Homeowners Insurance: An annual payment to the insurer that protects the homeowner against future losses and damages to their home. The policy normally covers interior and exterior damage, loss or damage of personal assets, and injury that arises while on the property.

Mortgage Insurance: A monthly payment to the insurer that protects the lender in the event that the borrower fails to make his/her mortgage payments.

Owner’s Title Insurance: A one-time payment to the insurer that protects the real estate owner and lender from title issues that occurred in the past. The insurer will issue a mandatory lender’s policy and optional (but highly recommended) owner’s policy. The policies protect the owner and lender against past defects or problems with the legal ownership of the property. Such defects include forged documents, lien claims on the property, undisclosed easements, ownership claims made by others, and mistakes from the previous title agency.

A statutory lien that is automatically placed on all Rhode Island real estate upon the death of the homeowner. The lien cannot be discharged until an estate tax return is filed with the Rhode Island Division of Taxation and any taxes and fees for the decedent are paid in full.

Rhode Island:
When a non-resident sells Rhode Island real estate, a portion of the net proceeds must be withheld and submitted to the Rhode Island Division of Taxation.

• 6% is withheld from individual sellers, trusts, estates, and partnerships.
• 7% is withheld from corporations.

The seller must file a Rhode Island tax return after closing to determine the actual tax owed and recover any excess withholding. Non-resident sellers may also pre-file using Form RI-71.3 to calculate the exact amount due and reduce or avoid withholding at closing.

Massachusetts:
For non-resident sellers of Massachusetts real estate with a sale price of $1,000,000 or more, the settlement agent must withhold 4% of the gross sales price, unless the seller pre-files through MassTaxConnect (Form M-22A) for reduced or waived withholding. No withholding is required for non-resident sellers when the sale price is below $1,000,000.

When two or more individuals own real estate there are three different ways to hold title: tenants in common, joint tenants, or tenants by the entirety. Regardless of the type of tenancy, each individual owns an undivided share of the entire property.

Tenants in Common: Individuals that own an equal or unequal percentage interest in the real estate. If one owner dies, their percentage interest automatically passes to their heirs. For example, if A and B own property as tenants in common and A passes, A’s heirs will receive her 50% interest and B will keep his 50% interest.

Joint Tenants: Individuals that own an equal percentage interest in the real estate. If one owner dies, the surviving owner has the right of survivorship and will receive the deceased owner’s percentage interest. For example, if A and B own property as joint tenants and A passes, B will get A’s 50% interest and will thus own 100% of the property.

Tenants by the Entirety (N/A CT): Married couples in which each spouse owns an equal 50% interest in the real estate. Like joint tenants, if one spouse dies, the surviving spouse has the right of survivorship and will receive the deceased spouse’s 50% interest. For example, if Spouse 1 and Spouse 2 own property as tenants by the entirety and Spouse 1 passes, Spouse 2 will get Spouse 1’s 50% interest and will thus own 100% of the property.

In Rhode Island, Massachusetts, and Connecticut, real estate taxes are levied by local municipalities (cities and towns) and are based on the assessed value and ownership of the property as of a specific statutory assessment date. The assessment date varies by state and determines who is responsible for the tax bill for that tax year.

In Rhode Island, the assessment date is December 31 of the prior year. In Massachusetts, the assessment date is January 1 preceding the fiscal tax year. In Connecticut, the assessment date is October 1 of the prior year.

Real estate tax bills are issued by the local city or town, and the billing schedule and payment structure can vary by municipality. Many communities issue quarterly tax bills, while others may bill semiannually or in different installment schedules depending on local practices.

Municipalities generally operate on either a fiscal tax year or a calendar tax year. A fiscal tax year typically runs July 1 through June 30 of the following year, while a calendar tax year runs January 1 through December 31. Because billing schedules and installment structures differ by municipality, property owners should confirm the exact tax billing schedule with their local tax assessor or tax collector’s office.

Real estate transfer taxes vary by state and are typically based on the property’s sale price. Below is a general overview of conveyance tax rates in Rhode Island, Massachusetts, and Connecticut.

Rhode Island
Rhode Island charges a conveyance tax of 0.75% of the sales price. For residential properties with a sale price above $824,000, an additional 0.75% is applied to the portion of the sales price above $824,000, for a total rate of 1.50% on that portion.

Massachusetts
Massachusetts charges approximately $4.56 per $1,000 of the sales price in transfer tax (about 0.456%). There are no additional rate tiers based on the sale price.

Connecticut
Connecticut charges a graduated state conveyance tax based on the sales price. The state tax is 0.75% on the first $800,000, 1.25% on the portion between $800,000 and $2.5 million, and 2.25% on the portion above $2.5 million. In addition, most municipalities charge a local conveyance tax of 0.25% of the sales price, although certain towns may charge up to 0.50%.

Homestead Declaration (Creditor Protection)
Homestead laws protect a homeowner’s primary residence from certain creditor claims by limiting the ability of unsecured creditors to force the sale of the property. These protections apply only to a homeowner’s primary residence and cover a portion of the homeowner’s equity in the property.

In Rhode Island, homeowners automatically receive up to $500,000 of homestead protection on their primary residence without needing to file any document.

In Massachusetts, homeowners automatically receive $125,000 of homestead protection. Homeowners may choose to file a Homestead Declaration with the Registry of Deeds, which increases the protection to up to $500,000 of equity.

In Connecticut, homeowners automatically receive up to $250,000 of homestead protection under state law. Like Rhode Island, no filing is required for this protection.

Homestead Property Tax Exemption
A homestead property tax exemption is different from creditor protection. It refers to a property tax benefit available in some municipalities for homeowners who occupy their property as their primary residence.

In Rhode Island, some cities and towns offer a homestead exemption or owner-occupied tax rate, which can reduce the annual property tax bill for primary residences.

In Massachusetts, certain municipalities offer a residential tax exemption that reduces the taxable value of a home that is the owner’s primary residence.

In Connecticut, property tax relief programs for owner-occupied homes may be available in some municipalities, although these programs vary by town and may depend on factors such as age, disability, or income.

The key difference is that a homestead declaration provides protection from certain creditors, while a homestead property tax exemption reduces the amount of property tax owed on a primary residence.