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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

Rhode Island

Mortgage, also referred to as a “Mortgage Deed.” &sect; 34-11-19 sets forth the minimum contents requirements for the legal effectiveness of a statutory short-form mortgage deed, including incorporation of mortgage covenants, the statutory condition and the statutory power of sale, as defined in &sect;&sect; 34-11-20 — 34-11-22 inclusive. See &sect; 34-11-12(4) for the Rhode Island statutory short form mortgage deed.

SECURITY INSTRUMENT USED

&sect; 34-11-1 provides that every conveyance of lands, tenements or hereditament absolutely, by way of mortgage, or on condition, use or trust, for any term longer than one year, and all declarations of trusts concerning the conveyance, shall be void unless made in writing duly signed, acknowledged as hereinafter provided, delivered, and recorded in the records of land evidence in the town or city where the lands, tenements or hereditaments are situated. However, a failure to record the same is valid and binding as between the parties and their heirs, and as against those taking by gift or devise or having notice thereof. Neither a witness nor a notary is required on promissory notes secured by a mortgage on Rhode Island real estate, though notes are sometimes witnessed as a matter of practice. Deeds, mortgages, and other documents affecting real estate must be acknowledged before a notary public before they can be recorded in the land evidence records of any city or town in Rhode Island. Notaries public customarily affix a notary stamp on instruments they notarize and note thereon the expiration date of their commissions. Effective January 1, 2019, &sect; 42-30.1 the “Uniform Law on Notarial Acts” replaces certain provisions of &sect; 42-30 and provides that Rhode Island notary applicants are required to complete a qualification statement and disclose criminal convictions involving fraud, dishonesty or deceit. Rhode Island notaries are required to have and utilize a stamping device which includes the notary public's name as it appears on the notary commission, the words “notary public” and the jurisdiction. Embossing seals do not photocopy and will no longer be acceptable as notary stamps. <ul>
 <li>34-11-1.1 requires that all persons signing any documents to be recorded, including notaries public, shall have their names typed or printed immediately beneath or adjacent to their respective signatures. Failure to comply with this section does not affect the validity of the instrument, but the recording fee for the instrument is increased by $2. &sect;&sect;&nbsp;34-11-1.2 and 34-11-1.3 require, respectively, that the name, residence and/or post office address of the grantee and mortgagee be contained in or be endorsed upon the deed or mortgage deed. &sect;&nbsp;34-11-1.3 also requires the mortgage deed to contain the name and address of the mortgagor. A seal is not required to be affixed to any instrument conveying lands. &sect; 34-11-2.</li>
 <li>34-11-1.4 requires that every deed that is recorded must contain the total amount of consideration. Although failure to comply with such requirement will not affect the validity of the deed, a city or town clerk may decline to accept such deed for recording.</li>
</ul> At the time of sale of residential property a seller must provide the buyer with a certificate from the fire department stating that the smoke and carbon monoxide detector systems have been inspected within 60 days prior to the sale date and are in working order. Prior law required that compliance language be included in the deed, but this requirement was repealed effective June 30, 2004, although it could still be included (and if included should now refer to 450 RICR-00-00-8).

RECORDING REQUIREMENTS

Rhode Island enacted the Uniform Electronic Transactions Act. Chapter 42-127.1 et seq. in 2000.

ELECTRONIC SIGNATURES AND RECORDS ACT

Authorizes a city or town clerk/recorder of deeds to accept electronic documents for recording real property and land records and to index and store those documents. Chapter 34-13.2 et seq.

UNIFORM REAL PROPERTY ELECTRONIC RECORDING ACT

All statutory and common law rights of curtesy and dower in Rhode Island were abolished in 1978. Chapter 33-25 et seq. See “Homestead Issues” below. <ul>
 <li>19-14.1-5(c), which applies to certain lenders and loan brokers, provides that no loan documents shall contain any provision whereby the debtor waives any rights accruing to him or her under the provisions of Title 19 (the Rhode Island banking law) or any other law expressly prohibiting such waiver.</li>
</ul>

STATUTES TO BE WAIVED

Bayview Loan Servicing LLC v. Providence Business Loan Fund, Inc., 200 A. 3d 152 (R.I. January 29, 2019), Attempted extension of 10-year mortgage that had no maturity date, was ineffective to extend life of mortgage, and thus mortgage was discharged by operation of the ancient mortgages statute (&sect; 34-26-7). Note that the modification agreement that set forth the attempted extension was not recorded, but amendment to mortgage was. (&sect; 34-26-7 provides that after January 1, 1989, except for mortgages made by Rhode Island Housing and Mortgage Finance Corporation, no foreclosure may be made after expiration of 35 years from the date of recording of the mortgage, or if the mortgage contains a stated maturity date, 5 years after the expiration of the maturity date. A mortgage may be extended by recording an extension agreement or recording an acknowledgement by affidavit, and the agreement or affidavit must be recorded prior to the maturity date.

ANCIENT MORTGAGES

&sect;&nbsp;19-9-2 requires mortgagees holding funds of a borrower in escrow for the payment of taxes and insurance premiums with respect to owner-occupied 1-4-family residential property located in Rhode Island to pay or credit annually on December 31 interest on such funds at an interest rate equal to the rate paid to the mortgagee on its regular savings account, if offered, and otherwise at a rate not less than the prevailing market rate of interest for regular savings accounts offered by local financial institutions as determined by the Rhode Island Director of Business Regulation (the rate formerly was 4% per annum). If the mortgage is paid in full prior to December 31, interest to the date of payment must be paid to the borrower. Mortgages insured or guaranteed by FMHLA, FHA, VA, a private mortgage insurer licensed to do business in Rhode Island, or made pursuant to the laws relating to Rhode Island Housing Mortgage Finance Corporation, are exempt from the requirements of &sect;&nbsp;19-9-2. Pursuant to &sect;&nbsp;19-9-2.1, all monthly billing by mortgagees to mortgagors must show an allocation of the mortgagor's prior monthly payment to principal, interest and escrow, if applicable. Under &sect;&nbsp;34-23-6, if any brokerage fees, loan fees, points, finders' fees, origination fees, or any similar charges are imposed on a mortgage loan secured by real estate containing not more than 4 dwellings, those charges will not be subject to any refund in the event that the loan is prepaid in full provided that the lender gives the following written disclosure to the loan applicant not later than 3 business days after the application is received: “Notice regarding non-refundability of loan fees: You have received a good faith estimate or other itemization of fees and charges showing the loan fees and similar charges you are likely to pay to obtain this loan. As provided in &sect; 34-23-6, none of these or other fees and charges will be refunded in the event the loan is prepaid in whole or in part.” <ul>
 <li>34-23-5 covers prepayment penalties in Rhode Island for a mortgage loan secured by not more than 4 dwellings. &sect;&nbsp;34-23-5(a) provides, in connection with loans secured by a mortgage on a 1-4-family dwelling, that the note contain a provision permitting the loan to be prepaid in full without penalty at any time after 1 year from the making of the loan. A prepayment penalty of up to 2% of the balance due may be imposed if a loan is prepaid within the first year. No prepayment penalty may be imposed after the first year. &sect; 34-23-5(a) further provides that if interest or other charges in connection with a loan are prepaid or included in the face of the mortgage, the lender must rebate such interest or other charges under regulations promulgated by the Director of the Rhode Island Department of Business Regulation (“DBR”).</li>
</ul> Under &sect; 34-23-5(b), an alternative prepayment penalty may be charged on a non-purchase-money mortgage loan secured by a 1-4-family dwelling if all of the following conditions are met: (1)&nbsp;the terms, conditions, and amount of the penalty or other similar charges are prominently and conspicuously disclosed to the borrower in writing; (2)&nbsp;the borrower agrees and consents to be bound by such terms and conditions; (3)&nbsp;the prepayment penalty is not imposed more than 60 months after the loan date; and (4)&nbsp;the lender providing a mortgage with the alternative prepayment penalty must also have available a similar mortgage product that has a prepayment penalty that complies with the 2%/1 year limitation under &sect;&nbsp;34-23-5(a) and applicable federal regulations.

