Articles Posted in Real Estate

Recently, a state appellate court issued an opinion in a Rhode Island real estate dispute, the facts of which were heavily in dispute. According to the plaintiff, he paid the defendant $150,000 over the course of ten years under the impression that all the money he paid to the defendant would be put towards the purchase of a certain piece of real estate. The defendant, however, maintained a vastly different story. According to the defendant, the money he received from the plaintiff was for his service as the plaintiff’s agent in the automotive business.

In 2015, the plaintiff filed an eight-count complaint against the defendant. Among the claims raised in the complaint were those of promissory estoppel, fraud, misrepresentation, and unjust enrichment.

Making the case more interesting is the fact that the defendant was a former state representative. The defendant filed a pretrial motion to preclude the plaintiff from mentioning this fact at trial; however, the court denied the motion.

The United States Constitution protects Rhode Island property owners from government intrusion or possession of their property under the Fifth Amendment. Also, it protects property owners from the unlawful seizure of property without just compensation under the Fourth Amendment. While these protections originally were created to protect against obvious and straightforward intrusions of the public’s property rights by the government, jurisprudence over the last 230 years has developed in a way to expand the protections offered by these constitution provisions, allowing property owners to challenge many government actions and regulations on constitutional grounds.

The U.S. Supreme Court recently heard arguments in a case from California that could expand the public’s right to challenge government regulations affecting business and property owners on these constitutional grounds. In the recently argued case, the plaintiff owns and operates an orchard for the production of fruit in California. The plaintiff has sued a quasi-government labor board, challenging regulations that permit union organizers to enter into the company property at certain times and solicit support for union membership and labor organization. The plaintiff sued the labor board, alleging that the permission granted by the regulations disrupted their business practices and amounted to a government-sanctioned trespass on their property without any compensation.

In the federal district court, the Plaintiff’s claim was dismissed because they did not allege facts that would show that the regulation had a meaningful effect on their possessory interests as a whole. The plaintiff appealed the district court ruling to the Ninth Circuit U.S. Court of Appeals, who ultimately upheld the district court decision, holding that the Defendant’s regulation only allowed controlled, nondisruptive visits that were limited in time, place and scope, and that the visits did not meaningfully affect the Plaintiff’s property interests.

The requirement that a court has jurisdiction–over both the parties and the issue of a legal dispute–is one of the first questions that a court asks when addressing a legal claim. Without valid jurisdiction over a party or the issue at hand, a court cannot grant the relief requested by the plaintiff. The Rhode Island Supreme Court recently affirmed a Superior court’s dismissal of a landlord-tenant dispute based on lack of jurisdiction. As a result of the ruling, the parties may not be able to obtain relief for their claims.

In the recently decided case, the plaintiff is a woman who owned a piece of property and leased it to the defendants for a period of two and a half years. After the defendants moved out of the property, the plaintiff withheld their security deposit and sought additional monetary damages from the defendants for damage allegedly caused to the property in violation of the lease agreement. The plaintiff filed a breach of contract claim with the Superior Court, making these allegations.

Although the defendants alleged counterclaims against the plaintiff’s lawsuit, they also challenged the plaintiff’s claim on jurisdictional grounds. The defendants argued that under Rhode Island law, landlord-tenant disputes fall under the jurisdiction of a housing court, or a District court in jurisdictions where a housing court is not available, and that a claim filed in Superior Court must fail as a matter of law. The Superior Court agreed, holding that the legislature specifically designated housing courts with authority to handle landlord-tenant disputes, and that the claim must be filed in the proper court for either party to obtain relief.

When properties are sold at auction after a foreclosure or other court-ordered liquidation, the terms and conditions of the sale are generally outlined in a contract that is known to potential bidders before the sale takes place. The party who is required to pay the costs, taxes, and fees related to the property and have accrued or continue to accrue before the title is exchanged should be discussed in the auction and purchase agreements. The Rhode Island Supreme Court recently ruled in favor of the purchaser of an auctioned home, who claimed that an unreasonable 17-month delay by the seller before closing should invalidate the terms of the contract requiring the buyer to pay all of the accruing costs before the closing.

The plaintiff in the recently decided case is an organization that purchased a home from the defendants at a foreclosure sale. According to the facts discussed in the judicial opinion, the parties entered into a contract after the sale that stated the closing should be within 30 days of the auction, and that while delays can and should be granted for good cause, that “time was of the essence.” Additionally, the contract stated that the buyer was responsible for any accruing taxes, fees, or costs associated with the home between the time of the sale and the closing. According to the buyer’s complaint, the seller delayed the closing for over 17 months, and although the buyer cooperated and allowed the delay to occur, when the seller notified the buyer of their responsibility to pay the costs that accrued over the 17 months, the buyer refused and filed a claim in the Superior Court.

The Superior Court judge summarily ruled against the buyer’s claim, finding that the contract language was clear that the buyer was responsible for accruing costs, and ruling that the buyer’s decision to allow the seller to delay the closing made it clear that the buyer was assuming responsibility for the costs. The buyer appealed the Superior Court decision to the Rhode Island Supreme Court, which disagreed with the lower court’s determination that the contract clearly required the buyer to pay all of the accruing costs under any circumstances. The court reversed the lower court’s ruling on the case, holding that there was a factual question of whether the defendant could be held responsible for payment of the fees if the 17-month delay was unreasonable, as the plaintiff claimed. As a result of the appellate ruling, the case will proceed toward a trial on the issues.

Rhode Island real estate disputes can become extremely complicated when multiple parties dispute multiple claims over a single piece of property. If several parties own a property and a dispute arises, all parties to the action must be diligent in bringing their claims properly and at the right time, in order to prevent the issues from being finally decided before a party can make their case. The Rhode Island Supreme Court recently ruled that the leaseholder of a marina was not able to pursue a claim against the owner of the marina, who had terminated their lease after the property was sold.

The plaintiff in the recently decided case was a company that leased a marina from the owners, who were defendants in the case. According to the facts discussed in the judicial opinion, the property was divided between several heirs in a previously adjudicated estate case. It was to be sold to liquefy the heirs’ interest in the property as part of the estate partition proceeding. Because of this condition, the plaintiff’s lease was contingent upon the property not being sold to a good-faith buyer, and the lease could be terminated if the property was, in fact, sold.

When the property was put up for sale, the plaintiffs attempted to purchase the marina outright, but were eventually outbid by family members of the owners, who are also named as defendants in the case. Before the sale went through, the plaintiffs challenged the new purchaser’s bid in court, arguing that their bid should be considered as better for the sellers. Ultimately, the plaintiff’s claim to reconsider the bidding process was rejected and the property was transferred to the new owners, and the plaintiff’s lease was terminated.

Buyers of a new or previously occupied home in Rhode Island may enjoy several distinct legal protections from loss in the event that the home they purchased is defective, unsafe, or has other unforeseen and expensive issues that must be resolved. In addition to any specific protections granted through the warranty provisions of a purchase contract, buyers may also seek remedy for the negligence of a previous owner, a contractor, an architect, or any other person or organization that completed faulty work on a home. Another protection that Rhode Island home buyers enjoy comes from the implied warranty of habitability, which protects any residential home buyer from an uninhabitable home irrespective of the language of the purchase contract. The Rhode Island Supreme Court recently issued a decision on a case concerning the implied warranty of habitability, which ultimately places concrete time limits on when such a claim can be pursued.

The plaintiffs in the recently decided case purchased a home from the defendant, who had constructed the home in 1997. The defendant represented that he was a professional home builder, and that the construction had been completed to the professional standard for a home in the area. In 2013, after noticing slight water damage in a part of their home, the plaintiffs had an inspection performed and learned that a significant portion of their home would need to be replaced because of water damage that would have been prevented if the home was properly constructed.

The plaintiffs sought damages from the defendant by filing a multi-claim lawsuit against the builder of the home. In addition to breach of contract and tort claims, the plaintiff made a claim based upon the implied warranty of habitability. At the trial level, all of the plaintiffs’ claims in contract and tort were barred by statutes of limitation, which would not allow such claims to proceed if made more than 10 years after the sale of the home. The plaintiff appealed the ruling on the implied warranty of habitability cause of action to the Rhode Island Supreme Court, arguing that the law was unclear, and that the 10-year time limit should not have started to run until the plaintiff discovered the defect in construction.

