2019 -- H 5730

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LC001934

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS -- REAL ESTATE SALES

DISCLOSURES

     

     Introduced By: Representatives Carson, and Cortvriend

     Date Introduced: February 27, 2019

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 5-20.8-1 and 5-20.8-2 of the General Laws in Chapter 5-20.8

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entitled "Real Estate Sales Disclosures" are hereby amended to read as follows:

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     5-20.8-1. Definitions.

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     When used in this chapter, unless the context indicates otherwise:

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     (1) "Agent" means any individual or entity acting on behalf of a seller or buyer to effect

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the transfer of real estate. It includes listing agent, selling agent, buyer's agent, and their

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respective brokers.

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     (2) "Agreement to transfer" means a purchase and sale agreement, installment sales

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contract, option to purchase agreement or other agreement intended to effect the transfer of real

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estate from a seller to a buyer.

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     (3) "Approved energy rater" means a vendor who evaluates the energy performance of a

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building and provides an estimate of annual utility costs. The office of energy resources shall

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create and maintain a list of approved energy raters who provide reliable annual utility cost

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estimates.

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      (4) "Building" means a structure that uses energy and is designed or intended to be used

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as a home, residence, sleeping place by one or more persons, workplace, storage facility, or to

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enable activities;

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     (3)(5) "Buyer" means any individual or entity seeking to obtain title to real estate from a

 

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seller for consideration.

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     (4)(6) "Closing" means the time at which real estate is transferred from seller to buyer

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and consideration is delivered to the seller or to a settlement agent with the intention of imminent

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delivery upon the recording of pertinent documents and other ministerial acts associated with

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settlement.

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     (5)(7) "Deficient conditions" means any land restrictions, defect, malfunction, breakage,

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or unsound condition existing on, in, across or under the real estate of which the seller has

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knowledge.

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     (8) "Owner" means any person who, alone or jointly or severally with others:

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     (i) Has legal title or tax title (pursuant to §§ 44-9-40 through 44-9-46) to any dwelling,

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dwelling unit or structure with or without accompanying actual possession thereof; or

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     (ii) Has charge, care, or control of any dwelling, dwelling unit or structure as owner or

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agent of the owner, or an executor, administrator, trustee, or guardian of the estate of the owner.

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Any person representing the actual owner in this way shall be bound to comply with the

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provisions of this chapter and of rules and regulations adopted pursuant thereto to the same extent

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as if he or she were the owner.

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     (6)(9) "Real estate" means vacant land or real property and improvements consisting of a

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house or building containing one to four (4) dwelling units.

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     (7)(10) "Seller" means any individual or entity seeking to transfer title to real estate to a

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buyer for consideration.

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     (8)(11) "Transfer" means the sale or conveyance, exchange of, or option to purchase any

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real estate.

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     5-20.8-2. Disclosure requirements.

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     (a) As soon as practicable, but in any event no later than prior to signing any agreement

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to transfer real estate, the seller of the real estate shall deliver a written disclosure to the buyer

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and to each agent with whom the seller knows he or she or the buyer has dealt in connection with

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the real estate. The written disclosure shall comply with the requirements set forth in subsection

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(b) of this section and shall state all deficient conditions of which the seller has actual knowledge.

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The agent shall not communicate the offer of the buyer until the buyer has received a copy of the

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written disclosure and signed a written receipt of the disclosure. If the buyer refuses to sign a

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receipt pursuant to this section, the seller or agent shall immediately sign and date a written

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account of the refusal. The agent is not liable for the accuracy or thoroughness of representations

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made by the seller in the written disclosure or for deficient conditions not disclosed to the agent

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by the seller.

 

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     (b)(1) The Rhode Island real estate commission may approve a form of written disclosure

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as required under this chapter or the seller may use a disclosure form substantially conforming to

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the requirements of this section. The following provisions shall appear conspicuously at the top of

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any written disclosure form: "Prior to the signing of an agreement to transfer real estate (vacant

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land or real property and improvements consisting of a house or building containing one to four

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(4) dwelling units), the seller is providing the buyer with this written disclosure of all deficient

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conditions of which the seller has knowledge. This is not a warranty by the seller that no other

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defective conditions exist, which there may or may not be. The buyer should estimate the cost of

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repair or replacement of deficient conditions prior to submitting an offer on this real estate. The

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buyer is advised not to rely solely upon the representation of the seller made in this disclosure,

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but to conduct any inspections or investigations which the buyer deems to be necessary to protect

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his or her best interest." Nothing contained in this section shall be construed to impose an

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affirmative duty on the seller to conduct inspections as to the condition of this real estate.

