In Rhode Island, lenders may foreclose on deeds of trusts or mortgages in default: 1) by using the judicial foreclosure process; 2) by filing a lawsuit seeking eviction; 3) by taking possession of the house; 4) by the borrower voluntarily giving up possession; or 5) by using the non-judicial foreclosure process.
Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.
Special Procedures
In instances where the lender takes possession of the house, they must do so peaceably and in the presence of two witnesses. Said witnesses must give a certificate of possession, which must then be notarized. Additionally, borrowers who voluntarily give up possession of the property must do so in the presence of a notary. In these instances, the lender will obtain the full title to the property if they are able to maintain possession for an established period of time.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:
- The lender must mail a written notice of the time and place of sale, by certified mail, return receipt requested, to the borrower at his or her last known address, at least twenty (20) days prior to the first publication, including the day of mailing in the computation.
- The lender must give notice of the sale by publication in some public newspaper at least once a week for three (3) successive weeks before the sale, with the first publication of the notice being at least twenty-one (21) days before the day of sale, including the day of the first publication in the computation.
- Said notice must contain the names of the borrower and lender, the mortgage date, the amount due, a description of the premises and the time and place of sale.
Any person may bid at the sale, including the lender.
