Rhode Island Real Estate Lawyer Blog

As communities in New England continue to grow at a rapid rate, businesses and property developers may plan Rhode Island construction projects that require the rerouting or elimination of public roads. Occasionally, other residents or businesses who oppose eliminating or changing a public road for a private purpose may object to the construction plans. In these cases, the municipality must decide whether to allow the development or not. This issue was addressed in a recently published decision by the New Hampshire Supreme Court, where a neighboring business challenged a town’s decision to allow construction of a development that required a public road to be discontinued and replaced by a private boulevard.

In the recently decided case, the plaintiffs are the owners of a hotel that is adjacent to a business development owned by another party. According to the facts discussed in the court’s opinion, the adjoining property owners sought to expand their business development with new construction on an adjacent lot, which they also owned. To complete their construction, a public road, which was one of three accesses to the plaintiff’s hotel, would need to be eliminated and reconstructed as a private road that would be in the middle of the newly-proposed development. The town ultimately approved the developers’ plan, with the condition that the discontinued road would be replaced by a road that was open to the public and allowed the same access to the plaintiff’s property as the current road.

After the development plan was approved, the plaintiffs challenged the decision, ultimately taking their case to the state supreme court. The plaintiffs argued that the replacement of a public road with a private one infringed on their rights and threatened their business interests. The high court evaluated the balancing test applied by the town in making its decision, and ruled that the town followed the law and was within its discretion to determine that approving the proposed development was in the town’s best interest. The town properly determined that discontinuing the public road did not substantially affect the plaintiff’s rights because the developers would be required to maintain the private road and grant an easement to the plaintiffs. As a result of the high court decision, the developers will continue the construction of their proposed development, and the public road will be discontinued.

The real estate market in Rhode Island is active, as many homes that would have been listed earlier in the year are being listed and sold now as a result of the Covid-19 pandemic. In a market like this, homes are often sold quickly after they are listed, and anyone interested in buying a property in Rhode Island should be prepared to move quickly if they wish to make a purchase. A recently published article by a professional association discusses the basic steps and players in a real estate transaction.

The article notes that in addition to the buyer and seller, there may also be real estate agents, attorneys, and other professionals involved in a Rhode Island real estate transaction. Although both parties can hire a real estate broker, the majority of brokers work for the seller of a property, and are essentially salespersons. Buyers should be cautious and use discretion when evaluating the claims of real estate brokers. While brokers are not permitted to misrepresent material facts concerning a piece of real estate or a transaction, they have an incentive to make a sale, and are often not held to as high of a standard as a real estate attorney.

The purchaser of a home can best protect their rights and interests in a real estate transaction by retaining a Rhode Island real estate attorney. An attorney can represent a home buyer through all phases of a real estate transaction, helping them ensure, with the help of other experts, that the property being purchased is free of encumbrances or other defects, and that all documents are prepared and executed properly to protect the buyer’s rights and ownership interest.

In accordance with a federal order recently filed by the U.S. Centers for Disease Control and Prevention (CDC), Rhode Island district courts have extended an existing moratorium on residential evictions until the end of the year. The CDC has ordered courts in all 50 states to forbid landlords from evicting their residential tenants for nonpayment of rent to prevent the spread of COVID-19. As described in the state and federal administrative orders themselves, as well as a news report discussing the implications of the extension, tenants who are unable to afford rent should be able to remain in their homes until at least January of 2021 if they meet the requirements of the moratorium.

In order for a delinquent tenant to invoke the federal protections of the moratorium and prevent their landlord from evicting them, the tenant must meet certain requirements and file a declaration with the landlord including sworn statements that: the tenant is unable to pay their full amount of rent due to financial hardship, that the tenant’s income falls below a certain threshold, that the tenant has used best efforts to obtain government assistance for rent or housing, that the tenant is using their best efforts to make partial rent payments when possible, that if the tenant were evicted they would be at risk of becoming homeless or forced to live in close quarters with other people, that the tenant understands they will still be responsible for all rents due under the lease agreements, including possible fees and interest, and that the tenant understands that the total amount of rent and other fees may become due immediately upon the expiration of the moratorium on January 1, 2021.

If a tenant delivers a valid declaration to their landlord at any time during an eviction proceeding, the case will not be heard by the courts until after the moratorium expires. Rhode Island residential evictions that are currently pending in the courts can continue unless and until the tenant delivers a declaration to the landlord, at which point the landlord is responsible for notifying the court that a declaration has been filed and the case will be reassigned to be heard next year.

International economic and public health crises are bound to have some effect on real estate markets worldwide. The COVID-19 pandemic represents a public health and an economic crisis. Consequently, the pandemic has certainly had a significant effect on the Rhode Island real estate market. Earlier this month, a popular newspaper interviewed five Rhode Island real estate agents to discuss their experiences and observations surrounding the effect of the pandemic to the statewide residential real estate market.

The Initial Pause of Real Estate Markets

During the beginning of the pandemic, the northeastern United States was hit especially hard by the virus. Public health officials instituted a strict lockdown in early March and most Rhode Island commercial activity was seriously affected. According to the realtors interviewed for the recently published article, the Rhode Island residential real estate market suffered a severe slowdown as a result of the lockdown and other worries surrounding COVID-19. Listings were cut drastically. However, the market did not shut down entirely, as deals already in the pipeline could still go through and remote technology allowed ambitious buyers and sellers to proceed with listings and transactions if they desired.

