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: 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.

Most states and every city/town in Rhode Island assess its real estate taxes based on the value/owner of the home as of December 31st. Payments are made in arrears, quarterly, and on either a fiscal or calendar basis.

Fiscal Year: The Fiscal Tax Year covers July 1st of the current year to June 30th of the following year. The quarter one tax payment covers July through September of the current year, the quarter two payment covers October through December of the current year, the quarter three payment covers January through March of the following year, and the quarter four payment covers April through June of the following year.

Calendar Year: The Calendar Tax Year covers January 1st of the current year to December 31st of the current year. The quarter one tax payment covers January through March of the current year, the quarter two payment covers April through June of the current year, the quarter three payment covers July through September of the current year, and the quarter four payment covers October through December of the current year.

Rhode Island charges $3.75 per every $500 of the sales price (equivalent to $7.50 per $1,000) in conveyance tax. For residential properties with a sales price over $800,000, Rhode Island imposes an additional $3.75 per $500 on the portion above $800,000.
Massachusetts charges approximately $4.56 per $1,000 of the sales price in transfer tax, with no additional rate tiers based on price.

Homestead Declaration: Homestead laws protect the possession and enjoyment of the homeowner and his/her family against the claims of certain creditors by preventing the property from execution and forced sale so long as the owner occupies the property as his/her primary residence. Rhode Island homeowners receive an automatic $500,000 in equity protection against debt collectors. Massachusetts homeowners receive an automatic $125,000 protection and may elect to file a homestead declaration with the Registry of Deeds that will give them up to $500,000 in equity protection from non exempt creditors.

Homestead Exemption: In some Rhode Island cities/towns owners that occupy their property as their primary residence get a reduction on their annual property taxes.