UNUSUAL TREATMENT OF STANDARD PROVISIONS

&sect;&nbsp;15-5-14.1 provides that an order automatically issues concurrently with the initial filing of a complaint for divorce or in other specified domestic relations cases. In relevant part, the automatic order prohibits parties from transferring, encumbering, or otherwise disposing of property held jointly or individually, except in the usual course of business or for customary household expenses or reasonable attorneys' fees, without the written consent of the other party or a court order. This law also prohibits the parties from unreasonably increasing debts subsequent to the filing and service of the complaint, including further borrowings against a credit line secured by the family residence, or from unreasonably using credit cards or cash advances. &sect;&nbsp;15-5-14.1 states that it is not to be construed to create liability against a creditor under the terms of the original agreement when the creditor acts in good faith and without actual knowledge of the automatic order. If no such order is outstanding, Lenders should consider obtaining a written representation of the borrower at the time the loan is closed that no automatic order is outstanding. If there is such an outstanding order, the lender should consider requiring another court order from the court from which the automatic order is issued that permits the party to engage in the loan transaction as a condition of the lender's loan commitment.

ORDERS AFFECTING REAL ESTATE

Rhode Island law specifically authorizes mortgages that secure future advances. See &sect;34-25-1 et seq. &sect; 34-25-8 provides that such mortgages shall be clearly entitled “Open-end mortgage to secure present and future loans under chapter 25 of title 34” and must, in addition, meet certain requirements specified in &sect; 34-25-9 in order to obtain the lien priority benefits of the law, including providing an address at which the mortgagee will accept written notices pursuant to &sect;&sect;&nbsp;34-25-10(b) and 34-25-11. Rhode Island law allows for priority of both obligatory and optional advances in open-end mortgage transactions. Non-obligatory or optional advances will lose their priority over certain liens if an advance is made after the mortgagee's receipt of written notice of a lien affecting the real estate subject to the open-end mortgage. Also, &sect; 34-25-11 provides that the mortgagor may terminate the right to have the mortgage secure further future advances by giving written notice to the mortgagee by certified or registered mail at the address provided for in the mortgage for this specific purpose. The mortgagor may establish the then outstanding principal balance as a matter of record by so notifying the mortgagee, also by registered or certified mail. The mortgagee is required to respond with a “stipulation” specifying the unpaid principal amount outstanding and “relinquishing the right to have such mortgage constitute security for additional future advances. . . .” The mortgagor is authorized to record the stipulation in the land evidence records.

SECURING FUTURE ADVANCES

With respect to open-end mortgages, &sect; 34-25-8 provides that such mortgage also shall be security for interest, taxes, insurance premiums, and such other obligations as are undertaken by the mortgagor in the deed, note, or agreement secured by the mortgage; and the open-end mortgage statute will not be violated if all such obligations, when added to the total principal amount of the loans outstanding at any time, may cause the amount secured by the mortgage deed to exceed the maximum principal amount stated in the mortgage. Moreover, such additional advances can be so secured in connection with any mortgage subject to the “Statutory Condition” and the “Statutory Power of Sale” contained in &sect;&sect; 34-11-21 and 34-11-22 and the agreement of the mortgagor to pay such advances.

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL, INCLUDING PAYMENT OF TAXES AND INSURANCE

Notwithstanding &sect; 34-4-27, &sect; 34-4-28 provides that title to real estate vests in the trustees of a named trust to which real estate has been conveyed despite the fact that the trustees are not named as grantees in the deed.

REAL ESTATE CONVEYED TO TRUST

Scrivener's error in legal description of properties conveyed was a mutual mistake warranting reformation of warranty deed and mortgages. Burt v. Furtado, 292 A.3d 640 (RI. May 1, 2023).

SCRIVENER'S ERROR

&sect; 34-27-8, concerning loans to natural persons for personal, family or household purposes secured by 1- to 4-family residential properties, effective July 6, 2016, restricts mortgagees from requiring, as a condition of sale or transfer pursuant to an offer made by a 501(c)(3) entity, or an entity controlled by a 501(c)(3), any provision limiting ownership or occupancy of the residential property.

TAX-EXEMPT ENTITIES - PURCHASE OF MORTGAGE LOAN OR RESIDENTIAL PROPERTY

Reverse Mortgages are governed under Chapter 25.1 of Title 34 of the Rhode Island General Laws. See &sect;&sect; 34-25.1-1 through 34-21.1-16.

REVERSE MORTGAGES

TRUSTEE UNDER DEED OF TRUST

FORECLOSURE

The customary method of foreclosure is the exercise of the statutory power of sale set forth in &sect;&nbsp;34-11-22. Rhode Island law also authorizes foreclosure by court proceedings to foreclose (&sect;&nbsp;34-27-1), by an action for possession (&sect;&nbsp;34-20-4), or by peaceable and open entry in the presence of 2 witnesses (&sect;&nbsp;34-23-3), though these alternative methods are not typically utilized. The &sect; 34-27-1 judicial foreclosure method (foreclosure by court proceedings) has become a more widely utilized foreclosure tool since the 2014 enactment of &sect; 34-27-3.2 which requires foreclosure counseling prior to foreclosure. In Ocwen Loan Servicing, LLC v. Medina, 247 A.3d 140 (R.I. 2021), the Rhode Island Supreme Court found that when a judicial foreclosure is initiated, the court first determines whether the mortgagee is entitled to foreclose and the court then oversees the conduct and process of the foreclosure sale, and judicial foreclosure sales brought in accordance with &sect; 34-27-1 do not trigger the statute governing nonjudicial foreclosures requiring notice of foreclosure counseling, even if certified letter or published notice referred to the statutory power of sale in the mortgage, where during proceeding, the trial court established the process for the judicial foreclosure sale, and there was no indication of deviation from that process. The following discussion accordingly relates to the statutory power of sale. Foreclosures in Rhode Island are arranged by an attorney following default and the delivery by the lender of any notice to the borrower required under the terms of the applicable note and mortgage. If the lender does not provide notices required by the mortgage, the attorney generally provides notice of the fact of default and acceleration. The attorney also provides any notice required to be given to the borrower by the attorney under the Federal Fair Debt Collection Practices Act. Finally, the attorney provides notice conforming to the requirements of &sect;&nbsp;34-27-4, which requires that a legal notice of foreclosure sale must be published in a public newspaper at least once a week for 3 successive weeks before the sale, the first notice to appear at least 21 days before the day of the sale, including the day of the first notice in the computation, and the third publication of the notice no fewer than 7 days before the original date of sale listed in the advertisement and no more than 14 days before the original date of sale. The sale may take place no more than 14 days from the date on which the third successive notice is published, including the day of the third publication in the computation. Because of foreclosure continuation requirements, the best practice is to publish 8 days before the sale and on the same day of the week for the 2 weeks immediately preceding that publication date. The mortgagor must also have been mailed written notice of the sale by certified mail at least 20 days (30 days for individual consumer mortgagors) prior to the first publication, including the day of mailing in the computation. The notice must comply with the requirements of subsections (c) and (d), which impose detailed, special notice requirements directed to any mortgagor who may be an active service member, and the foreclosure deed must include an affidavit of compliance with subsections (c) and (d). The foreclosure notice must describe the real estate to be foreclosed by street address and 1 or more of the following: (i)&nbsp;metes and bounds description, (ii)&nbsp;recitation of the taxing authority's assessor's plat and lot designation, or (iii)&nbsp;recitation of the book and page at which the mortgage is recorded in the applicable land evidence records. &sect;&nbsp;34-27-5. Although not required by statute, notice of the foreclosure sale is sent to junior lienholders, and should also be sent to any party to whom the mortgagor conveyed title. Notice of the sale also is sent to the office of the Internal Revenue Service Advisory Group specified in Publication 4235 pursuant to 26 U.S.C. &sect;&nbsp;7425 if the Internal Revenue Service has filed a lien against the property subject to the mortgage being foreclosed.

