Sale Type: | Collector’s Deed Sale (hybrid tax deed, subject to redemption) |
Interest Rate: | Redemption penalty paid by the owner: 10% of the purchase price within 6 months of the sale, plus 1% for each additional month |
Bid Method: | Public auction of the smallest undivided share (at least 1%) that covers the amount owed |
Until the buyer files a foreclosureThe legal process by which a lienholder forces the sale of a property to recover the debt owed when the property owner fails to pay. petition, which cannot be filed until 1 year after the sale | |
Sale Date(s): | Set by each city or town (public notice at least 3 weeks before the sale) |
State Statute(s): | R.I. Gen. Laws Title 44, Chapter 9 (Tax Sales) |
Varies by city or town (a town that buys at the sale may assign its tax title) | |
State Website: |
How Rhode Island Tax Sales Work
Rhode Island does not sell tax lien certificates the way some states do. When property taxes go unpaid, the city or town tax collector can sell the property at a public auction. The buyer receives a collector’s deed, which is sometimes called a hybrid tax deed because it transfers title but stays subject to the owner’s right to take the property back.
Here is how the sale itself works:
The collector must post notice of the sale in at least two public places in the city or town at least three weeks before the sale, and must also advertise it in a newspaper.
The sale is a public auction held by the collector for the taxes, assessments, interest and necessary charges owed.
The collector sells the smallest undivided share of the property that will cover the amount owed, but not less than 1%. An undivided share means a percentage ownership interest in the whole property, not a specific piece of it. If no one takes a share, the whole property is sold for the amount owed.
Sale dates are set by each city or town, so there is no single statewide calendar.
What the Buyer Receives
The collector’s deed conveys the property to the buyer subject to the right of redemptionThe legal right of a property owner to reclaim their property after a tax sale by paying the full amount of delinquent taxes, interest, and penalties., which is the owner’s legal right to reclaim the property. Until the property is redeemed or that right is foreclosed, the title is held as security for the repayment of the purchase price, costs and charges. Some other points matter to an investor:
The deed must be recorded within 60 days of the sale to be valid against later interests.
The buyer has no right to possession of the property, or to its rents, until one year after the sale.
After one year, the buyer is only entitled to net rents the former owner or a mortgagee actually collected. The buyer is not entitled to rent for owner-occupied, single-unit residential property.
After one year, the buyer is also jointly and severally liable with the owner for the property’s upkeep and for complying with state and local rules, even before redemption is foreclosed.
How Redemption Works
The owner and others entitled to notice of the sale can redeem the property by paying the following:
The purchase price
A penalty of 10% of the purchase price if redeemed within six months of the sale, plus an additional 1% of the purchase price for each following month
Any intervening taxes the buyer paid, plus interest at 1% per month
Costs paid by the buyer
The redeeming party can pay the buyer directly, or pay the town treasurer, who acts as the buyer’s agent until one year after the sale. The penalty is paid by the owner and is calculated on the purchase price. It is not an annual interest rate.
Why “1 Year” Is Not the Whole Story
Many summaries say Rhode Island has a one-year redemption period. That is only part of the picture. The owner’s right to redeem does not end after one year. It continues until the buyer files a petition in Superior Court to foreclose the right of redemption, and that petition cannot be filed until one year after the sale.
The title becomes absolute only after the court enters a decree foreclosing the right of redemption. Even then, a decree can be challenged for a short time on limited grounds, such as inadequate notice. Because foreclosure is a court process, anyone who plans to pursue it should talk with a Rhode Island attorney.
What This Means for Investors
Rhode Island’s structure is different from a typical lien certificate state. The buyer’s return, if the owner redeems, comes from the redemption penalty on the purchase price. If the owner does not redeem, the buyer may pursue foreclosure in court, which takes time, adds legal costs and does not guarantee an outcome. A buyer may also take on responsibility for the property after one year.
Returns are not guaranteed, and every sale is different. All investing involves risk, and results depend on your due diligenceThe research and investigation process an investor conducts before purchasing a tax lien or tax deed to evaluate the property and assess risk..
What Investors Should Check
The notice for each sale in the city or town, including the date and the share being offered
Title, liens and other tax titles that could affect the property, using our guide on how to evaluate tax lien properties at auction
The redemption timeline and the full amount an owner would have to pay
The costs and time involved in a foreclosure petition, and your plan for the property after one year
The current statutes and local rules, including how our tax lien states vs. tax deed states map shows each state
This content is for educational purposes only and is not legal, tax or financial advice. Talk with a qualified professional about your own situation.
Learn How Tax Sales Work in a Free Workshop
Every state handles tax sales differently, and Rhode Island’s rules are not the same as those in lien certificate states. Register for a Free Workshop with our coaching team to learn how tax liens and tax deeds work and how to research them step by step.