RI Real Estate cheat sheet

Agency is a fiduciary relationship created when a principal authorizes an agent to act on the principal's behalf and the agent consents.

Agency may be created by express agreement, written or oral, by implication from conduct, by ratification of unauthorized acts, or by estoppel; compensation is not required.

Special agency authorizes a specific transaction; general agency covers a class of transactions; universal agency covers all matters the principal can delegate.

In dual agency the broker represents both buyer and seller; Rhode Island requires informed written consent from both parties before dual representation.

A seller's agent owes fiduciary duties to the seller, and a buyer's agent owes them to the buyer; customers are not owed fiduciary duties.

Core fiduciary duties are care, obedience, loyalty, disclosure, accounting, and confidentiality, often remembered as COLDAC.

An agent must disclose material facts known to the agent that affect the principal's decision, even when the fact could reduce the agent's commission.

Agency terminates by performance, expiration, mutual agreement, revocation, renunciation, death, incapacity, or bankruptcy of the principal or agent.

Loyalty requires the agent to place the principal's interests above the agent's own and above third parties; secret profits and self-dealing breach it.

Confidentiality protects information acquired during the agency that could harm the principal's bargaining position, and it generally continues after termination.

Accounting requires the agent to keep client funds in a separate escrow account, reconcile the account, and never commingle client money with brokerage funds.

Disclosure requires the agent to reveal known material adverse facts about the property or transaction and to disclose conflicts of interest.

Obedience requires the agent to follow lawful instructions within the scope of agency; unlawful or unethical instructions need not be followed.

Reasonable care and diligence require the agent to use the skill and knowledge expected of a licensed professional in the market.

In designated agency the broker appoints different licensees to represent each party; the broker may be a dual agent while each designated licensee advocates for one side.

A principal may be vicariously liable for an agent's acts committed within the scope of authority, and the agent may also be personally liable for wrongful acts.

The Rhode Island Real Estate Commission, within the Department of Business Regulation, administers the license law, investigates complaints, and may suspend, revoke, or fine licensees.

A license is required to list, sell, buy, exchange, rent, or negotiate real estate for another person for compensation in Rhode Island.

Rhode Island salesperson applicants must complete a 45-hour pre-license course; broker applicants must complete a 90-hour pre-license course plus experience requirements.

A salesperson must be affiliated with a licensed Rhode Island broker, and the broker supervises the salesperson and is responsible for the salesperson's real estate activities.

Commissions may be paid only to licensed brokers; a licensee may not pay a commission or referral fee to an unlicensed person for real estate brokerage activity.

Advertising by a salesperson must identify the affiliated broker, and a salesperson may not advertise real estate services independently.

Rhode Island real estate licenses renew biennially, and licensees must complete required continuing education before the renewal deadline.

Brokers must maintain escrow accounts and transaction records; Rhode Island requires records to be kept for at least three years and made available to the Commission on request.

A licensee must disclose in writing any interest the licensee has in a property being sold or bought and must not use confidential information for personal gain.

A valid real estate contract requires an offer, acceptance, consideration, competent parties, legal purpose, and mutual assent.

The Statute of Frauds requires real estate sale contracts and leases longer than one year to be in writing and signed by the party to be charged.

A counteroffer terminates the original offer; acceptance must be unequivocal and communicated to the offeror.

A bilateral contract exchanges promises, while a unilateral contract promises performance in exchange for an act, such as an option.

Earnest money is a deposit showing buyer good faith; it is applied to the purchase price at closing or forfeited under the contract if the buyer defaults.

Common contingencies include financing, appraisal, inspection, sale of the buyer's home, and clear title; failure of a contingency may allow termination and refund.

Remedies for breach include compensatory damages, specific performance, rescission, and liquidated damages when the amount is reasonable and not a penalty.

The parol evidence rule limits use of prior or contemporaneous oral statements to vary a fully integrated written contract.

An option contract gives the optionee the right to buy or lease within a set period, and the optionor must keep the offer open for the option term.

Exclusive right to sell: the broker earns a commission if the property sells during the listing term, regardless of who procures the buyer.

Exclusive agency: the broker earns a commission if the broker or another broker sells, but the seller may sell without paying the broker if the seller procures the buyer.

Open listing: non-exclusive; the broker earns a commission only if the broker is the procuring cause of the sale.

Net listing: the broker's commission is the amount above the seller's stated net; Rhode Island prohibits net listings because they create a conflict of interest.

A listing agreement states the term, commission, property description, agency relationship, and exclusions; it must be signed by the seller and broker.

Procuring cause is the broker's effort that leads to the sale and determines commission entitlement in open and non-exclusive listings.