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     (2) The disclosure form shall include the following information:

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     (i) Seller Occupancy -- (Length of Occupancy)

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     (ii) Year Built

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     (iii) Basement -- (Seepage, Leaks, Cracks, etc. Defects)

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     (iv) Sump Pump -- (Operational, Location, and Defects)

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     (v) Roof (Layers, Age and Defects)

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     (vi) Fireplaces -- (Number, Working and Maintenance, Defects)

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     (vii) Chimney -- (Maintenance History, Defects)

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     (viii) Woodburning Stove -- (Installation Date, Permit Received, Defects)

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     (ix) Structural Conditions -- (Defects)

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     (x) Insulation -- (Wall, Ceiling, Floor, UFFI)

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     (xi) Termites or other Pests -- (Treatment Company)

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     (xii) Radon -- (Test, Company) "Radon has been determined to exist in the State of

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Rhode Island. Testing for the presence of radon in residential real estate prior to purchase is

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advisable."

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     (xiii) Electrical Service -- (Imp. & Repairs, Electrical Service, Amps, Defects)

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     (xiv) Heating System -- (Type, Imp. & Repairs, Underground Tanks, Zones,

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Supplemental Heating, Defects)

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     (xv) Air Conditioning -- (Imp. & Repairs, Type, Defects)

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     (xvi) Plumbing -- (Imp. & Repairs, Defects)

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     (xvii) Sewage System -- (Assessment, Annual Fees, Type, Cesspool/Septic Location,

 

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Last Pumped, Maintenance History, Defects)

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     "Potential purchasers of real estate in the state of Rhode Island are hereby notified that

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many properties in the state are still serviced by cesspools as defined in Rhode Island general law

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chapter 23-19.15 (The Rhode Island Cesspool Phase-Out Act of 2007). Cesspools are a

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substandard and inadequate means of sewage treatment and disposal, and cesspools often

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contribute to groundwater and surface water contamination. Requirements for abandonment and

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replacement of high-risk cesspools as established in Rhode Island general law Chapter 23-19.15

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are primarily based upon a cesspool's non-treatment of wastewater and the inherent risks to public

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health and the environment due to a cesspool's distance from a tidal water area, or a public

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drinking water resource. Purchasers should consult Rhode Island general law chapter 23-19.15 for

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specific cesspool abandonment or replacement requirements. An inspection of property served by

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an on-site sewage system by a qualified professional is recommended prior to purchase. Pursuant

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to Rhode Island general law § 5-20.8-13, potential purchasers shall be permitted a ten (10) day

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period to conduct an inspection of a property's sewage system to determine if a cesspool exists,

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and if so, whether it will be subject to the phase-out requirements as established in Rhode Island

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general law chapter 23-19.15.

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     (xviii) Water System -- (Imp. & Repairs, Type, Defects) Private water supply (well).

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"The buyer understands that this property is, or will be served, by a private water supply (well)

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which may be susceptible to contamination and potentially harmful to health. If a public water

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supply is not available, the private water supply must be tested in accordance with regulations

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established by the Rhode Island department of health pursuant to § 23-1-5.3. The seller of that

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property is required to provide the buyer with a copy of any previous private water supply (well)

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testing results in the seller's possession and notify the buyer of any known problems with the

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private water supply (well)."

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     (xix) Domestic Hot Water -- (Imp. & Repairs, Type, Defects, Capacity of Tank)

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     (xx) Property Tax

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     (xxi) Easements and Encroachments -- The seller of that real estate is required to provide

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the buyer with a copy of any previous surveys of the real estate that are in the seller's possession

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and notify the buyer of any known easements, encroachments, covenants or restrictions of the

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seller's real estate. If the seller knows that the real estate has a conservation easement or other

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conservation or preservation restriction as defined in § 34-39-1 of the general laws, the seller is

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required to disclose said information and provide the buyer with a copy of any documentation in

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the seller's possession regarding the conservation and preservation restrictions. A buyer may

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wish to have a boundary or other survey independently performed at his or her own expense.

