Need Help With A Tax Lien?
Purchasing real estate at a tax sale can be lucrative and also beneficial to society because it provides a way for distressed or abandoned properties to be quickly recycled back to productive use.
My firm represents people who have purchased property at tax sales and want to obtain full legal title. I also represent people who have lost their property at tax sales and want to redeem it.
Through my legal practice, Andrew M. Cagen, Attorney at Law, in Pawtucket, I help clients to complete all steps necessary to purchase and gain possession of, Rhode Island tax title properties. I have deep experience in providing tax title services and am one of only a handful of attorneys in Rhode Island who practice in this area of law.
How Does The Tax Title Process Work?
It’s important to understand the tax-title procedure, which can be a legal minefield. Here’s a primer on the process:
Who holds tax sales? In Rhode Island, people who do not pay their real estate taxes risk having their property sold by the city or town at a tax sale. As municipal budgets have become tighter, cities and towns are giving less and less “grace periods” for payment of taxes. They now frequently hold tax sales for an unpaid bill just a year after it is issued.
How do tax sales work? Tax sales are held in the form of auctions. The winning bidder is NOT the person willing to pay the most money, but rather the person willing to receive the smallest percentage of ownership. For instance, $5,000 may be owed to a city or town in unpaid taxes, interest and legal fees. The city or town may then sell the property at auction for the $5,000 – no more and no less.
If there is only one bidder, that person will have bought a 100 percent interest in the property. If there are competing bidders, the person willing to accept the smallest percentage interest in the property wins the auction. For instance, a person might successfully bid a 60 percent interest in the property. He or she would get the 60 percent interest and the remaining 40 percent interest would remain with the original owner.
Does the winning bidder get a deed? Yes, a deed will be issued by the city’s or town’s collector of taxes. The deed MUST be recorded with that city’s or town’s land evidence records within 60 days of the sale.
Can the original owner get his or her title back? Yes. For at least one year, the original owner may redeem the tax title by paying the purchaser the amount paid at the tax sale plus interest. The interest is 10 percent of the tax sales price if paid in the first six months. After that it is an additional 1 percent per month.
When does the tax title purchaser get absolute title to the property? After one year from the date of the tax sale, the tax title purchaser has the right to file a petition in Superior Court known at a Petition to Foreclose Right of Redemption. This is not a simple process and generally requires the services of an attorney. The attorney will ask the court to certify all of the parties who have an interest in the property and then have them served with a citation, which will give certain parties an opportunity to contest the validity of the tax sale or to redeem the taxes. At this point, the redemption would include the attorney’s fees and court costs expended in filing the court petition.
If the validity of the tax title is not contested and the taxes are not redeemed, a judge will grant the petition and the tax title owner will have absolute title to the property.
Does the original owner have any ability to contest the tax sale after the court grants the petition? The Rhode Island Supreme Court has ruled that in certain circumstances, the original owner can seek to contest a tax-title decree within one year of the issuance of the Superior Court judgment.
Is title insurance available for properties obtained at tax sales? Title insurance companies do insure these properties, but are quite cautious in doing so, and often not a year after the Superior Court judgment.