Rhode Island Amends Homestead, Property Transfers and Transfer Fee Laws
by Nathan Walker Esq.
Associate Counsel
The Rhode Island Legislature recently amended provisions regarding the homestead estate exemption, transfers of property to a revocable living trust, and transfer fees on the sale of real property. These changes are effective immediately.
The Homestead Estate Exemption
The homestead estate exemption granted by Rhode Island General Law 9-26-4.1, which prohibits attachment of a person’s principal residence to a debt proceeding, has recently been amended in three ways:
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The amount of a person’s estate covered by the homestead estate exemption, both in land and buildings, has been raised from $300,000.00 to $500,000.00;
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Persons allowed to claim the homestead estate exemption on the property they occupy or intend to occupy as their principal residence has been expanded. The exemption previously included only owners and persons leasing the premises. The new version extends the exemption to included owners and persons possessing the premises by lease, as a life tenant, and as a beneficiary of a revocable or irrevocable trust.
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The provisions of the homestead estate exemption, which previously did not apply to any debt owing to a financial institution, private mortgages, or a mechanics’ lien on the property comprising the estate, has been amended to not applying to any debt owing to a regulated institution, a debt secured by a mortgage, other voluntary liens on a home, or a mechanics’ lien on the property comprising the estate.
Transfer of Property to Trust
Rhode Island General Law 44-3-38 creates protection for any exemption, freeze of tax rates, and/or valuation granted to any eligible individual who transfers the property to a revocable living trust pursuant to provisions in the Rhode Island General Laws or any public law or municipal ordinance. The eligible individuals qualifying for this protection has recently been clarified.
An otherwise eligible individual will not be affected if the individual:
- Transfers an ownership interest in the property while retaining a life estate in the property; or
- Transfers an ownership interest in the property while leasing the property back to the previous property owner before the eligible individual; or
- Transfers the property to a revocable or irrevocable living trust, if the eligible individual resides in the property and the eligible individual or the trustee is legally obligated to pay property taxes on the property.
These provisions apply to any transfer of property, regardless of when the transfer is made.
Transfer Fees on the Sale of Real Property
The Rhode Island Legislature recently added Rhode Island General Law 34-11-42. The provision prohibits any person or business entity who sells real property from charging, collecting, receiving, or being otherwise entitled to a fee, solely on the subsequent resale or transfer of property.
While this new provision prohibits resale transfer fees, exemptions exist for:
- Any low or moderate income housing development as defined by Rhode Island General Law 45-53-3(9);
- Any fee that is connected to the transfer of property with a conservation restriction as defined by Rhode Island General Law 34-39-2(a); and
- Any fee connected with community associations, which include but are not limited to, condominium associations, homeowners associations and cooperative associations.
Finally, any contract of purchase recorded on or after July 1, 2012, that imposes any charge or fee that is inconsistent with this provision, will be deemed void and unenforceable against any subsequent owner, purchaser, or mortgagee.
Homestead Exemption:
http://www.allregs.com/ao/main.aspx?did2=25c763307fa648f58c0f52117327c4ea
Property Transfers:
http://www.allregs.com/ao/main.aspx?did2=93c7f5b1c5a54505ada89b3555522aeb
Property Conveyances:
http://www.allregs.com/ao/main.aspx?did2=745c5fe8d8d14eb5824bbd5eb68efcd0
About The Author
Nathan is Associate Counsel at Bankers Advisory and regulatory compliance specialist. He earned his B.A. from the University of Richmond and J.D. at Suffolk University Law School, Boston. He is admitted to the Massachusetts Bar Association.
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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