2025 -- H 5185

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LC000749

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2025

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A N   A C T

RELATING TO PROPERTY -- PROHIBITION OF UNFAIR SERVICE AGREEMENTS

     Introduced By: Representatives Donovan, Potter, Carson, Fogarty, Spears, McGaw,
Speakman, Shallcross Smith, Ajello, and Handy

     Date Introduced: January 24, 2025

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

     SECTION 1. Legislative intent.

     This act is intended to prohibit the use of service agreements that are unfair to an owner of

residential real estate who enters into such an agreement or to persons who may become owners of

that real estate in the future. The act also prohibits the recording of such agreements so that the

public records will not be clouded by them, and future owners will not be put to the burden of

bringing suits to remove them from their chains of title and provides remedies for owners who are

inconvenienced or damaged by the recording of such agreements.

     SECTION 2. Title 34 of the General Laws entitled "PROPERTY" is hereby amended by

adding thereto the following chapter:

CHAPTER 50

PROHIBITION OF UNFAIR SERVICE AGREEMENTS

     34-50-1. Definitions.

     For the purposes of this chapter:

     (1) “Service agreement” means a contract under which a person agrees to provide services

in connection with the maintenance of or purchase or sale of residential real estate.

     (2) “Residential real estate” means real property located in this state which is used

primarily for personal, family, or household purposes and is improved by one to four (4) dwelling

units.

     (3) “Recording” means presenting a document to a city or town clerk in the recorder of

deeds office for official placement in the public land records.

     (4) “Service provider" means an individual or entity that provides services to a person.

     (5) “Person” means a natural person, partnership, association, cooperative, corporation,

trust, or other legal entity.

     34-50-2. Unfair service agreements.

     (a) A service agreement is unfair under this chapter if any part of the service subject to the

agreement is not to be performed within one year after the time it is entered into and has any of the

following characteristics:

     (1) The service agreement purports to run with the land or to be binding on future owners

of interests in the real property; or

     (2) The service agreement allows for assignment of the right to provide service without

notice to and consent of the owner of residential real estate; or

     (3) The service agreement purports to create a lien, encumbrance, or other real property

security interest.

     (b) This chapter does not apply to:

     (1) A home warranty or similar product that covers the cost of maintenance of a major

home system (for example, plumbing, HVAC or electrical wiring) for a fixed period; or

     (2) An insurance contract; or

     (3) An option or right of refusal to purchase the residential real estate; or

     (4) A declaration created in the formation of a common interest community or an

amendment thereto; or

     (5) A maintenance or repair agreement entered by a homeowners’ association in a common

interest community; or

     (6) A mortgage loan or a commitment to make or receive a mortgage loan; or

     (7) A security agreement under the UCC relating to the sale or rental of personal property

or fixtures; or

     (8) Water, sewer, electrical, telephone, cable, or other regulated utility service providers.

     (c) This statute does not impair the rights granted by the mechanics lien statute of this state,

chapter 28 of title 34.

     34-50-3. Unfair service agreements unenforceable.

     If a service agreement is unfair under this chapter it is unenforceable.

     34-50-4. Deceptive practices.

     If a person enters into an unfair service agreement with a consumer, as defined in this

chapter, that agreement shall per se be deemed a deceptive act under chapter 13.1 of title 6

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(“deceptive trade practices”).

     34-50-5. Recording prohibited.

     (a) No person shall record or cause to be recorded an unfair service agreement or notice or

memorandum thereof in this state.

     (b) Any person who records or causes to be recorded an unfair service agreement or notice

or memorandum thereof in this state shall be guilty of a misdemeanor.

     (c) Notwithstanding the recording statute of this state, chapter 13 of title 34, the city or

town clerk in the recorder of deeds office may refuse to accept for recordation an unfair service

agreement as defined herein.

     (d) If an unfair service agreement is recorded in this state, it shall not provide actual or

constructive notice against an otherwise bona fide purchaser or creditor.

     34-50-6. Recording of court order.

     If an unfair service agreement or a notice or memorandum thereof is recorded in this state,

any person with an interest in the real property that is the subject of that agreement may apply to

the superior court in the county where the recording exists to record a court order declaring the

agreement unenforceable.

     34-50-7. Rights of recovery.

     If an unfair service agreement or a notice or memorandum thereof is recorded in this state,

any person with an interest in the real property that is the subject of that agreement may recover

such actual damages, costs and attorneys’ fees as may be proven against the service provider who

recorded the agreement.

     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 PROPERTY -- PROHIBITION OF UNFAIR SERVICE AGREEMENTS

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     This act would prohibit the use of service agreements that are unfair to an owner of

residential real estate who enters into such an agreement or to persons who may become owners of

that real estate in the future. The act would also prohibit the recording of such agreements so that

the public records will not be clouded by them, and future owners will not be put to the burden of

bringing suits to remove them from their chains of title and provides remedies for owners who are

inconvenienced or damaged by the recording of such agreements.

     This act would take effect upon passage.

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