A purchase and sale agreement identifies the parties, property, price, earnest money, closing date, contingencies, title and deed terms, and prorations.

Rhode Island requires a residential seller disclosure form for most one-to-four unit residential properties, delivered before the purchase and sale agreement is signed.

Federal lead-based paint disclosure is required for pre-1978 housing; the seller must provide the EPA pamphlet and allow a 10-day inspection period.

Loan-to-value (LTV) equals loan amount divided by the lesser of purchase price or appraised value; a higher LTV generally increases lender risk.

PITI equals principal, interest, property taxes, and hazard insurance; lenders often add mortgage insurance and HOA dues to the housing payment.

Conventional qualifying ratios are often 28% front-end for housing and 36% back-end for total debt; FHA ratios are commonly 31% and 43%.

One discount point equals 1% of the loan amount; points are prepaid interest that can lower the note rate.

A fixed-rate mortgage keeps the same interest rate and principal-and-interest payment for the loan term; an adjustable-rate mortgage changes with an index plus margin.

ARM caps limit periodic and lifetime interest-rate changes; a payment cap limits payment increases and may cause negative amortization.

PMI is usually required when LTV exceeds 80%; under the Homeowners Protection Act, borrowers can request cancellation at 80% LTV based on original value and it terminates at 78%.

RESPA requires a Loan Estimate within three business days of application and a Closing Disclosure at least three business days before closing.

FHA loans allow 3.5% down with mortgage insurance; VA loans generally allow 0% down for eligible veterans; USDA loans target eligible rural areas.

Rhode Island uses mortgages, not deeds of trust, as the standard security instrument, and the mortgage is recorded in the land evidence records.

Closing transfers title, settles prorations, disburses funds, and records the deed and mortgage; Rhode Island closings are typically conducted by attorneys.

Proration formula: annual expense divided by 365, multiplied by the number of days in the period; the seller usually pays through the day before closing.

Debits reduce a party's proceeds or increase funds due, while credits increase proceeds or reduce funds due; the settlement statement lists both.

The title search identifies liens and encumbrances; title insurance protects the owner and lender against covered title defects.

The deed and mortgage are recorded in the city or town land evidence records where the property is located.

Rhode Island imposes a state real estate conveyance tax on the transfer consideration, and municipalities may impose additional conveyance taxes.

Closing costs commonly include lender origination, appraisal, credit report, title search and insurance, attorney fees, recording fees, and prepaid items.

RESPA prohibits kickbacks, referral fees, and unearned fees in federally related mortgage transactions.

A Closing Disclosure must be delivered at least three business days before consummation, and certain changes can trigger a new three-day review.

Fee simple absolute is the most complete ownership estate; it lasts indefinitely and can be inherited.

A life estate lasts for the life of a named person, ends at that person's death, and may create a reversion or remainder interest.

Tenancy in common gives co-owners undivided interests with no right of survivorship; each owner may sell or devise their share.

Joint tenancy requires unity of time, title, interest, and possession plus survivorship; the last surviving joint tenant takes the whole.

Tenancy by the entirety is a marital estate with right of survivorship, and Rhode Island recognizes it for spouses.

An easement appurtenant benefits a dominant parcel and burdens a servient parcel; an easement in gross benefits a person or entity, not a parcel.

A prescriptive easement arises from open, notorious, adverse, continuous use for the statutory period and is not a transfer by deed.

Liens, mortgages, easements, covenants, and encroachments are encumbrances that affect title or use.

Rhode Island is not a community property state; property acquired during marriage is generally titled under common-law rules.

Market value is the most probable price in an arm's-length transaction with a willing buyer and seller, both informed and not under duress.

The sales comparison approach adjusts recent comparable sales for differences in location, size, condition, features, and date of sale.

Adjust the comparable, not the subject: if the comparable is superior, subtract value; if inferior, add value.

Cost approach value equals land value plus replacement or reproduction cost minus accrued depreciation.

Income approach value equals net operating income divided by the capitalization rate; a lower cap rate produces a higher value for the same NOI.

Gross rent multiplier equals sale price divided by gross rent and is a quick income-approach indicator.

Depreciation has three sources: physical deterioration, functional obsolescence, and external or economic obsolescence.

Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.

Principles of substitution, contribution, conformity, progression, and regression explain how neighboring properties affect value.

A valid deed requires a grantor, grantee, words of conveyance, legal description, consideration, signature of the grantor, and delivery with acceptance.

A warranty deed includes covenants of title; a quitclaim deed transfers only the grantor's interest with no title warranty.

Recording a deed in the land evidence records gives constructive notice; priority among competing interests depends on recording statutes and notice.

Title insurance protects against covered defects arising before the policy date; a lender's policy protects the lender, and an owner's policy protects the owner.