Since the passage of the federal CARES Act, renters, landlords and homeowners have been subject to often changing protections and restrictions concerning the payment of rent or mortgage payments, as well as evictions and foreclosures. Shortly after President Biden’s inauguration, the new administration has issued several orders to clarify and extend the existing protections for a month or more. A recently published news article discusses the new executive actions and their possible effects on Rhode Island tenants and property owners.

The furthest reaching new executive action has been the administration’s extension of the eviction moratorium, which protects tenants who are unable to pay their rent as a result of the pandemic from being evicted by their landlords. To be eligible, tenants must make below $99,000 ($198,000 for a couple), and complete a CDC Eviction Declaration form (available through the CDC website). The latest extension protects renters from eviction through at least February 28, 2021, although it is likely to be extended further. It is important to note for both tenants and landlords, that this moratorium does not relieve tenants from the obligation to pay rent. Once the moratorium eventually expires, then landlords will be able to evict delinquent tenants and collect the full amount of rent due.

Another executive action that may protect both landlords and tenants involves the allocation of at least $30 billion in rental assistance payments to qualified renters through the Emergency Rental Assistance Program. These payments are made directly to the landlord from an eligible grantee, and can prevent the tenant from becoming delinquent while also allowing landlords to collect their income and pay the mortgage on their property. Eligibility for this program can be determined by contacting the U.S. Department of the Treasury online at treasury.gov.

Experienced landlords understand what is at stake when selecting a tenant for a residential rental property. Choosing the right tenant can make a landlord’s life extremely easy, and signing a lease with the wrong tenant can be expensive, stressful, and leave you with a damaged property or legal problems. Because the Rhode Island rental market is favorable for landlords at this time, a property will usually have multiple interested tenants, and landlords can thoughtfully choose who to offer the property to. A recently published landlord resource discusses some items to consider in selecting a tenant.

To effectively start the tenant selection process, landlords should set the right criteria in the rental listing, to screen out undesirable tenants. Most importantly, the tenant should make sufficient income, or have a co-signer that does, in order to pay the desired amount of rent. Certain criminal convictions can be screened for by the listing, and issues like smoking or pets should also be discussed. A listing should also note that a credit check and background check will be performed.

After a tenant reviews the listing and shows interest in a property, the parties should meet to show the premises. A showing is as much for the landlord to evaluate the possible tenant as it is for the tenant to evaluate the property. At the showing, a landlord should ask the prospective tenant about their current living situation, why they are moving, and when they would like to move in. Issues such as credit, smoking, and pets can be discussed if they were not brought up over the phone. Additionally, the landlord can get an idea of the tenants’ employment and lifestyle. If a tenant fails to show up or is very late to a showing, gives suspicious answers to questions about their past, or refuses to fill out an application and submit to a credit or background check, these may be red flags that help a landlord decide that another tenant would be more desirable.

Most Rhode Island home buyers will require a home inspection as a contingency to close the sale after they have submitted an offer on a home. While a general home inspection is a good idea and should be included in any home purchase, a recently published article makes the argument that buyers should also have other specialized inspections performed to protect themselves from unforeseen maintenance expenses that could arise.

The specialized inspections that should be performed on a home before purchase depend on several factors, including the age of the home and maintenance history. A general home inspection may bring the possibility of issues to light that should be followed up on by an inspector with specialized expertise, but some latent defects in a home may be missed entirely without a specialized inspection from the start. Important inspections may include a roof inspection, an electrical inspection, a pest inspection, and a radon inspection, among others.

The roof is one of the most important structural components of your home, and a damaged or defective roof can cause serious and expensive damage in the event of heavy rain or snow. For a relatively low price, a licensed roofing contractor can inspect the roof and ceilings of a home to find problem areas that could signal leaks or rot. Inspectors can also use specialized equipment to see if heat is escaping from a roof and causing unnecessary utility expenses.