October 13, 2014
by Joseph A. Camillo, Jr. and Brett Edmunds
Shechtman Halperin Savage, LLP – USFN Member (Rhode Island)
On July 8, 2014, the governor of Rhode Island signed legislation that amended Chapter 34-18 of the General Laws, entitled “Residential Landlord and Tenant Act.” Specifically, the Act revised § 34-18-20/§ 34-18-23 and added § 34-18-38.1 as well as § 34-18-38.2, which took effect upon passage and applies to premises containing four or fewer dwelling units. The legislation is silent as to whether it is to be applied prospectively on properties foreclosed after July 8, 2014, or retroactively. The new law dramatically changes the process of evicting “bona fide” tenants who occupy foreclosed properties, and extends the notice-to-quit period for former mortgagors who “hold-over” after the foreclosure.
The new section requires foreclosing owners to post a notice to the tenants advising of the change of ownership, and providing the contact information for the new owner or its property manager within 30 days of the foreclosure. The notice must advise the tenants where rent can be sent, and that a “request for occupancy form” must be submitted to the property manager to remain on the premises. The form shall be provided as part of the notice and be “substantially similar” to the HUD occupancy request form. The notice shall be posted at a prominent location of the building, slid under the door of each unit, and mailed via first-class mail.
Unlike the prior law, § 34-18-38.2 limits a foreclosing owner’s right to possession in a bona fide tenant eviction to the following reasons: (1) where a tenant failed to submit the “request for occupancy form” within 30 days; (2) where the owner has “just cause” [including, but not limited to, the tenant’s failure to pay rent, refusal to grant access, and material violation of the lease]; (3) where there is a binding purchase and sales agreement with a third party for the property; and (4) where HUD has denied the occupants’ request for an occupied conveyance, if the case involved a FHA-insured mortgage.
The new law also impacts the procedure for evicting former mortgagors, and non-bona fide tenants who occupy the property after a foreclosure sale. The new law dictates that non-bona fide tenant evictions must be brought under the Residential Landlord and Tenant Act, specifically § 34-18-37, which grants former mortgagors the right to a “full rental period” notice to quit.
In addition to the changes to the post-foreclosure eviction process, the new law also requires the mortgagee to provide each bona fide tenant with notice that the property is subject to a foreclosure, with the date, time, and place of the sale; the address and telephone number of the Rhode Island Housing Help and United Way 2-1-1 center; include a reminder to pay rent and a statement that it is not an eviction notice. The notice may be addressed to “Occupant,” and mailed to each dwelling unit. The notice is to be mailed first-class mail at least one business day prior to first publication of the notice. A form meeting these requirements was promulgated by the Department of Business Regulation; see Appendix A (Form 34-27-7) within Banking Regulation 5. Failure to provide the notice does not affect the validity of the foreclosure, but it may be a defense to the ability to evict a bona fide tenant, post-foreclosure.
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