Zoning regulates use, density, setbacks, height, and bulk; a variance grants relief from hardship, and a special use permit allows a listed conditional use.

Subdivision regulations require plat approval and public improvements; building codes set construction and safety standards.

Eminent domain allows government taking for public use with just compensation.

Police power includes zoning, building codes, and health and safety regulations; it does not require compensation unless regulation goes too far.

Rhode Island's Coastal Resources Management Council regulates coastal and shoreline development, and the Department of Environmental Management regulates freshwater wetlands.

Agency is a fiduciary relationship created when a principal authorizes an agent to act on the principal's behalf and the agent consents.

Agency may be created by express agreement, written or oral, by implication from conduct, by ratification of unauthorized acts, or by estoppel; compensation is not required.

Special agency authorizes a specific transaction; general agency covers a class of transactions; universal agency covers all matters the principal can delegate.

In dual agency the broker represents both buyer and seller; Rhode Island requires informed written consent from both parties before dual representation.

A seller's agent owes fiduciary duties to the seller, and a buyer's agent owes them to the buyer; customers are not owed fiduciary duties.

Core fiduciary duties are care, obedience, loyalty, disclosure, accounting, and confidentiality, often remembered as COLDAC.

An agent must disclose material facts known to the agent that affect the principal's decision, even when the fact could reduce the agent's commission.

Agency terminates by performance, expiration, mutual agreement, revocation, renunciation, death, incapacity, or bankruptcy of the principal or agent.

Loyalty requires the agent to place the principal's interests above the agent's own and above third parties; secret profits and self-dealing breach it.

Confidentiality protects information acquired during the agency that could harm the principal's bargaining position, and it generally continues after termination.

Accounting requires the agent to keep client funds in a separate escrow account, reconcile the account, and never commingle client money with brokerage funds.

Disclosure requires the agent to reveal known material adverse facts about the property or transaction and to disclose conflicts of interest.

Obedience requires the agent to follow lawful instructions within the scope of agency; unlawful or unethical instructions need not be followed.

Reasonable care and diligence require the agent to use the skill and knowledge expected of a licensed professional in the market.

In designated agency the broker appoints different licensees to represent each party; the broker may be a dual agent while each designated licensee advocates for one side.

A principal may be vicariously liable for an agent's acts committed within the scope of authority, and the agent may also be personally liable for wrongful acts.

The Rhode Island Real Estate Commission, within the Department of Business Regulation, administers the license law, investigates complaints, and may suspend, revoke, or fine licensees.

A license is required to list, sell, buy, exchange, rent, or negotiate real estate for another person for compensation in Rhode Island.

Rhode Island salesperson applicants must complete a 45-hour pre-license course; broker applicants must complete a 90-hour pre-license course plus experience requirements.

A salesperson must be affiliated with a licensed Rhode Island broker, and the broker supervises the salesperson and is responsible for the salesperson's real estate activities.

Commissions may be paid only to licensed brokers; a licensee may not pay a commission or referral fee to an unlicensed person for real estate brokerage activity.

Advertising by a salesperson must identify the affiliated broker, and a salesperson may not advertise real estate services independently.

Rhode Island real estate licenses renew biennially, and licensees must complete required continuing education before the renewal deadline.

Brokers must maintain escrow accounts and transaction records; Rhode Island requires records to be kept for at least three years and made available to the Commission on request.

A licensee must disclose in writing any interest the licensee has in a property being sold or bought and must not use confidential information for personal gain.

A valid real estate contract requires an offer, acceptance, consideration, competent parties, legal purpose, and mutual assent.

The Statute of Frauds requires real estate sale contracts and leases longer than one year to be in writing and signed by the party to be charged.

A counteroffer terminates the original offer; acceptance must be unequivocal and communicated to the offeror.

A bilateral contract exchanges promises, while a unilateral contract promises performance in exchange for an act, such as an option.

Earnest money is a deposit showing buyer good faith; it is applied to the purchase price at closing or forfeited under the contract if the buyer defaults.

Common contingencies include financing, appraisal, inspection, sale of the buyer's home, and clear title; failure of a contingency may allow termination and refund.

Remedies for breach include compensatory damages, specific performance, rescission, and liquidated damages when the amount is reasonable and not a penalty.

The parol evidence rule limits use of prior or contemporaneous oral statements to vary a fully integrated written contract.

An option contract gives the optionee the right to buy or lease within a set period, and the optionor must keep the offer open for the option term.

Exclusive right to sell: the broker earns a commission if the property sells during the listing term, regardless of who procures the buyer.

Exclusive agency: the broker earns a commission if the broker or another broker sells, but the seller may sell without paying the broker if the seller procures the buyer.

