2019 -- H 5774

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LC002034

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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 Handy

     Date Introduced: February 28, 2019

     Referred To: House Corporations

     (by request)

It is enacted by the General Assembly as follows:

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

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

     5-20.8-1. Definitions.

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

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

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

respective brokers.

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

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

estate from a seller to a buyer.

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

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

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

estimates.

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

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

enable activities;

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

seller for consideration.

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

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

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

settlement.

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

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

knowledge.

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

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

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

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

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

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

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

as if he or she were the owner.

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

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

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

buyer for consideration.

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

real estate.

     5-20.8-2. Disclosure requirements.

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

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

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

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

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

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

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

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

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

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

by the seller.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     (ii) Year Built

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

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

     (v) Roof (Layers, Age and Defects)

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

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

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

     (ix) Structural Conditions -- (Defects)

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

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

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

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

advisable."

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

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

Supplemental Heating, Defects)

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

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

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

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Last Pumped, Maintenance History, Defects)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

general law chapter 23-19.15.

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

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

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

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

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

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

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

private water supply (well)."

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

     (xx) Property Tax

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

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

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

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

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

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

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

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)

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

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

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

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

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

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

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

for details."

     (xxiv) Restrictions -- (Plat or Other)

     (xxv) Building Permits

     (xxvi) Minimum Housing -- (Violations)

     (xxvii) Flood Plain -- (Flood Insurance)

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

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

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

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

management.

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

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

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

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

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

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

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

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

problem. Environmental lead inspection is recommended prior to purchase.

     (xxxii) Fire

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

     (xxxiv) Miscellaneous

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

municipality are protected by the right to farm law

     (xxxvi) Annual Energy Cost Estimate.

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

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

with the provisions of this section.

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

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

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

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

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

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

as required by this chapter.

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

is hereby amended by adding thereto the following section:

     5-20.8-14. Annual energy cost estimate.

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

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

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

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

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

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

promote its underlying purposes.

     SECTION 3. This act shall take effect upon passage.

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LC002034

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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

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

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

     This act would take effect upon passage.

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LC002034

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