Rhode Island Amends Foreclosure and Homestead Exemption Statutes
RIGL 34-27-8 Requirement of affidavit from certain tax-exempt entities
The State of Rhode Island has recently passed an act relating to Mortgage Foreclosure and Sale. Rhode Island has amended RIGL Ch. 34-27 Mortgage Foreclosure and Sale by adding Section 34-27-8 Requirement of affidavit from certain tax-exempt entities. The amended statute affects the sale of residential property by a mortgagee.
Under RIGL 34-27-8, where a tax-exempt entity (an entity which files under section 501(c)(3) of the Internal Revenue Code) makes an offer to purchase a mortgage loan or residential property, the selling mortgagee is prohibited from requiring as a condition of sale or transfer: an affidavit, statement, agreement or addendum, the purpose of which is to limit ownership or occupancy of the residential property subject to sale or transfer.
Any such condition is not a basis for the mortgagee to avoid a sale and shall not be enforceable against the acquiring entity or any real estate broker, mortgageor or settlement agency who is party to the transaction.
The full text of the amendment can be found here.
RIGL 9-26-4.1 Homestead Estate Exemption
Effective immediately, Rhode Island has amended its Homestead Exemption. RIGL 9-26-4.1 Homestead Estate Exemption has been amended to expand the nature of the properties that are entitled to homestead protection and to clarify the priority of homestead interests when a mortgage is granted.
RIGL 9-26-4.1(a) has been amended to extend homestead protections that were previously limited to “land and buildings” to include “personal property that the owner uses as a residence.”
RIGL 9-26-4.1(c) provides that, a homestead shall be subordinate to a mortgage which encumbers the property to the extent that each owner of the home signs the mortgage at the time of execution. The homestead protections of any titled owner who does not sign the mortgage at the time of execution shall be superior to the right of the mortgagee.
RIGL 9-26-4.1(d) provides that for the purposes of the Homestead Exemption, a mortgage shall include a security instrument granting an interest in a manufactured home or cooperative housing unit. Further, Section (d) does not require a non-titled spouse to sign the mortgage in order for subordination of the homestead to be effective against the spouse. In addition, no statement contained in the mortgage is required in order to subordinate homestead rights and no language or document executed in connection with the mortgage shall create, modify or terminate a homestead estate except to subordinate said estate. Section (d) also provides that a mortgagee shall not require a release of homestead when making or recording a mortgage.
The full text of the amendment can be found here.
Adam Faria, JD, is a regulatory compliance consultant with CLA. He is a graduate of Northeastern University and earned his juris doctor at Suffolk University Law School. He is admitted to the bar in Massachusetts and New Hampshire.
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