Rhode Island Divorce Lawyer Blog

Buying a home is likely the biggest purchase most people make in their lifetime. However, purchasing a home in Rhode Island is not without its risks. There are, however, certain steps prospective homeowners can take to reduce their exposure. Title insurance offers prospective homeowners a way to mitigate many of the risks of buying a home.

When discussing any type of insurance, it is essential to fully understand the nature of the insurance policy as well as the risks that the policy is protecting against. While it is perhaps more confusing than other types of insurance that consumers are more familiar with, title insurance is no exception. A title insurance policy is between the insurance company and the mortgage lender. A mortgage lender almost always requires the policy as a precondition to making the loan. It is important to note that this policy only protects the lender, and offers no protection to the home buyer. This can be confusing because the buyer is the one who pays the policy premium. However, if a home buyer desires title insurance, they must obtain a separate policy with the title insurance company.

Rhode Island title insurance protects lenders and homeowners against historical title defects. This includes forgery, undisclosed but recorded prior mortgages, bankruptcies, liens or divorces, deeds not properly recorded, missing wills or heirs, and inadequate property descriptions. For example, if a portion of a piece of property changed hands between family members, and was recorded but not explained to the home buyer, a home buyer may be surprised to learn that their property boundaries were not what they thought them to be at purchase. Rhode Island title insurance protects against these claims, giving home buyers clean title to the property.

Not just any person can file a claim in court. In order to bring a lawsuit, the plaintiff must have the legal ability to bring the claim. This is referred to as “standing.” The state’s high court recently heard a Rhode Island real estate case in which the court decided that a plaintiff did not have standing to bring a lawsuit challenging a tax assessment.

According to the court’s opinion, the plaintiff was the owner of a property in Barrington, Rhode Island. He filed a complaint appealing the tax assessment of his property, based on the allegedly unfair tax assessment of a development in the same town. The plaintiff contended that he was forced to pay a higher tax on his property because a Rhode Island tax policy that favored the development, which was a low- and moderate-income housing development. The town granted the development a tax of eight percent of gross rental income. Such a tax was permitted under Rhode Island Laws Section 44-5-13.11 because the development was comprised of restricted-income housing.

The plaintiff sued the town, the development, and its company, arguing that his property was overtaxed due to the under-taxing of the development.

In a real estate case before Rhode Island’s Supreme Court, the court considered the validity of the assignment of a mortgage in a foreclosure action. Evidently, in 1984, the defendants obtained title to a house in Cranston, Rhode Island. In 2006, the defendants executed a promissory note to a mortgage company, Zurich Mortgage Solutions, for $971,750, secured by the house. Later in 2006, the mortgage company transferred the note and mortgage to another company, American Residential Equities.

Two weeks before the transfer occurred, American Residential Equities assigned the note and mortgage to GMAC, which sought to foreclose on the mortgage. GMAC later assigned the note and mortgaged to a fourth company, ARELIX. At some point, ARELIX realized that the note had been lost after it gave the note to its lawyer. Later, ARELIX purported to assign the note and mortgage to a fifth company, Note Capital—the plaintiffs in the lawsuit. A court granted summary judgment in favor of Note Capital, and the defendants appealed.

The defendants argued that the plaintiff did not have title to the note and mortgage because there was an improper transfer, thereby breaking the chain of title. Specifically, the defendants maintained that American Residential Equities could not transfer the note and mortgage to GMAC, because at the time that it purported to assign them, the note and mortgage had not yet been transferred from Zurich.

One of the most fundamental rights of Rhode Island property ownership is the ability to exclude trespassers from your property. However, if a landowner is not careful, continuous trespassers may be able to claim an ownership right in the property if they can meet the elements of a Rhode Island adverse possession claim. The adverse possession doctrine is sometimes referred to as “squatter’s rights.”