The Opening of the Floodgates

After the initial slowdown and pandemic fears subsided, public health officials managed to get the virus under control, and the Rhode Island residential real estate market saw a large bump in listings and sales. It was as if all of the homes that would have been sold during the lockdown period went on the market as soon as it appeared safe to do so. Because of this, the summer of 2020 has actually seen a 50% increase in homes that are under contract compared to the same time in 2019. Most if not all of this increase can be attributed to the homes that would have been sold during the spring if not for the pandemic and government response.

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Rhode Island eviction proceedings, as well as those across New England, are designed to be streamlined in ways that allow summary cases to proceed quickly through the system to keep the courts from being overrun by those that could be quickly resolved. Because these summary proceedings are often simplified, state legislatures require that the procedural requirements to remove a tenant by summary proceedings are strictly followed. A landlord’s failure to strictly comply with the procedural requirements for summary eviction proceedings will often result in the denial of their claim, as is demonstrated in a recent decision by a state appellate court.

The plaintiff in the recently decided case is a landlord who sought to evict the defendants from a home for nonpayment of rent. Although state courts provide forms that landlords can serve on their tenants to initiate summary eviction proceedings, the plaintiff instead served the defendants with eviction documents he had drafted himself. The documents drafted by the landlord did not include a statement from the court forms notifying the tenant that the notice was not a court order to vacate the rental property, and that the tenant could remain on the premises while the landlord initiated formal eviction proceedings.

The defendant did not vacate the premises within the term specified in the eviction notice, and the landlord proceeded with a formal eviction. In response, the defendant asked the court to dismiss the eviction complaint because the initial notice did not include the information from the court form, and was therefore defective. The trial court found that state law requires the eviction notice to include the information which the landlord omitted, and agreed with the defendants that the landlord’s claim must be dismissed.

Beachfront property can be some of the most valuable and desirable real estate in Rhode Island. However, beachfront property owners often face difficulties in exercising their property rights and maintaining privacy when members of the public seek to use beaches abutting a property owners’ home. These conflicts impact not only beach-lovers, but also property owners and real estate developers.

Under Rhode Island law, the public is guaranteed access to all beaches in the state, at least up to the high tide water line. This public access is guaranteed through an easement that a state or municipal organization has on any privately owned property, which includes shoreline. It is not always clear whether public rights to beach access extend above the high tide line. These uncertainties can result in disputes between members of the public and shore front property owners, along with conflicts between nearby property owners seeking to access a beach from their own homes.

Although well-established laws guarantee the rights of the public to access and traverse beaches on private property, some property owners have decided to construct sea walls or beachfront patios that restrict access to the beach, sometimes creating the appearance of a private beach in violation of state law. Although these beaches are not, in fact, private, the existence of obstructions below the high tide water line function to deter beach goers from using the beaches adjoining private property. While members of the public or state and municipal organizations can challenge such construction in state court and seek to have obstacles removed, property owners often get away with restricting beach access for extended periods.

Rhode Island real estate transactions often involve several parties in addition to a buyer and seller. Both the buyer and seller frequently use real estate agents, who, in turn, may be associated with brokerage firms to affect the transaction. Although real estate agents generally owe a fiduciary duty to their clients to act in good faith during transactions, a recent decision by the Rhode Island Supreme Court demonstrates that a brokerage firm associating with the agent may not owe any duty to a client in the event the agent acts in bad faith.

The plaintiff in the recently decided case is a real estate investor from Australia, who hired a real estate agent to assist him in purchasing and managing investment properties in Rhode Island. The agent he hired was associated with a real estate firm that is the defendant in this appeal. In the course of her dealings with the plaintiff, the agent allegedly mismanaged the plaintiff’s assets and properties by securing multiple mortgages on a property without the consent of the plaintiff, and using the money from the mortgages for her own purposes, essentially defrauding the plaintiff of equity in his real estate.

After discovering the actions of the agent, the plaintiff filed a lawsuit in Rhode Island district court against the agent and the brokerage firm and sought damages, alleging that both defendants violated their fiduciary duty to handle his assets in good faith. The plaintiff claimed to rely on the relationship between the agent and the brokerage firm in making a decision to trust the agent to handle his investments. The brokerage firm responded to the allegations by claiming that the agent was an independent contractor of the agency, and that the agency did not owe any duty to the plaintiff or bear any responsibility for the agent’s wrong actions. The district court agreed with the agency’s arguments, finding that the agent’s alleged wrongdoing did not benefit the defendant, and that they owed no special duty to the plaintiff to supervise the agent or prevent any fraudulent actions.

There are many circumstances where a Rhode Island property owner may wish to transfer ownership and title of their property to another individual or organization. The most common reason for a conveyance is when one party sells real estate to another party. However, transfers may also be made in the course of a larger business transaction, or as a result of a divorce or other legal settlement. Transferring the title of real estate is not as simple as accepting payment and signing a contract, as a deed must be executed and recorded for a property transfer to be valid.

In Rhode Island, several types of deeds are used to transfer real estate. The most common type of deed used in a real estate purchase transaction is a general warranty deed. The term warranty in this type of deed is used because the deed is warrantied by the grantor (or a title company) to be valid and marketable. Because of this, the grantor must foot the expense of defending a claim against the deed by a third party after it has been executed and recorded. A valid general warranty deed usually contains the following information: The amount of consideration (purchase price), the names and addresses of the grantor and grantee, a legal description of the property, and a notarized signature of the parties.

Deeds known as special or limited warranty deeds are also used to transfer properties. These deeds only hold the grantor responsible for title defects that originated during the time that the grantor owned the property. While this type of deed does not offer as much protection to the grantee, it may be desirable for certain transactions where the grantor is handling investment properties and only wishes to prove she has acted in good faith while owning the property, but is unwilling or unable to warranty the validity and marketability of the title throughout the full chain of title.