosure laws require the lender to publish a notice of the sale in a local county newspaper for three continuous weeks before the sale, with the first notice being published at least 21 days before the sale. The notice must contain the names of the borrower and lender, the mortgage date, the amount due, a legal description of the property, and the time and place of the sale. The lender also has to mail the borrower a copy of the notice at least 20 days before the first publication.
Procedure for repossessed homes for sale when there is no Power of Sale clause involved
If the security instrument does not contain a Power of Sale clause, the lender can opt for a judicial foreclosure. This requires him to file a lawsuit requesting for foreclosure of the distressed property by means of a public auction. After filing the lawsuit, the lender is required to issue a public notice regarding the sale of the distressed property in local newspapers for four continuous weeks. In the absence of a local county newspaper, the notice should appear for the same time period in the newspaper of an adjoining county.
However, lenders also have an option of forgoing the lawsuit and selling the foreclosure property outright. In these instances, specific guidelines as laid down by State laws must be closely followed.
Special Procedures
The laws require a lender to have 2 witnesses present when taking possession of a foreclosed property. The 2 witnesses must sign a certificate of possession, which must then be notarized.
A borrower who voluntarily gives up possession of the foreclosed property must do it in the presence of a notary. In these instances, the lender will obtain the title to the property if they are able to maintain possession for an established period of time.
