2012 -- S 2492

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO COURTS AND CIVIL PROCEDURE--PROCEDURE GENERALLY -- LEVY

AND SALE ON EXECUTION--PROPERTY SUBJECT TO TAXATION

     Introduced By: Senator Michael J. McCaffrey

     Date Introduced: February 16, 2012

     Referred To: Senate Judiciary

It is enacted by the General Assembly as follows:

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     SECTION 1. Section 9-26-4.1 of the General Laws in Chapter 9-26 entitled "Levy and

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Sale on Execution" is hereby amended to read as follows:

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     9-26-4.1. Homestead estate exemption. -- (a) In addition to the property exempt from

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attachment as set forth in section 9-26-4, an estate of homestead to the extent of three hundred

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thousand dollars ($300,000) five hundred thousand dollars ($500,000) in the land and buildings

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may be acquired pursuant to this section by an owner or owners of a home or one or all an

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individual who rightfully possess possesses the premise by lease premises by lease, as life tenant,

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as a beneficiary of a revocable or irrevocable trust or otherwise, and who occupy or intend

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occupies or intends to occupy the home as a his or her principal residence. The estate of

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homestead provided pursuant to this section shall be automatic by operation of law, and without

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any requirement or necessity for the filing of a declaration, a statement in a deed, or any other

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documentation. The estate shall be exempt from the laws of attachment, levy on execution and

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sale for payment of debts or legacies except in the following cases:

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      (1) Sale for taxes, sewer liens, water liens, lighting district assessments and fire district

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assessments;

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      (2) For a debt contracted prior to the acquisition of the estate of homestead;

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      (3) For a debt contracted for the purchase of the home;

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      (4) Upon an order issued by the family court to enforce its judgment that a spouse pay a

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certain amount weekly or otherwise for the support of a spouse or minor children;

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      (5) Where a building or buildings are situated on land not owned by the owner of a

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homestead estate are attached, levied upon or sold for the ground rent of the lot upon which the

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building or buildings are situated;

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      (6) for a debt due to, or a lien in favor of, the department of human services and/or the

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state of Rhode Island for reimbursement of medical assistance, as provided for in section 40-8-15;

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      (7) For a debt heretofore or hereafter owing to a federally insured deposit taking

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institution or a person regulated or licensed under title 19.

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      (b) For the purposes of this section, "owner of a home" includes a sole owner, lessee (but

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only a lessee that was the owner of a home prior to transfer to the lessor) joint tenant, tenant by

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the entirety or tenant in common; provided, that only one owner individual may acquire an estate

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of homestead in the home for the benefit of his or her family; and provided further, that an estate

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of homestead may be acquired on only one principal residence for the benefit of a family. For the

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purposes of this section, "family" includes either a parent and child or children, a husband and

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wife and their children, if any, or a sole owner. The provisions of this section shall not apply to

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any debt owing to a financial institution, or private mortgages, regulated institution, a debt

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secured by a mortgage or other voluntary lien on a home, or a mechanics' lien on the property

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comprising the estate as provided for under chapter 28 of title 34. Notwithstanding any other

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provisions of law, it shall not be necessary to record a declaration of homestead in order to take

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advantage of the homestead estate exemption.

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     SECTION 2. Section 44-3-38 of the General Laws in Chapter 44-3 entitled "Property

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Subject to Taxation" is hereby amended to read as follows:

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     44-3-38. Transfer of property to trust. -- Any exemption, freeze of tax rates and/or

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valuation granted to any individual or individuals pursuant to this chapter is not affected if the

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eligible individuals transfer the property to a revocable living trust pursuant to the provisions of

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the general laws and/or pursuant to any public law or municipal ordinance shall not be affected if

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the otherwise eligible individual: (1) Transfers an ownership interest in the property while

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retaining a life estate in the property; or (2) Transfers an ownership interest while leasing the

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property back, but only where the lessee was the owner of the property prior to the transfer to the

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lessor; or (3) Transfers the property to a revocable or irrevocable living trust, if and so long as the

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otherwise eligible individual resides in such property and the otherwise eligible individual or the

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trustee is legally obligated to pay property tax on such property by contract, by agreement, by the

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terms of the trust instrument, or otherwise by law. The provisions of this section shall be

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applicable to any such transfer, regardless of when the transfer is made.

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO COURTS AND CIVIL PROCEDURE--PROCEDURE GENERALLY -- LEVY

AND SALE ON EXECUTION--PROPERTY SUBJECT TO TAXATION

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     This act would increase the amount of the homestead exemption protected from

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attachment from three hundred thousand dollars ($300,000) to five hundred thousand dollars

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($500,000), and it would clarify that the homestead exemption extends to persons occupying the

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subject premises as life tenant, lessee or as a beneficiary of a trust that owns the subject property.

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In addition, this act would provide that a tax exemption created by a public law or municipal

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ordinance would not be affected by the transfer of an ownership interest in property when the

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transferor retains a life estate in the property or continues to reside in the property by lease or as a

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trust beneficiary.

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     This act would take effect upon passage.

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