BRIEF DESCRIPTION OF PROCEDURE

<ul>
 <li>34-27-3.1, which required lenders to deliver notice of pre-foreclosure counseling to individual consumer mortgagors was repealed in 2014, with a sunset on the repeal of July 1, 2018. The repeal was not extended in the 2018 legislative session, which results in the resurrection on June 28, 2018 of &sect; 34-27-3.1, which requires lenders and loan servicers conducting Rhode Island foreclosures to send out availability of foreclosure counseling notices no less than 45 days prior to commencing foreclosure.</li>
</ul> Rhode Island's Administrative Procedures Act required state agencies to review, reformat and publish all State regulations in a comprehensive and uniform administrative code by December 31, 2018. The Mortgage Foreclosure Disclosure regulation numbered and known as 230-RICR-40-10-4 to 230-RICR-40-10-4.9, “Mortgage Foreclosure Disclosure”. In 2009 and 2010, the cities of Cranston, East Providence, Providence, Warren, and Warwick enacted local ordinances to address sub-prime lending and predatory lending practices. These ordinances required lenders, with some exceptions, to comply with certain requirements before conducting a foreclosure sale on owner-occupied 1-4-family residential properties, including the requirement that lenders conduct pre-foreclosure conciliation (a/k/a mediation). Compliance by lenders with the 2014 enactment of the statewide pre-foreclosure mediation requirement set forth in Chapter 34-27-3.2 fulfills the local mediation requirements in most instances. Foreclosure lenders should review local ordinances in the municipality in which the subject property is located for certain provisions that address notices to tenants in residential rental properties subject to foreclosure. The Cranston, East Providence, Providence, Warwick and Warren ordinances are similar in nature with minor differences. All ordinances require foreclosure conciliation. The mortgagee must give the city notice of the intent of sale at the same time that the notice is sent to the mortgagor. The notice must also be filed with the recorder of deeds. Following the filing of the notice of intent, the mortgagor and mortgagee must participate in a loan/mortgage conciliation conference to accomplish formal discussion and mediation regarding the mortgage. The mortgagee is permitted to participate in the conference via telephone, and a “loan/mortgage conciliation coordinator” must schedule the conference no later than 30 days following the issuance of the notice of intent. The “loan/mortgage conciliation conference coordinator” is an individual employed by a HUD-approved independent counseling agency whose purpose is to facilitate discussions between the mortgagor and mortgagee. The conciliation conference requirements must be completed within 60 days of the initial notice of intent in the City of Providence and the City of Warwick. The requirement for completion is 45 days in the City of Cranston, the City of East Providence, and the Town of Warren. A “good faith effort” to reach an agreement by both the mortgagor and mortgagee is required. The conciliation coordinator must provide the mortgagee with a housing agency certification report indicating the conciliation conference is complete, and the mortgagee must record it with the recorder of deeds. If the mortgagor fails to respond or otherwise cooperate with the conciliation coordinator's attempt to schedule the conference, after 2 attempts, the conciliation requirements will be deemed met. The foreclosure deed must also contain a certificate of compliance or, if applicable, an exemption certification. The East Providence, Providence, Warren and Cranston ordinances also contain a provision requiring that pre-foreclosure notices be given to tenants contemporaneously with the notice to the mortgagor. All of these ordinances require that the notice must be both in English and in Spanish; the Warren ordinance also requires the notice to be in Portuguese. Non-compliance will not affect the foreclosure, but compliance is a necessary pre-requisite to an eviction. The definition of a tenant does not include the mortgagor or members of the mortgagor's immediate family. A penalty may be assessed against the lender if the foreclosure takes place without affording the homeowner relief given by the ordinance. Penalties under the aforementioned local ordinances range from $500 to $2,000 per offense. Pursuant to &sect;&nbsp;34-27-3.2, prior to initiation of foreclosure by the mailing of the notice required by &sect;&nbsp;34-27-4(b) with respect to an individual consumer first-lien mortgage on any owner-occupied 1-4- family residential property that is the mortgagor's primary residence, the mortgagee must provide written notice to the mortgagor that the mortgagee may not foreclose on the mortgaged property without first participating in a mediation conference. &sect; 34-27-3.2 was set to expire on July 1, 2023, but the sunset provision was permanently removed on June 14, 2023. The written notice must be mailed to the mortgagee within 120 days after the default date. Failure to comply with this requirement results in a penalty of $1,000 per month for each month or part thereof. The first month commences on the 121st day after the date of default; subsequent months commence on the same day of each succeeding calendar month until the mortgagee sends the required notice. On April 15, 2020, the Rhode Island Department of Business Regulation (“DBR”) issued Bulletin 2020-5 “Mediation Compliance during the COVID-19 emergency.” During the pendency of the emergency, the phrase “after the date of default” in the above referenced section is interpreted to mean within one hundred twenty (120) days of the later of the following events, as applicable: (i)&nbsp;the date on which a forbearance agreement terminates; or (ii) if foreclosure of the subject mortgage is stayed due to an applicable foreclosure moratorium, then the date on which the applicable foreclosure moratorium concludes. This means that mortgagees will be able to honor the spirit of the CARES Act by affording relief to mortgagors who have requested assistance and/or observe any applicable foreclosure moratorium without being in violation of &sect; 34-27-3.2(d)(1). This interpretation applies to (1)&nbsp;all mortgages that are not in default at the time of the forbearance agreement was reached and (2)&nbsp;all mortgages in which the forbearance agreement was reached on or before the 120th day following the date of default under the mortgage. The DBR re-issued Bulletin 2020-5 on May 5, 2021, and the COVID-19 emergency in Rhode Island expired on May 11, 2023. The form of written notice has been prepared by the DBR in English, Portuguese and Spanish. The mediation conference is conducted by Rhode Island Housing and Mortgage Finance Corporation which is the mediation coordinator for purposes of &sect; 34-27-3.2.; the mediation coordinator is entitled to $400 for each mediation that takes place, and the HUD-approved counseling agency that acts as the mediator is entitled to a filing fee of $100 (a/k/a the “initial outreach” fee) per engagement. The fees are paid by the mortgagee. If the mortgagor does not respond to the notice, or does not cooperate with the mediation, the mediation coordinator will issue a certificate in a form prepared by the DBR authorizing the mortgagee to proceed with foreclosure, which certificate shall be recorded with the foreclosure deed. If the mortgagor does respond to the notice, but after a good faith effort made by the mortgagee no agreement is reached to renegotiate the terms of the loan in an effort to avoid foreclosure, the provisions of this section are deemed satisfied. The mediation coordinator will then issue a certificate in a form promulgated by the DBR authorizing the mortgagee to proceed with foreclosure, which certificate shall be recorded with the foreclosure deed. Failure of the mortgagee to comply with the requirements of this section renders the foreclosure void, but the mortgagee can re-exercise the power of sale upon compliance with this section. Foreclosing lenders must comply with &sect; 34-27-3.1 and 3.2 even if the mortgage being foreclosed secures a commercial loan, and the mortgagor is an individual. Title insurers will not insure the foreclosed title of real property where the owner mortgagor was an individual person unless lender can prove compliance with &sect; 34-27-3.1 and 3.2., even if the loan was not a consumer loan.

SPECIAL REQUIREMENTS FOR INDIVIDUAL CONSUMER MORTGAGOR

Foreclosure by statutory power of sale is approximately 60 to 90 days plus for an individual consumer mortgagor the time until a certificate is issued regarding mediation as described above.

TYPICAL LENGTH OF PROCEDURE

Rhode Island did not impose a moratorium on foreclosure sales in response to the COVID-19 pandemic, but banks and credit union loan servicers took part in a formal pledge to provide foreclosure relief for residential mortgage borrowers. https://dbr.ri.gov/documents/Financial_Institution_Pledge.pdf. Many Rhode Island loan servicers followed the foreclosure moratorium imposed by the GSE for their residential mortgages, and that moratorium terminated on August 31, 2021.

COVID RELIEF FOR FORECLOSURES

Mortgagees customarily provide in the terms and conditions of sale for a 2-4-week period following the auction sale during which the successful purchaser must pay the balance of the bid price. A deposit is required from the successful purchaser at the foreclosure sale. The mortgagee is permitted to bid for and purchase the property at the sale. &sect;&nbsp;34-27-2. A bid by the mortgagee may be assigned to any person including the FHA or VA prior to recording a mortgage deed. A copy of the assignment of bid should be attached as an exhibit to the foreclosure deed. If the mortgagee is the successful bidder, the usual practice is that the mortgagee, as grantor, conveys title to itself as grantee in the foreclosure deed.

FORECLOSURE BID REQUIREMENTS

No statutory right of redemption exists after a sale pursuant to the power of sale.

REDEMPTION PERIOD AND PRICE

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

If the mortgagee or an affiliate of the mortgagee is the successful bidder, the foreclosure deed shall be recorded, and all outstanding real estate taxes and other assessments that constitute liens on the real estate paid, within 45 days of the sale date. &sect;&nbsp;34-27-6. Effective July 7, 2017, the penalty for failing to record the foreclosure deed within 45 days of the sale date is increased from $40.00 per month to $300 per month with a cap at $2,000. The mortgagee shall include in the foreclosure deed an affidavit of compliance with the requirements of &sect;&nbsp;34-27-4 and, in the case of an “individual consumer mortgagor”, compliance with the requirements of &sect;&nbsp;34-27-3.1. Note that title insurers may require compliance with &sect; 34-27-3.1 for foreclosure of a commercial purpose loan where the mortgagor does not meet the statutory definition of an “individual consumer mortgage,” but the mortgagor is an individual.

FORECLOSURE DEED

A deficiency judgment may be obtained against the borrower after foreclosure. Although there are no statutory requirements that must be complied with in order to preserve the mortgagee's ability to collect a deficiency judgment, it is prudent to advise the borrower in writing of the possibility that a deficiency judgment may be sought after the foreclosure. This notice generally is given in the foreclosure notice discussed above. Generally, the limitations period is 10 years from the date of default. &sect; 9-1-13. For contracts under seal, the limitations period is 20 years. &sect;&nbsp;9-1-17.

DEFICIENCIES

Generally, foreclosure of a mortgage will terminate the tenancy of any tenant whose lease was entered into or renewed after the date the mortgage was recorded. In such a case, the tenant having been in possession under a lawful tenancy that has terminated is deemed a tenant at sufferance, and the notice to quit and ejectment procedure applicable to a mortgagor should apply to such a tenant. Note, however, the effect of the provisions of an enforceable Subordination, Non-Disturbance and Attornment Agreement. Pursuant to &sect;&nbsp;34-27-7, all bona fide residential tenants occupying the property to be foreclosed must be mailed a form of notice promulgated by the DBR; failure to comply with this statute, however, does not invalidate the foreclosure. Additionally, &sect; 34-18-38.2 imposes “just cause” limitations on the foreclosing owner's ability to evict a tenant of residential property. The purchase of property at foreclosure sale by assignee of mortgagee extinguishes all interests inferior to the foreclosed mortgage, including unrecorded leases. CFS 915, LLC v. Unetixs Vascular, Inc., et al., 226 A.3d 1058 (R.I. 2020).

EFFECT OF FORECLOSURE UPON LEASES

&sect; 34-11-22 governing the statutory power of sale was amended effective July 1, 2014, to permit foreclosure notices for property located in Bristol, Kent, or Washington counties to be published in a public newspaper previously published in the county and presently distributed daily in the county in which the mortgaged property is situated if there is no daily newspaper published in the city or town where the property is situated.

PUBLICATION OF FORECLOSURE NOTICES

REVIEW OF DEFAULT NOTICES: Compliance with the notice requirements in a mortgage contract is a condition precedent to acceleration. Failure to comply with the notice terms of the loan documents could affect the validity of a foreclosure sale. Cesar A. Woel v. Christiana Trust et al., 228 A.3d 339, (R.I. 2020).

REVIEW OF DEFAULT NOTICES

The general usury statute, &sect;&nbsp;6-26-2, provides in part that no lender may: “. . . directly or indirectly, reserve, charge, or take interest on a loan, whether before or after maturity, at a rate which shall exceed the greater of 21% per annum or the alternate rate specified in . . . this section of the unpaid principal balance of the net proceeds of the loan, not compounded, nor taken in advance, nor added on to the amount of the loan&hellip;” The “alternate rate” is essentially 9% over the domestic Prime Rate as published in The Wall Street Journal's Money Rates Section as of the last business day of the month preceding the later of the debtor's agreement or the date on which the interest rate is redetermined in accordance with the debtor's agreement. (In the case of credit card transactions, the maximum interest rate is the rate agreed upon between the lender and the debtor.) <ul>
 <li>6-26-2(c) also describes certain charges or payments that need not be included as “interest” for purposes of the usury statute.</li>
</ul> If any “regulated financial institution” as defined under the law knowingly contracts or charges a usurious rate of interest in violation of &sect;&nbsp;6-26-2, it is required to forfeit the entire interest on the debt. Usurious loans made by other than regulated financial institutions are void.

USURY CEILING

The usury rate limitation under &sect; 6-26-2 does not apply to loans in an amount greater than $1,000,000 to a commercial entity where repayment is not secured by a mortgage on the borrower's principal residence and where the commercial entity has first obtained a pro forma methods analysis by a certified public accountant licensed in Rhode Island indicating that the loan is capable of being repaid. See &sect; 6-26-2(e). This exception to the usury rate limitation will not apply where there is no actual proof that a commercial borrower has obtained the required pro forma methods analysis prior to entering into the loan. In Commerce Park Realty, LLC v. HR2-A Corp., 253 A.3d 1258 (R.I. 2021), the Rhode Island Supreme Court noted that although the lender received certifications by the borrower that they had obtained the required analysis, those certifications alone, without actual proof that the borrower obtained the required pro forma analysis, were insufficient to meet the terms of the exception to the usury rate limitation under &sect; 6-26-2(e). The usury law does not apply to “credit card transactions” subject to the Credit Card Lending Act, &sect; 6-26.1-1 et seq. USURY SAVINGS CLAUSES: In NV One, LLC v. Potomac Realty Capital, LLC, et al., 84 A.3d 800 (R.I. 2014), the Rhode Island Supreme Court held that usury savings clauses are unenforceable as against the well-established public policy of preventing usurious transactions.

USURY EXCEPTIONS

See Chapter &sect; 6A-9-501; Rhode Island adopted revised Article 9 of the UCC effective July 1, 2001.

LOCATIONS FOR FILING

SECURITY INSTRUMENT USED AS FIXTURE FILING

UNUSUAL PROVISIONS OR REQUIREMENTS

None. If guaranty is secured by guarantor's principal residence, the form of guaranty should address any homestead issues. See discussion below.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY

STATUTE OF LIMITATION PERIOD

&sect; 19-9-9 requires lenders and servicers to provide to the obligor within 3 business days after receipt of a written request for same the exact payoff due the lender on such loan, except if the payoff is requested for a loan that is 45 days or more delinquent or for an equity line of credit, in which case the period is 5 business days of the request. Non-amortizing loans made by Rhode Island Housing and Mortgage Finance Corporation for the purpose of providing closing cost or down payment assistant are not subject to this requirement. &sect;&nbsp;19-9-9(a)(1). <ul>
 <li>19-9-9 also requires lenders and servicers to: (a) permit such payoff to be made to it or, in the case of a mortgage owned or serviced by its subsidiary or affiliate, permit the payoff to be made at its principal place of business located in this state; (b)&nbsp;accept as final interest due the lender on any such payoff the interest calculated as of the business day full payment is made to the lending institution; and (c)&nbsp;issue, or provide, to the mortgagor or his or her agent or real estate closing officer a discharge of the mortgage securing the loan within 30 days after full payment of the payoff and final interest by separate instrument of release of the mortgage or as provided in &sect; 34-26-3.</li>
</ul> Further, a settlement agent who complies with all of the terms of the lender's or servicer's payoff statement is not responsible for any shortfall in the amount due to pay the mortgage loan in full, or for any interest on funds tendered beyond the date that the funds were received, even if the funds were insufficient to pay off the full balance of the mortgage loan. &sect;&nbsp;19-9-9(c). <ul>
 <li>34-26-2 requires a mortgagee to discharge a mortgage within 30 days after final payment of the debt secured by the mortgage. Upon forwarding the discharge for recording, the mortgagee is required to notify the mortgagor. The recording cost may be assessed to the mortgagor.</li>
</ul> If a mortgagee or its agent fails to comply with the requirements of &sect;&sect; 34-26-2 and 34-26-5 (also relating to discharges of mortgages and providing for a 10-day discharge requirement), the mortgagee is required to pay a penalty to the mortgagor equal to $50 for the first day of noncompliance (i.e., the day following the last day under the applicable law for the mortgagee to discharge the mortgage) and $5 per day thereafter. The mortgagor also is entitled to reimbursement of reasonable attorneys' fees (if applicable) and costs incurred by the mortgagor or the mortgagor's attorneys in attempting to obtain a mortgage discharge. Demand for penalties and attorneys' fees and costs may be made to the DBR if the mortgagee is a “regulated institution” under Title 19 of the Rhode Island General Laws, and the DBR is required to direct the mortgagee to pay the penalties and fees and costs on confirmed instances of noncompliance. The DBR also is empowered to promulgate rules and regulations governing the processing of the reimbursement. If the noncomplying mortgagee is not a regulated institution, the DBR is required to provide the mortgagor with the name, address and telephone number of the regulatory agency having jurisdiction over the mortgagee's actions. <ul>
 <li>34-26-8 provides that, subject to certain conditions, a Rhode Island attorney or authorized officer of a title insurance company authorized to transact title insurance business in Rhode Island may discharge certain mortgages of record by recording an affidavit of payment if the mortgagee fails to provide a mortgage discharge within 30 days of receipt of payment in accordance with a written payoff statement furnished by the mortgagee.</li>
</ul>

REQUIREMENTS FOR RELEASE OF LIEN

Chapter &sect; 9-26-4.1 permits the acquisition of a homestead estate in the maximum amount of $500,000 in the owner's principal residence. The estate is automatic by operation of law and no filing thereof is required. Persons rightfully in possession of premises occupied as a primary residence by lease or otherwise also may acquire a homestead estate. The estate is exempt from laws of attachment, levy on execution, and sale for payment of debts or legacies, except in the following relevant cases: sales for taxes, sewer liens, and certain other assessments, a debt contracted prior to the acquisition of the homestead estate, a debt contracted for the purchase of a home, an order issued by family court to support certain spousal or children's awards, a debt due to or a lien in favor of the Rhode Island Department of Human Services and/or the State for reimbursement of medical assistance as provided for in &sect;&nbsp;40-8-15, or a debt heretofore or hereafter owing to a federally insured deposit-taking institution or a person regulated or licensed under Title 19 of the Rhode Island General Laws. The provisions of this law also do not apply to a debt owing to a “financial institution” (although there is no definition of “financial institution” under this law) or private mortgages or mechanics' liens on the property comprising the estate under &sect;&nbsp;34-28-1 et seq. A homestead estate is subordinate to a mortgage encumbering the home that was signed by all owners of the home at the time that the mortgage was executed. No statement that a homestead estate shall be subordinate to the mortgage is required to be in the mortgage, and nothing in the mortgage affects or terminates a homestead estate other than to subordinate it to the mortgage. A mortgage lender shall not require or record a release of homestead in connection with the making of a mortgage.

HOMESTEAD ISSUES

Rhode Island is not a community property state.

COMMUNITY PROPERTY

Public Laws 2013, Chapters 4 and 5, identical acts that were enacted on May 2, 2013, and took effect on August 1, 2013, legalized same-sex marriage by amending &sect;&nbsp;15-1-1 to permit any person meeting the eligibility requirements of Chapters 15-1 and 15-2 of the General Laws to marry any other eligible person, regardless of gender. &sect;&nbsp;15-1-7 mandates that terms relating to marital or familial relationships shall be construed consistently with the changes wrought by this legislation throughout the law.

MARRIAGE EQUALITY

MORTGAGE TAX

&sect; 44-5-7 provides that mortgage servicers are permitted to pay escrowed taxes on an installment basis free of any charge, interest, penalties, or other assessments. This law provides for a limitation of liability to tax collectors (and the city or town) who have required payment in a single annual installment. It prohibits tax collectors from attempting to impose different requirements relating to the payment of taxes based upon whether the person who actually pays the tax is the owner or a mortgagee or servicer. Compliance with this law is mandatory. This law expressly does not apply to any city or town that as of July 8, 1999, offered a discount for payment of tax in a single installment payment.

PAYMENT OF TAXES BY ESCROW AGENTS

Yes. On Note: None. On Deed: $2.30 per $500. Rhode Island imposes a conveyance tax on each instrument by which any realty (including mobile and manufactured housings) is conveyed to a purchaser or other person when the consideration paid exceeds $100. Since July 1, 2014, the conveyance tax is $2.30 per $500 or fraction thereof on the purchase price (including the value of any lien or encumbrance remaining thereon at the time of sale). Customarily, the tax is paid when the instrument is presented for recording. Payment of the tax is evidenced by a receipt printed on the instrument by the recording clerk showing the amount of the tax and the payment date. In the absence of an agreement to the contrary, the tax customarily is paid by the grantor (seller). If no consideration is paid, the instrument must state that consideration is such that no documentary stamps are required. No transfer tax or fee shall be imposed by a land trust or municipality upon the acquisition of real estate by the state of Rhode Island or any of its political subdivisions. &sect; 44-25-1 et seq. and &sect; 44-5-27. The statutorily prescribed fees for recording mortgages and mortgage discharges are contained in &sect;&nbsp;34-13-7. Under &sect;&nbsp;34-13-7, the current fee for recording a mortgage is $60 plus $1 for each additional page. The current fee for recording a mortgage discharge, partial release of mortgage, or assignment of mortgage is $45, plus $1 for each additional page. Under &sect;&nbsp;42-8.1-20, an additional assessment of $4 for every instrument filed for record pursuant to &sect; 34-13-7 must be collected by the recording clerk.

DOCUMENTARY STAMP TAX

TRANSFER TAX

In connection with purchase transactions, any Rhode Island property sold by a non-resident seller must have a percentage of the net proceeds (6% of the proceeds if the non-resident seller is an individual, estate, trust or non-corporate entity and, as of July 15, 2019, 7% of the net proceeds if the non-resident seller is a corporation, reduced from the previous 9%) deducted and withheld by the buyer. &sect; 44-30-71.3 and Regulation NRW 91-01, 95-02 and 95-03. The amount withheld must be paid to the Rhode Island Division of Taxation within 3 banking days after the date of the recording of the instrument of transfer. The lien created by &sect; 44-30-71.3 for amounts required to be withheld from the proceeds of a sale of Rhode Island property by a non-resident seller ceases to be a lien upon or enforceable against the real estate and associated tangible personal property giving rise to the lien upon the expiration of the 10-year period from the sale date. &sect; 44-30-71.3. At closing, a resident seller is required to execute a residency affidavit, and the deed should contain a recitation that the seller is a Rhode Island resident, if applicable. If there is such a recitation, any lien is automatically discharged. There is an alternate method (the gain method) if the seller provides a Certification of Withholding Due (Rhode Island 71.3 Certificate) at the closing. This method requires the seller to submit to the Rhode Island Division of Taxation a Rhode Island Form 71.3 Election at least 20 days before the closing and the Division must approve it before the recording of the deed.

WITHHOLDING TAX

Consumer mortgage contracts typically provide that the mortgage is subject to the law where the real estate is located.

ENFORCEABILITY OF AGREEMENT OF BORROWER AND LENDER AS TO CHOICE OF LAW PROVISIONS

Effective June 20, 2022, Rhode Island updated and modernized Rhode Island receivership practice. R.I.G.L. &sect; 10-21-1 et seq. applies to receiverships of real estate and entire business entities. It clarifies inconsistent statutory and case law provisions regarding receiverships, and it codifies existing procedures for receiverships including addressing notices to interested parties, bond requirements for receivers, claim-filing procedures, engagement of professionals, stays of creditor actions, distribution of assets, multi-jurisdictional receiverships, treatment of executory contracts, and periodic reporting requirements. The law also codifies the concept of a temporary, non-liquidating receiver appointed to assist Rhode Island businesses adversely affected by a public emergency which results in business closures or substantial revenue losses to businesses that were not insolvent prior to the emergency.

RECEIVER AVAILABLE

Rate Locks: There are no Rhode Island statutes or regulations specifically dealing with lock-in agreements, loan approvals, or commitments. In November 1992, the Superintendent of Banking circulated to licensees a memorandum on lock-in agreements stating the DBR's position that if the loan fails to close within the lock-in period as a result of circumstances not under the applicant's control, the licensee is expected to honor the lock-in agreement at no additional cost to the applicant. Tax Service Fees: Mortgagees that escrow real estate taxes are prohibited from charging an “annual tax service fee or such other annual fee” to determine whether real estate taxes have been paid. By only prohibiting such “annual” fees, the law indirectly allows mortgagees to impose a 1-time tax service fee at loan closing. &sect; 19-9-2. The ability of mortgagees to charge a 1-time tax service fee at closing has been clarified in DBR Regulation 230-RICR-40-10-5.5A.2., which provides that a 1-time charge to pay the cost of a tax reporting service, paid by the mortgagor prior to or at the time of closing of the mortgage transaction, is not an “annual tax service fee.” Appraisal Fee Disclosure: &sect; 19-9-3(a) requires lenders that require the borrower to pay an appraisal fee to advise the mortgagor prior to the payment of the fee that if the mortgage loan application is not approved, the appraisal fee may not be refunded. &sect;&nbsp;19-9-3(b) requires lenders that accept applications and engage a real estate appraiser at the applicant's expense to conduct the appraisal to provide the applicant with a copy of the appraisal upon written request. Appraisals: &sect; 19-9-3.1 prohibits lending institutions that accept residential or commercial mortgage loan applications from using an appraisal company (for required appraisals) that is owned by or has directors, stockholders, or employees of that lending institution. This law does not apply to federally insured institutions. Choice of Title Attorney: &sect; 19-9-6 requires lending institutions that accept an application for a residential or commercial mortgage loan and require either a title insurance policy or that a title attorney search the real estate title to first permit the applicant to select a title insurance company or a qualified title attorney or of his or her own choice to search the title of the subject real estate. A lending institution is precluded from unreasonably disapproving a title insurance policy paid for or provided directly or indirectly by the borrower. Acceptance of a title insurance company's policy by FNMA or FHLMC is deemed to be conclusive proof that the title insurance company meets the reasonable standards required by &sect; 19-9-6. If the applicant does not select a qualified title attorney or title insurance company, then the applicant must sign a waiver permitting the lending institution to select its own attorney. Owner's Policy of Title Insurance: &sect; 19-9-5 requires lenders that accept mortgage loan applications and engage a title attorney to require the attorney to offer the borrower an owner's title insurance policy at the usual premium rate. If the borrower does not wish to purchase such title insurance, the borrower must have the right to reject the offer and the rejection must be in writing and signed by the borrower. Fee Disclosure in Mortgage: In the event that any brokerage fees, loan fees, points, finders' fees, origination fees or any similar charges are imposed on any secured mortgage loan secured by real estate containing 1-4-family residential dwellings, such charges are not subject to being refunded in the event that the loan contract is prepaid in full provided that the loan originator, broker or lender gives the following written disclosure to the loan applicant not later than 3 business days after the application is received: “Notice regarding non-refundability of loan fees: You have received a good faith estimate or other itemization of fees and charges showing the loan fees and similar charges you are likely to pay to obtain this loan. As provided in &sect; 34-23-6, none of these or other fees and charges will be refunded in the event the loan is prepaid in whole or in part.” Loans to Elderly Persons: Chapter 6-28.1 declares that the home solicitation of a consumer who is 65 years or older for a home improvement loan arising out of the lease or sale of goods or services, which violates the high cost mortgage provisions of the federal Truth-in-Lending Act, violates Rhode Island law. A third party is not liable for a violation unless there is an agency relationship between the violator and the third party or the third party had actual knowledge or participated in the violation. A violation of Chapter 6-28.1 is a misdemeanor; if the violator is found guilty, the violator is precluded from maintaining a civil action on the debt and is required to discharge the mortgage. Insurance: &sect; 27-5-3.2 prohibits lenders from requiring, as a condition of a mortgage or as a term of a mortgage deed, that the borrower carry property insurance on the property that is the subject of the mortgage in excess of the replacement cost of any buildings or improvements subject to the mortgage. Mortgage holders are not entitled to payment of a claim under a property insurance policy for a loss to a covered building that equals less than $3,500 and for which such holder is otherwise entitled to payment. <ul>
 <li>27-5-6 requires lenders to accept binders or other temporary insurance contracts, provided that the binders are in writing, in a form acceptable to the lender, and indicate that the lender is a loss payee on the binder and that the lender will be notified by registered or certified mail in the event the binder is canceled. If a binder is used, a policy is required to be produced at the lender's request within 30 days after the closing has been consummated.</li>
 <li>27-29-4(9)(i) provides that when a lender requires that property insurance be procured, the borrower must be given the free choice of agent and insurer through or by which the insurance is to be placed or written. However, a lender may require evidence, to be produced at a reasonable time prior to commencement or renewal of the risk, that insurance providing reasonable coverage has been obtained in an amount equal to that required by the lender and is issued by an insurer authorized to do business and having a licensed resident agent in Rhode Island. The lender may refuse to accept insurance from a particular insurer on reasonable grounds related to solvency. In addition, &sect;&nbsp;27-29-4(10) in part requires the lender to inform the borrower in writing of his or her right of free choice in the selection of the agent and insurer through or by which the insurance is to be placed. A 2017 amendment to &sect; 27-29-4 added a provision prohibiting unfair discrimination by treating persons in domestic partnerships differently than persons in a marriage.</li>
 <li>27-5-6.1 prohibits lenders from obtaining single interest hazard insurance and charging the related cost to the borrower in connection with a loan secured by an owner-occupied 1-4-family residential property, unless the lender has notified the borrower of its intent to obtain such coverage and 10 days have elapsed since the notice. This requirement does not apply if the lender has received notice of nonrenewal or cancellation of the hazard insurance policy.</li>
 <li>27-29-4(9)(iii)(C) prohibits any person who lends money or extends credit from requiring that any borrower, mortgagor, purchaser, insurer, or insurance producer pay a separate charge in connection with the handling of any policy required as security for a loan on real estate or a separate charge to substitute the policy of one insurer for another.</li>
 <li>27-5-3.3 requires banks and lending institutions doing business within Rhode Island, whether acting under state or federal authority, to maintain a resident agent in Rhode Island who has authority to endorse insurance claim checks on behalf of those banks and lending institutions.</li>
 <li>27-5-3.4 relates to notice of cancellation or non-renewal of fire insurance policies. This law provides that if the policy is made payable to a mortgagee or any person other than the named insured, notice must be given to the payee as well as the named insured as provided in the statute.</li>
 <li>27-5-6.2 requires, in connection with a loan secured by an owner-occupied 1-4-family residential property, that lenders that escrow for hazard insurance premiums pay the annual premium to the insurance company on or before the first to occur of (i)&nbsp;10 days after receiving the annual insurance premium bill, approved in writing by the mortgagor, if such approval is required by the lender, provided the lender has notified the mortgagor in writing that such approval is required or (ii)&nbsp;7 days before the effective date of the policy. No payment is required, however, unless the mortgagor has sufficient funds escrowed for payment of the annual premium.</li>
 <li>34-43-1 requires every landlord or lessor of residential or commercial property located in the City of Providence to file a written declaration in the tax assessor's office setting forth information regarding the insurance company insuring the property against loss by damage or fire. The declaration is required to be filed within 10 days of the landlord's or lessor's taking title to the property and within 10 days of the issuance of a new policy or an amended policy changing any information contained in the declaration. This section does not apply to owner-occupied residential property or residential property occupied by 1 or 2 households. Violations of this law are punishable by a $500 fine and/or up to 1 year's imprisonment.</li>
 <li>27-5-3.5 requires all insurance companies authorized to provide condominium unit owner's insurance and tenant's and homeowner's insurance on owner-occupied 1-4-unit dwellings in Rhode Island, in connection with such insurance, to make available to any insured purchasing such a policy, at the insured's option, earthquake coverage. The premium and deductible amounts for earthquake coverage must be shown separately on the declarations page of the policy.</li>
 <li>27-29-4(9)(iv) provides that any person who lends money or extends credit and who solicits insurance on real and personal property shall explain to the borrower in writing that the insurance related to the credit extension may be purchased from an insurer or insurance producer of the borrower's choice, subject only to the lender's right to reject a given insurer based on reasonable standards uniformly applied, relating to the extent of coverage required and financial soundness and services of an insurer. Compliance with truth-in-lending laws constitutes compliance with &sect;&nbsp;27-29-4(9)(iv). (The solicitation of insurance for the protection of real property after a person indicates interest in securing a first mortgage credit extension is prohibited under &sect;&nbsp;27-29-4 until the person receives a written commitment from the lender as to the loan or credit extension.)</li>
 <li>19-14.1-3 regulates disclosure of unemployment insurance. This law requires a lender or loan broker offering such coverage to provide “specific written indication” that the cost of coverage has been disclosed to the debtor, that the coverage is not a condition for the credit extension and that the debtor voluntarily desires the coverage. Also, the debtor must be given written notice of his or her right to cancel the insurance within 30 days of receipt of the insurance policy and that cancellation will result in a full refund of any premiums paid.</li>
</ul>

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

Lead Hazard Sales Pamphlet: &sect; 23-24.6-16 requires the promulgation of regulations by the Department of Health to require an owner of a dwelling offered for sale or lease to provide copies of any lead inspection results relating to the dwelling and copies of educational materials developed by the Department. The Department's educational materials have been added to the EPA Lead Hazard Information Pamphlet required to be provided on properties with 1 to 4 units. Other seller disclosures are required under Rhode Island law. Please consult Rhode Island counsel if you need further information.

Lead Hazard Sales Pamphlet

RIGL &sect; 19-14-2 prohibits any individual, partnership, corporation or limited liability company from making or brokering loans within Rhode Island without obtaining a lender's license or a loan broker's license. Loans are considered made “within Rhode Island” if they are secured by mortgages on Rhode Island property; if the application is taken or the loan closes in Rhode Island; if the loan solicitation is done in Rhode Island; or if the lender maintains an office in Rhode Island. The following are exempt from licensing for lending and loan brokering: lenders who make less than 6 loans in a consecutive 12-month period (this exception applies to lenders only and not to loan brokers), closing attorneys, non-profits, financial institutions, banks and credit unions regulated by the federal government and by the State of Rhode Island. State-chartered banks from outside of Rhode Island must obtain approval from the Director of the Rhode Island Dept. of Business Regulation to take advantage of the exemption from the licensing requirement. The licensing requirement does not apply to loans made to corporations, partnerships, limited liability companies, and other business entities, and to loans over $25,000 to individuals for commercial purposes. All new applications for licensing must be submitted to the Rhode Island Division of Banking via the Nationwide Multistate Licensing System (NMLS). See RIGL &sect;&sect; 19-14-1, 19-14-2 and 19-14.1-10, and Rhode Island Code of Regulations 230-RICR-40-10-2. MODIFICATION - UNUSUAL PROVISIONS OR REQUIREMENTS FOR MODIFICATIONS OF EXISTING MORTGAGE LOANS: None.

LENDER QUALIFICATION AND/OR LICENSURE

&sect; 34-39-5, governing release and amendment of conservation and preservation restrictions, was amended in 2016 to require court approval, based on set criteria, for amendments to such restrictions that materially detract from the values intended for protection.

CONSERVATION AND PRESERVATION RESTRICTIONS -AMENDMENT

The procedure for terminating time shares in a time-share property under &sect; 34-41-2.05 was amended in July 2016 to provide that an agreement of at least 60% of the time share owners was required for termination. Alternatively, upon the occurrence of any of the circumstances enumerated in new subsection (b)(2)(i) - (v), the time share instrument can be terminated pursuant to a plan or agreement approved by the lesser of (1) the percentage of voting interest needed to amend the instrument, or (2) the percentage interest needed to terminate it. 2018 amendments to &sect; 34-41-2.05 clarify the rights of creditors and former share owners after termination, the procedure for valuation of the time share interests and subsection (f) was amended to provide that foreclosure of a time-share association lien vests title in the transferee upon recording of the foreclosure deed, without further action if no foreclosure litigation is commenced within 1 year after recording.

TIME-SHARE ACT - TERMINATION OF TIME SHARES

The principal environmental lien in Rhode Island is the Rhode Island Industrial Property Remediation and Reuse Act, Sections 23-19.14-1 et seq., which provides that the State, or one of its agencies, may incur and recover response costs for remediation at a site and may impose a so-called “windfall lien” for unrecovered response costs and/or for additional necessary remedial actions. &sect;&nbsp;23-19.14-14. The lien may not exceed the unrecovered costs plus interest and may not exceed the increase in the site's fair market value attributable to the response action or redevelopment activities. The lien is subject to the rights of a purchaser, holder of a security interest, or judgment lien creditor whose interest is perfected prior to notice of the filing of the lien. &sect;&nbsp;23-19.14-15. In addition, the following may be considered environmental liens: <ul>
 <li>Cities and towns are authorized to create dam management districts and assess fees to property owners within the districts for repair and maintenance of dams, among other things. These district fees become liens of the properties within the districts. &sect; 45-62-4.</li>
 <li>Cities, towns and fire districts have liens for the cost of installation of sewer and water lines. Sections 44-9-1 and 44-9-3.</li>
</ul>

ENVIRONMENTAL LIEN LAW ISSUES

Rhode Island does not have a local bar opinion report that articulates standard accepted opinion practices. However, Rhode Island has an unusual provision regarding enforceability opinions, since &sect; 19-9-7 prohibits a lending institution making a loan in Rhode Island from requiring, as a condition to the loan, that borrower's counsel provide “an opinion in relation to the validity, binding effect, or enforceability of any of the loan documents or the availability of remedies thereunder.” This prohibition does not apply to state or municipal transactions or transactions related to the public sale of bonds or other securities. The law permits the requirement for opinions on the “authority and status of a borrower and matters relating to collateral.” LABOR AND MATERIAL LIEN CLAIMS (“L&M LIEN”)—PRIORITY ISSUES:

LEGAL OPINIONS

A contractor or subcontractor, including an architect or engineer, or a materialman or laborer, who performs work on or furnishes materials to real estate with the consent of the owner or lessee is entitled to an inchoate lien (“L&M lien”) against the real estate, provided that a statutory form of Notice of Possible Mechanic's Lien was sent to the owner or lessee by certified mail by the person contracting directly with such owner or lessee within 10 business days after the work under such contract began. &sect;&sect; 34-28-1 and 34-28-4.1. The L&M lien is lost unless the lienholder records a notice of intention in the land evidence records of the city or town where the real estate is located using the form specifically set forth in the statute before or within 200 days from the performance of such work or furnishing of materials, and mails by registered or certified mail, return receipt requested, a copy of said lien to the owner of record of the land before or within that 200-day period. See &sect;&nbsp;34-28-4. If a notice of intention is so mailed and recorded within 200 days after performance of work or furnishing of materials, the L&M lien takes effect at the time of recording but the lien amount relates back to cover all work done during the 200-day period prior to the notice's mailing plus all retainage effective from commencement of said work. See Sections 34-28-4 and 34-28-25. In order to enforce an L&M lien, the purported lienholder must also comply with strictly construed statutory procedures for perfecting the lien. Those procedures include filing of a complaint to enforce the lien (in the Superior Court for the County in which the property is situated) and filing a corresponding notice of lis pendens in the Land Evidence Records within 40 days of recording the notice of intention. Failure to so timely perfect the lien can result in the lien being void and wholly lost. &sect;&nbsp;34-28-10. A mortgagee must timely appear as a party and file a response to the lienholder's complaint in Superior Court or its position will be subordinated to those of the lienholder and others who have appeared and filed a response. &sect; 34-28-16.

INCEPTION OF L&M LIEN (Priority of Lien of Mortgage)

&sect; 34-49-1 et seq. grants real estate brokers a lien on commercial real estate in the amount of the compensation due to the broker for licensed services, and establish the rules for enforcing the lien. Prior recorded liens, including mortgages, have priority over the lien created by this act.

COMMERCIAL REAL ESTATE BROKER LIEN ACT

&sect;&nbsp;45-24-57 provides that a zoning board of review is required to hear and decide zoning appeals within 65 days of the filing of the appeal.

ZONING

TITLE INSURANCE (FOR LOAN POLICY)

The American Land Title Association (“ALTA”) loan policy is the form generally required by lenders for a residential or commercial mortgage loan secured by Rhode Island property.

FORM USUALLY REQUIRED BY LENDER

There are numerous ALTA endorsements available for loan policies. The requirement of particular endorsements depends upon the particular circumstances of the loan and subject property. A secondary mortgage market endorsement is typically required for residential loan policies. This endorsement insures that (a)&nbsp;taxes, water and sewer charges, and other municipal liens are paid, except for assessments that are not yet due and payable, (b)&nbsp;restrictions, covenants, and conditions set forth in the policy have not been violated and future violations will not result in a forfeiture or reversion of title, (c)&nbsp;easements set forth in the policy do not adversely affect the use and enjoyment of the premises for residential purposes as presently improved and none of the improvements encroach on such easements, and (d)&nbsp;the policy insures against loss by reason of any violation, encroachment or adverse circumstances that would have been disclosed by an accurate survey, except as set forth in the policy. For commercial loans, endorsements are determined on a case-by-case basis. For example, tie-in, first loss, comprehensive, land same as survey, separate tax lot, subdivision, zoning and waiver of arbitration endorsements may be required in a commercial loan secured by real estate. In addition to other standard exceptions, there is a standard exception from coverage in the ALTA loan policy for L&M liens. There is not a standard endorsement for L&M lien coverage. However, for residential properties, and for commercial loan policies under a certain dollar amount, title companies will delete the standard exception for L&M liens from a loan policy upon a property owner's execution of an affidavit stating that no labor or materials have been furnished with respect to the mortgaged property within the 200-day period prior to the granting of the mortgage and, with respect to commercial properties, upon receipt of such affidavit along with an indemnity agreement from the property owner.

ENDORSEMENTS AVAILABLE

See the section of this survey regarding loan application disclosures for special rules regarding title insurance provided in &sect;&sect; 19-9-5 and 19-9-6. <ul>
 <li>&sect;&nbsp;34-13-11 and 34-13-12, require persons, corporations or limited liability companies that own real estate or have an interest therein to file or record, as applicable, a certificate of merger, consolidation or conversion from a general partnership to a limited liability company, within 60 days of the event. Also, with respect to name changes, any person who conveys property acquired prior to a name change must state in the instrument of conveyance the name under which the person acquired the property and the new name under which it is transferred and the clerk or recorder of deeds is required to index the record of the instrument under both names.</li>
</ul> Private transfer fees, i.e., a fee to a person or business entity (including, but not limited to, a real estate developer) based solely on the subsequent resale or transfer of real property, are prohibited by &sect;&nbsp;34-11-42. Any covenant recorded on or after July 1, 2012, imposing a transfer fee is void and unenforceable against subsequent owners, purchasers, or mortgagees. Exemptions from this section apply to low or moderate income housing developments covered by the definition of &sect;&nbsp;45-53-3(9); to fees or charges connected with the transfer of properties subject to a conservation restriction as defined in &sect;&nbsp;34-39-2(a); and to community associations, including, but not limited to, condominium associations, homeowners associations, and cooperation associations. <ul>
 <li>27-2.6-6 of the Rhode Island Title Insurers Act dealing with the issuance of closing protection letters was amended effective July 2, 2014. &sect; 27-2.6-6(c)(1) was amended by obligating a title insurer to provide a closing protection letter in connection with the issuance of any loan policy insuring a lender's interest in 1-4-family residential property, and permitting title insurers to offer a closing protection letter in connection with the issuance of any loan policy insuring a lender's interest in any other type of residential or commercial property. &sect;&nbsp;27-2.6-6(c)(2) was added to authorize a title insurer to charge a fee for the issuance of a closing protection letter.</li>
</ul> &nbsp;

Rhode Island

Mortgage Law Summary

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Mortgage Law Summary for Rhode Island

Rhode Island

Mortgage Law Summary

Continue reading theMortgage Law Summary for Rhode Island

Continue reading the
Mortgage Law Summary for Rhode Island