Rhode Island Real Estate Lawyer Blog

The U.S. Supreme Court recently decided a case that may impact a government’s ability to take privately held Rhode Island property without compensation. The issue before the Court was whether property owners are required to seek compensation in state court before filing a claim against the federal government.

According to the Court’s opinion, in 2012, a town in Pennsylvania passed a law that required that “[a]ll cemeteries . . . be kept open and accessible to the general public during daylight hours.” The plaintiff had a small family graveyard on her property. In 2013, the city told her that she was violating the law passed by the town by failing to open the cemetery to the public during the day. The plaintiff brought suit against the town, arguing that the law amounted to a “taking” of her property.

The Fifth Amendment of the U.S. Constitution states in part, “private property [shall not] be taken for public use, without just compensation.” This clause is known as the Takings Clause. The U.S. Supreme Court previously held, in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, that property owners must seek just compensation in state court before filing a takings claim under federal law. Under 42 U.S.C. section 1983, individuals can bring claims against the government for civil rights violations.

In a recent property case before the Rhode Island Supreme Court, the court considered a case involving the right to parking spaces in a Rhode Island parking lot. The case arose over parking spaces in a section of Westerly, Rhode Island.

Evidently, In 1985, JHRW LLC transferred ownership of two buildings to Seaport Studios, Inc. (“Seaport”) and at the same time entered into an agreement leasing the land under the buildings to Seaport for 99 years. The lease agreement stated in part that JHRW would lease one parking space to Seaport, that if the premises were submitted to the Rhode Island Condominium Act at any time, JHRW would deed to premises to Seaport, and that the premises were subject to building and zoning restrictions. JHRW later attempted to develop the land which included the land leased to Seaport. It was divided into three units. Unit C was developed into a parking lot, and did not include spaces for Seaport. Seaport later filed a complaint against JHRW alleging that JHRW breached the lease agreement. After a hearing, a court found that JHRW was the rightful owner of the property, and all remaining claims were dismissed.

Shortly after the resolution of the first case, JHRW filed a complaint alleging that two Seaport employees had parked in JHRW’s parking lot, and sought in part to enjoin Seaport’s employees from parking on the land within the unit C condominium. Seaport argued it was entitled to nine parking spaces, and that JHRW unlawfully blocked Seaport’s access to its parking spaces. The court granted summary judgment in favor of the plaintiff ordering an injunction, enjoining the defendant from parking in spaces owned by the plaintiff, JHRW. The court found that the plaintiff had demonstrated the necessary elements to warrant a permanent injunction.

In June, the state’s high court issued a written opinion in a Rhode Island landlord-tenant case discussing whether an out-of-state landlord’s failure to comply with a statutory requirement that she maintain an in-state agent entitled the tenant to all rents paid during periods of non-compliance. Ultimately, the court concluded that the statutory text and the legislative intent in passing the statute did not support the plaintiff’s claim, and entered judgment in favor of the defendant landlord.

According to the court’s opinion, the plaintiff rented a waterfront condo from the defendant landlord for a period of about ten years. The tenancy was without incident until the tenant moved out, at which point there was a dispute over the return of the security deposit.

About two years after the tenant moved out, he filed a claim against the landlord, seeking the entire amount of rent that he paid throughout the tenancy. The tenant claimed that the landlord failed to comply with Rhode Island General Law § 34-18-22.3, which requires a “nonresident landlord” to “designate and continuously maintain an agent upon whom service may be made.” The tenant’s position was that because the landlord never designated an agent, he was not required to pay rent, but because the rent was paid during this time, he was entitled to have that money returned to him.

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: