Rhode Island Real Estate Lawyer Blog

Property insurance policies are contracts entered into between an insurance company and an insured party. These contracts are usually drafted by the insurance company, and often contain provisions that appear innocuous but are included to benefit the insurance company at the expense of their client. The tremendous economic damage caused by the Covid-19 pandemic has resulted in a nationwide deluge of insurance claims, filed by property owners attempting to recoup some of the pandemic-related losses. When an insurance company denies a Covid-19 related claim, the client may pursue a civil claim against the company to enforce the insurance policy. A Superior court in Providence, Rhode Island recently heard a real estate company’s claim against their insurance company.

According to the facts discussed in the recent ruling, the plaintiff in the recently decided case is one of the largest privately-held real estate investment companies in the world. The plaintiff’s business includes the leasing of residential, commercial, and industrial properties in Rhode Island. The plaintiff entered into an insurance contract with the defendant to cover several properties they owned in Rhode Island. After the arrival of the Covid-19 pandemic, the plaintiff was unable to keep many of their properties occupied and lost a substantial amount of income as a result.

Based on their losses, the plaintiff made a claim with the defendant, demanding that the defendant honor the insurance contract because the “physical damage” done by the SARS-COV-19 virus was what resulted in their loss. The defendant denied the plaintiff’s claim, noting exclusions in the plaintiff’s policy that limited the covered losses resulting from communicable diseases or contamination. After the defendant rejected their claim, the plaintiff filed a suit in Rhode Island state court.

Rhode Island zoning laws and regulations are designed to allow property owners and residents the most freedom in developing their properties while protecting neighbors, the public, the municipality, and the environment from the possible effects of development. As the culture and economy of coastal Rhode Island develop, some zoning laws and requirements are functioning to prevent property owners from making the best use of their land.

New homes along the Rhode Island coast have been getting larger and larger, as the housing market solidifies. Many coastal areas are shifting from seasonal “vacation home” occupancy styles to year-round habitation. Because of these changes, many of the zoning requirements for construction do not allow for the construction that property owners may desire. The Rhode Island Supreme Court recently published a ruling on an appeal filed by a coastal property owner whose construction plans were denied by the municipal zoning board.

The plaintiff in the recently decided case has been the owner of two adjacent small lots in the town of Narragansett for several decades. According to the facts discussed in the appellate opinion, the plaintiff sought permission from the town to build a home that spanned the two small lots. The plaintiff’s proposed construction would not be permitted by the zoning laws in effect at the time, so the plaintiff requested that the town approve special use permits in order for the construction to proceed. The town rejected the plaintiff’s request, finding that the plaintiff’s requested exemptions from zoning requirements would negatively affect the neighborhood and that the requested house was simply too large for the lot.

The arrival of the Covid-19 pandemic sparked a shift in real estate markets nationwide, with smaller, satellite cities and regions attracting workers from larger cities. Workers with remote work opportunities sought to move to areas with less expensive real estate and a lower cost of living, as the remote work revolution that accompanies pandemic life made living in large cities less desirable.

The real estate market in Rhode Island has been significantly affected by this phenomenon, as our proximity to New York, Boston, and other New England economic centers makes Rhode Island a desirable destination for remote work. In addition to the remote-work immigrants who are moving into our state, Rhode Island is also seeing an influx in wealthy people who are purchasing luxury properties at historic prices. A recently published news report discusses this phenomenon and the effects it will have on the Rhode Island real estate market as a whole.

The recently published report focuses on the effects on the luxury residential real estate market in Rhode Island. According to the report, over 700 homes in the state sold for over $1 million in 2021, with over half of those sales to out-of-state or international buyers. The article notes that although Rhode Island is situated near financial centers such as the NYC metropolitan area and Boston, real estate has been undervalued in the state for decades, and prices are catching up. According to sources cited in the article, the median price of a single-family home in Rhode Island rose by over 14% in 2021.

Municipal zoning regulations are often developed as a means to protect present property owners and residents from changes that could negatively affect the value of their property or the character of the neighborhood. Often zoning regulations can be used to ensure that a neighborhood only includes residential property or only single-family units. While zoning regulations can be effective at preventing low-density neighborhoods from becoming too dense and crowded, the regulations often serve to prevent developers from constructing affordable housing units. A recently published local news report discusses how zoning regulations in Pawtucket are making it difficult to address the state’s affordable housing crisis.

The recently published news report discusses the efforts of a nonprofit organization that was founded to help foster children find affordable housing after they age out of foster care. Because foster children who age out of foster care are often looking for a small studio or one-bedroom units at an affordable price, single-family housing is not always a feasible option. The organization featured in the article sought to purchase single-family homes and divide them into multiple apartments for their clients. According to the news report, the organization purchased a building that was converted into four separate units, which could house between 8-10 people. Unfortunately, the municipal zoning board rejected the organization’s proposal to occupy the fourth unit, as there was not sufficient parking available to meet zoning requirements.

The zoning requirements at issue demand that each residential unit has two parking spots of off-street parking available. Although it is important to make sure that there is parking available for residents before allowing them to move in, the article notes that the application of this particular requirement is counterproductive. Of the 10 people that would live in the proposed new building, 6 spots are available, and only two spots appeared to be needed. By requiring two parking spots for each unit, the law is preventing people who don’t even own a vehicle from finding housing. To address this problem, municipal zoning boards are being encouraged to update the over 30-year-old zoning codes that require so much parking. People seeking new construction or renovations can also petition the zoning board for a variance or exception to approve a proposal that doesn’t meet the zoning requirements outright.

Where the ocean meets private property, disputes are commonplace. Under state law, the ocean itself and portions of the coast and beach are public property, and anyone can use them. However, access to such areas can be problematic, as private property owners often want to restrict or prevent public access to beaches adjacent to their property. Under current law, it isn’t clear to property owners or members of the public exactly where members of the public are permitted to be. A recently published news report discusses efforts in the Rhode Island legislature to modify current laws and clarify where members can enjoy the coast.

In an effort to clear up the ambiguities in the current law, the Rhode Island general assembly is considering passing legislation. According to the recent article, current laws allow members of the public use of beaches and shorelines up to the median high tide line over the last 18.6 years. Because this line is impossible to see, beachgoers and property owners have been involved in heated disputes over whether a certain area of the beach was public or private. Private property owners have been using law enforcement in an attempt to enforce trespassing laws against beachgoers, and police have been forced into the awkward position of deciding whether a certain spot was public or private.

One proposal to clarify the rights of property owners vis-a-vis the public would be to use the “wrack line” instead of the median high tide line to determine where private property begins. The wrack line is the highest spot where the ocean has deposited visible debris. Some property owners are resistant to changing the law, as the wrack line will generally be higher on the shore than the line currently in use. Some property owners have threatened legal action if the legislature changes the law, arguing that it would amount to a taking by the government, and the property owners should be compensated as such. The news report concludes that such legal challenges would face an uphill battle; however, the law is certainly not settled in Rhode Island.

The explosion of the short-term rental industry in Rhode Island has resulted in many advantages and disadvantages for Rhode Island residents and property owners. The popularity of short-term vacation rental websites and apps, such as Airbnb, have resulted in hundreds of millions of dollars in earnings for property owners in Rhode Island. The influx of tourist traffic from the short-term rental industry may also have adverse effects on communities, such as parking, traffic and other nuisance issues that come along with short-term vacationers.

In an effort to regulate this quickly developing industry, the Rhode Island General Assembly passed a bill last year that would require the owners of short-term rentals (defined as rentals for a term of fewer than 30 days) to register with the state. Shortly after the bill was passed, Governor Dan McKee vetoed it, stating that it was an unnecessary regulation on Rhode Island small business owners. According to a recently published local news report, the General Assembly recently overrode the governor’s veto, and the legislation has now become law.

As a result of the legislature’s override of the veto, Rhode Island property owners who choose to rent out their properties using Airbnb or a similar service will be required to apply for a license for the property. Applications will be required to have the following information: the principal place of business of the owner, or if outside the state, the agent for service of process or property manager for the owner; the phone number of the property owner and/or property manager; an email address of the property owner and/or property manager; the rental property address; the number of rooms for rent at the property; the intended use of the property (whether rented as a whole home, private room, or a shared space.

Receiving a new tax assessment of your residential or commercial real estate can be an exciting and stressful experience. Although the tax assessment numbers are nowhere near as accurate as an appraisal or market determination of the value of your property, evaluating the value that the state determines your property to be worth can certainly give you an idea as to how your investment is performing. Because the state performs so many tax assessments each year and uses very broad indicators to estimate the value of the property, the assessed value of properties can be extremely inaccurate.

If the state assesses your property for an amount that is less than you believe it is worth, it may cause some stress, as your assets may not be as valuable as you thought. This stress probably isn’t warranted, however, because the state assessment is used only to determine how much in property tax you owe on the property. If the state undervalues your property, don’t be offended, it’s probably best to simply pay the lower-than-expected tax bill. You can always obtain an appraisal or do market research to determine what your property is actually worth.

When the state has overvalued property in a tax assessment, it presents more of a problem. If the tax assessment of your property is excessive, it could result in tens of thousands, or more, of unjustified tax increases that you must pay. The good news is that tax assessments can be appealed. Rhode Island General Laws Section 44-5-15 sets forth the procedures for appealing a tax assessment. When followed properly and if there is a factual basis for the appeal, pursuing an appeal could save you thousands in property taxes.