Opinion ID: 1965477
Heading Depth: 2
Heading Rank: 1

Heading: The Validity of the Tax Sale

Text: We first address the city's argument that the trial justice erred by ruling the tax sale invalid because Joan Kilberg did not receive notice of the tax sale under the provisions of § 44-9-10. The rights of the parties at a tax sale foreclosure proceeding are determined by the law in force on the date of the tax sale. See Sycamore Properties, LLC v. Tabriz Realty, LLC, 870 A.2d 424, 427 n. 7 (R.I.2005); Kildeer Realty v. Brewster Realty Corp., 826 A.2d 961, 965 (R.I.2003); Town of Jamestown v. Pennsylvania Company for Banking and Trusts, 101 R.I. 274, 279, 221 A.2d 821, 823 (1966). At the time of the June 25, 2003, tax sale, § 44-9-11(b), as amended by P.L. 2002, ch. 140, § 1 said: Only a person or entity failing to receive notice in accordance with the provisions of this section and §§ 44-9-9 and 44-9-10 shall be entitled to raise the issue of lack of notice or defective notice to void the tax sale. The right to notice shall be personal to each party entitled to it and shall not be asserted on behalf of another party in interest. If there is a defect in notice, the tax sale shall be void only as to the party deprived of adequate notice, but shall be valid as to all other parties in interest who received proper notice of the tax sale. Sepe and Slade's Ferry cite G.L.1956 § 34-11-28 for the proposition that they are the same party in interest as Joan Kilberg. They argue that a conveyance through a mortgage foreclosure passes all the rights of the record owner to the successful bidder in a fee simple interest. Section 34-11-28 provides in pertinent part that [i]n any conveyance of real estate all rights, privileges, and appurtenances belonging or appertaining to the granted estate shall be included in the conveyance   . Rhode Island is a title-theory state, in which a mortgagee not only obtains a lien upon the real estate by virtue of the grant of the mortgage deed but also obtains legal title to the property subject to defeasance upon payment of the debt. In re D'Ellena, 640 A.2d 530, 533 (R.I.1994). In Block Island Land Trust v. Washington Trust Co., 713 A.2d 199, 201 (R.I.1998), we explained that the title theory is a fiction designed to aid in decision making; it is not an absolute per se rule of law. Nevertheless, we noted that [i]n this state a first mortgage is a conveyance to [the] mortgagee of the legal fee in the land, defeasible upon condition that the mortgagor will perform the condition of the mortgage. Id. (quoting Houle v. Guilbeault, 70 R.I. 421, 423, 40 A.2d 438, 440 (1944)). In the case under review, before the mortgage foreclosure sale, legal title to the property was held by Lincoln Trust subject to the right of the mortgagor, Arnold Kilberg, to defeasance upon his payment of the promissory note and satisfaction of the mortgage conditions. Mr. Kilberg then conveyed his interest in the property to his wife, Joan Kilberg, by quitclaim deed, and on June 23, 2003 Lincoln Trust foreclosed her equity of redemption by selling the property at a mortgage foreclosure sale. Significantly, § 34-11-22 provides that a foreclosure conducted by statutory power of sale shall forever be a perpetual bar against the mortgagor and his, her or its heirs, executors, administrators, successors and assigns, and all persons claiming the premises, so sold, by, through or under him or her, them or any of them. Thus, any interest that may have reposed in Joan Kilberg was forever barred by the foreclosure sale because she was the successor in interest to Arnold Kilberg, the mortgagor. [10] At the time of the tax sale, she no longer held an interest in the property and could not have claimed a right to notice under § 44-9-10. See 4 Richard R. Powell, Powell on Real Property, § 37.46 at 37-317 (2007) ([T]he mortgagor has an opportunity to redeem down to the time of the [mortgage foreclosure] sale   , but this opportunity comes to an end with such sale   . From that point on, the equity court ceases to be concerned with the mortgagor in relation to the land.). We conclude, therefore, that the hearing justice erred by invalidating the tax sale for lack of notice to Mrs. Kilberg.