RI REALTORS® See Positive Improvements During 2018 Legislative Session

July 16, 2018 — Since 1948. the Rhode Island Association of Realtors has been a strong advocate for property owners in preserving private property rights and enhancing the ability of Rhode Island citizens to attain and maintain homeownership. During this year’s legislative session, the association addressed seven issues with favorable results for those who own Rhode Island property. These newly enacted laws pertaining to real estate include the following:

– The Uniform Real Property Electronic Recording Act (URPERA) is an important piece of legislation that enables cities and towns to accept e-recording documents. Rhode Island was one of three states that had not passed URPERA or a similar measure but as of July 1, 2019, Rhode Island municipalities will be able to accept e-recorded documents, creating a more streamlined and efficient process for recording deeds.

– The Federal National Mortgage Association (Fannie Mae) will no longer back mortgages for homes on private roads or shared driveways unless a covenant or perpetual road maintenance agreement has been recorded or a state statute has been enacted to define how the costs of maintenance will be shared. Homeowners who have handled maintenance informally over the years may learn only when they try to sell their home that the property cannot meet federal appraisal requirements. As a result, these homes are unsellable to any buyer who requires conventional financing.

The Rhode Island Association of Realtors asked the General Assembly to introduce legislation that addresses this problem. The legislation creates a formula for sharing the costs and maintenance of a private road or shared driveway if neither a legally enforceable agreement or covenant exists between property owners who benefit from the road. The new law became enforceable upon passage.

– An existing state law mandated that it was illegal for any Rhode Island landlord who resides out-of-state to collect rent if they had not designated a Rhode Island agent for service of process which left these landlords vulnerable to unlimited losses. If for example, a landlord tried to collect rent from a tenant that owed several months of back rent, the tenant would be under no obligation to pay if they had received notices from the landlord directly and not by a designated Rhode Island agent. As written, the old law also allowed tenants to secure a refund for rent already collected in cases where no Rhode Island agent was recorded.

The new law reduces the landlord’s exposure by levying a civil fine of $100 per month up to a maximum of $1,200 in a calendar year or if the monthly rent exceeds $1,200, the civil fine imposed will be one month’s rent for the calendar year. This creates a fair playing field that holds landlords accountable while eliminating a loophole in the Rhode Island General Laws that could have potentially led to severe losses in rental income. The legislation takes effect September 1, 2018.

– In accordance with Rhode Island General Law, the maximum penalty per offense relative to license law violations was $1,000 per offense. Rhode Island’s fine for license law violations had not changed in more than fifteen years.

During the past legislative session, the General Assembly approved legislation which doubles the maximum penalty per offense for license law violations to $2000. The legislation, which took effect upon passage, was introduced at the request of the Rhode Island Association of Realtors as part of their efforts to raise the bar on professional standards.

– During the 2017 legislative session, the General Assembly approved legislation that enabled six Rhode Island cities and towns to prorate a homestead exemption at the time of title transfer.

This year, once again on behalf of Rhode Island Realtors, members of the Central Falls delegation introduced legislation which provides for a proration of the Central Falls homestead exemption in cases where title to property passes to those entitled to claim an exemption.

Enabling cities and towns to enact a local ordinance to reflect this type of change sends a message to the local community that fairness is critical to growing a local tax base and Rhode Island’s economy. The association remains committed to working with Rhode Island’s municipalities to improve homeownership opportunities. This law becomes effective August 1, 2018.

– The leasing of fully furnished, apartment housing is becoming quite common. Prior to this year’s legislative session, Rhode Island General Law placed restrictions on the amount of a security deposit that can be charged by a landlord. Property owners were prohibited from charging an additional security deposit for furnishings if a standard one-month security deposit is charged without creating a conduit arrangement for furniture rental.

To address this, the General Assembly introduced legislation on behalf of the Rhode Island Association of Realtors that permits landlords and property owners to charge a security deposit on furnished units if the replacement value of the furniture being furnished is $5000 or greater. In this way, the landlord may charge a separate furniture security deposit equal to one month’s rent or less to cover the loss or insurance deductible. This act took effect upon passage.

– Finally, during the legislative session, members of the Senate introduced legislation that would require salespersons and brokers to disclose to potential buyers, in writing, the use of a home for marijuana cultivation. The legislation exposed home sellers, Realtors and all real estate licensees to legal liabilities, violating the Health Insurance Portability and Accountability Act of 1996 (HIPPA).

During public testimony and written correspondence, the Realtor Association countered arguments that this bill would protect consumers from issues, such as mold, electrical HVAC, etc. as existing law requires sellers of real estate to disclose physical defects of the property prior to the sale of a residential home.

While the legislation was approved by the General Assembly, it was vetoed by Governor Raimondo at the request of the Rhode Island American Civil Liberties Union (RI ACLU), RI Realtors and the Rhode Island Patient Advocacy Coalition.

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