At its most basic, adverse possession is a legal doctrine that allows a person to acquire an ownership right in another’s property. The idea behind the doctrine is that the government wants to encourage landowners to put the property to use. Thus, if a property owner “sleeps on their rights” while another puts the property to use, then the user of the property can gain a property right in the area that is possessed. Common examples of adverse possession include use of an abandoned road or farming on vacant land.

In Rhode Island, a person seeking to adversely possess property must be able to meet each of the elements of a Rhode Island adverse possession claim for the statutory period of ten years. Courts in Rhode Island have held that, to establish a claim of adverse possession, a possessor of land must establish that their possession has been “actual, open, notorious, hostile, continuous, exclusive, and under a claim of right.” Below is a brief explanation of each element:

In May 2019, a state appellate court issued a written opinion in a Rhode Island real estate case discussing the plaintiff’s claim that a tax levied against the plaintiff’s property was illegal. However, the court determined that the tax was not illegal, but technically an “overassessment,” and that the plaintiff failed to timely file a claim. The case goes to show the importance of staying on top of Rhode Island property tax issues and acting quickly when they arise.

According to the court’s opinion, the plaintiff was a bank that underwrote a mortgage on two parcels of land. One of the parcels was listed as being located in Providence and the other in Cranston. A few years after the mortgage was written, the city’s tax assessor noticed that the Providence parcel was up for a tax sale. The city sold the parcel on July 9, 2015. On June 2, 2016, the plaintiff filed a claim arguing that the tax assessor illegally assessed the parcel and sought injunctive relief, preventing the city from selling the Providence parcel. The plaintiff’s argument was based on the fact that much of the Providence parcel was actually located in Cranston, depriving the City of Providence of the right to assess a tax on the property.

The assessor argued that the plaintiff’s complaint failed to comply with the procedural requirements for tax relief. Specifically, the assessor argued that the relevant statute required a claim be filed within 90 days from the date the first payment of the tax was due. The plaintiff argued that, in cases of an illegally assessed tax, the typical procedural requirements do not apply and that its claim was timely.

Buying a home is a big decision. Whether it be a modest first-time home or a multi-unit investment property, home buyers should take every precaution before the purchase of any Rhode Island real estate. One of the most important things that prospective home buyers can do before beginning their search is to understand the roles of all the parties involved in the Rhode Island home-buying process.

Most Rhode Island real estate transactions involve at least one real estate agent, but most involve both a listing agent and a buyer’s agent. When someone plans to put their home up for sale, they may contact a listing agent. The listing agent handles the marketing of the home and will negotiate with prospective buyers. Those who are looking to buy a home may contact a buyer’s agent. A buyer’s agent finds properties for sale that match the buyer’s specifications. A buyer’s agent will also negotiate on behalf of their client and, importantly, will often draft legal documents such as an Offer to Purchase or a Purchase and Sale Agreement.

Home buyers should contact a Rhode Island real estate attorney to review all legal documents that are drafted by real estate agents. While real estate agents may seem to know what they are doing when it comes to a real estate transaction, real estate agents are not attorneys and do not have any formal legal training.

For most people, their home is their most valuable asset. However, when circumstances unexpectedly change, many people find that it is challenging to keep up with a mortgage, utilities, and the other expenses of maintaining a home. If a mortgage goes unpaid, the lending financial institution will eventually initiate Rhode Island foreclosure proceedings.

A foreclosure is when a lender forces the sale of a property to cover the remaining balance of the loan. Typically, a lender will foreclose on a property if there is a significant history of non-payment. While the length of time that a lender will wait to initiate foreclosure proceedings can vary, it is common for a foreclosure to begin within six months of the first missed payment. This is not to say that a single missed payment will result in a foreclosure; most lenders understand that a homeowner may be facing a short-term financial hardship that they will be able to recover from if given the opportunity.

While the foreclosure process can be frightening, there are certain actions homeowners can take to prevent a foreclosure. It is important for Rhode Island homeowners to understand that the foreclosure process must follow strict guidelines, and a lender cannot suddenly foreclose on a home.