 

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     (xxii) Deed -- (Type, Number of Parcels)

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     (xxiii) Zoning -- (Permitted use, Classification) "Buyers of real estate in the state of

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Rhode Island are legally obligated to comply with all local real estate ordinances; including, but

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not limited to, ordinances on the number of unrelated persons who may legally reside in a

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dwelling, as well as ordinances on the number of dwelling units permitted under the local zoning

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ordinances." If the subject property is located in a historic district, that fact must be disclosed to

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the buyer, together with the notification that "property located in a historic district may be subject

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to construction, expansion or renovation limitations. Contact the local building inspection official

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for details."

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     (xxiv) Restrictions -- (Plat or Other)

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     (xxv) Building Permits

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     (xxvi) Minimum Housing -- (Violations)

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     (xxvii) Flood Plain -- (Flood Insurance)

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     (xxviii) Wetlands -- The location of coastal wetlands, bay, fresh water wetlands, pond,

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marsh, river bank or swamp, as those terms are defined in chapter 1 of title 2 and the associated

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buffer areas may impact future property development. The seller must disclose to the buyer any

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such determination on all or part of the land made by the department of environmental

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management.

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     (xxix) Multi-family or other Rental Property -- (Rental Income)

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     (xxx) Pools & Equipment -- (Type, Defects)

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     (xxxi) Lead Paint -- (Inspection) Every buyer of residential real estate built prior to 1978

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is hereby notified that those properties may have lead exposures that may place young children at

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risk of developing lead poisoning. Lead poisoning in young children may produce permanent

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neurological damage, including learning disabilities, reduced IQ behavioral problems, and

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impaired memory. The seller of that property is required to provide the buyer with a copy of any

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lead inspection report in the seller's possession and notify the buyer of any known lead poisoning

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problem. Environmental lead inspection is recommended prior to purchase.

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     (xxxii) Fire

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     (xxxiii) Hazardous Waste -- (Asbestos and Other Contaminants)

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     (xxxiv) Miscellaneous

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     (xxxv) Farms -- The disclosure shall inform the buyer that any farm(s) that may be in the

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municipality are protected by the right to farm law

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     (xxxvi) Annual Energy Cost Estimate.

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     (c) Any agreement to transfer real estate shall contain an acknowledgement that a

 

LC001934 - Page 5 of 7

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completed real estate disclosure form has been provided to the buyer by the seller in accordance

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with the provisions of this section.

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     (d) The Rhode Island real estate commission has the right to amend the seller disclosure

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requirements by adding or deleting requirements when there is a determination that health, safety,

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or legal needs require a change. Any change to requirements shall be a rule change, subject to the

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Administrative Procedures Act, chapter 35 of title 42. The power of the commission to amend the

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written disclosure requirements shall be liberally construed so as to allow additional information

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to be provided as to the structural components, housing systems, and other property information

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as required by this chapter.

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     SECTION 2. Chapter 5-20.8 of the General Laws entitled "Real Estate Sales Disclosures"

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is hereby amended by adding thereto the following section:

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     5-20.8-14. Annual energy cost estimate.

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     Purpose. To protect consumers in the purchase of buildings through the disclosure of an

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annual building energy cost estimate produced by an approved energy rater. This information

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shall enable more knowledgeable decisions about the full costs of operating building

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improvements that lower utility bills, reduce energy consumption, increase renewable energy

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generation, improve financial security, reduce carbon emissions, and increase comfort, safety and

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health for building occupants and owners. This section shall be liberally construed and applied to

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promote its underlying purposes.

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     SECTION 3. This act shall take effect upon passage.

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LC001934

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS -- REAL ESTATE SALES

DISCLOSURES

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     This act would require sellers of real estate to provide buyers a disclosure of the annual

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building energy cost estimate produced by an approved energy rater. The act would also impose

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an affirmative duty on sellers to conduct inspections as to the condition of the real estate.

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     This act would take effect upon passage.

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