Open listing: non-exclusive; the broker earns a commission only if the broker is the procuring cause of the sale.

Net listing: the broker's commission is the amount above the seller's stated net; Rhode Island prohibits net listings because they create a conflict of interest.

A listing agreement states the term, commission, property description, agency relationship, and exclusions; it must be signed by the seller and broker.

Procuring cause is the broker's effort that leads to the sale and determines commission entitlement in open and non-exclusive listings.

A purchase and sale agreement identifies the parties, property, price, earnest money, closing date, contingencies, title and deed terms, and prorations.

Rhode Island requires a residential seller disclosure form for most one-to-four unit residential properties, delivered before the purchase and sale agreement is signed.

Federal lead-based paint disclosure is required for pre-1978 housing; the seller must provide the EPA pamphlet and allow a 10-day inspection period.

Loan-to-value (LTV) equals loan amount divided by the lesser of purchase price or appraised value; a higher LTV generally increases lender risk.

PITI equals principal, interest, property taxes, and hazard insurance; lenders often add mortgage insurance and HOA dues to the housing payment.

Conventional qualifying ratios are often 28% front-end for housing and 36% back-end for total debt; FHA ratios are commonly 31% and 43%.

One discount point equals 1% of the loan amount; points are prepaid interest that can lower the note rate.

A fixed-rate mortgage keeps the same interest rate and principal-and-interest payment for the loan term; an adjustable-rate mortgage changes with an index plus margin.

ARM caps limit periodic and lifetime interest-rate changes; a payment cap limits payment increases and may cause negative amortization.

PMI is usually required when LTV exceeds 80%; under the Homeowners Protection Act, borrowers can request cancellation at 80% LTV based on original value and it terminates at 78%.

RESPA requires a Loan Estimate within three business days of application and a Closing Disclosure at least three business days before closing.

FHA loans allow 3.5% down with mortgage insurance; VA loans generally allow 0% down for eligible veterans; USDA loans target eligible rural areas.

Rhode Island uses mortgages, not deeds of trust, as the standard security instrument, and the mortgage is recorded in the land evidence records.

Closing transfers title, settles prorations, disburses funds, and records the deed and mortgage; Rhode Island closings are typically conducted by attorneys.

Proration formula: annual expense divided by 365, multiplied by the number of days in the period; the seller usually pays through the day before closing.

Debits reduce a party's proceeds or increase funds due, while credits increase proceeds or reduce funds due; the settlement statement lists both.

The title search identifies liens and encumbrances; title insurance protects the owner and lender against covered title defects.

The deed and mortgage are recorded in the city or town land evidence records where the property is located.

Rhode Island imposes a state real estate conveyance tax on the transfer consideration, and municipalities may impose additional conveyance taxes.

Closing costs commonly include lender origination, appraisal, credit report, title search and insurance, attorney fees, recording fees, and prepaid items.

RESPA prohibits kickbacks, referral fees, and unearned fees in federally related mortgage transactions.

A Closing Disclosure must be delivered at least three business days before consummation, and certain changes can trigger a new three-day review.

Fee simple absolute is the most complete ownership estate; it lasts indefinitely and can be inherited.

A life estate lasts for the life of a named person, ends at that person's death, and may create a reversion or remainder interest.

Tenancy in common gives co-owners undivided interests with no right of survivorship; each owner may sell or devise their share.

Joint tenancy requires unity of time, title, interest, and possession plus survivorship; the last surviving joint tenant takes the whole.

Tenancy by the entirety is a marital estate with right of survivorship, and Rhode Island recognizes it for spouses.

An easement appurtenant benefits a dominant parcel and burdens a servient parcel; an easement in gross benefits a person or entity, not a parcel.

A prescriptive easement arises from open, notorious, adverse, continuous use for the statutory period and is not a transfer by deed.

Liens, mortgages, easements, covenants, and encroachments are encumbrances that affect title or use.

Rhode Island is not a community property state; property acquired during marriage is generally titled under common-law rules.

Market value is the most probable price in an arm's-length transaction with a willing buyer and seller, both informed and not under duress.

The sales comparison approach adjusts recent comparable sales for differences in location, size, condition, features, and date of sale.

Adjust the comparable, not the subject: if the comparable is superior, subtract value; if inferior, add value.

Cost approach value equals land value plus replacement or reproduction cost minus accrued depreciation.

Income approach value equals net operating income divided by the capitalization rate; a lower cap rate produces a higher value for the same NOI.

Gross rent multiplier equals sale price divided by gross rent and is a quick income-approach indicator.

Depreciation has three sources: physical deterioration, functional obsolescence, and external or economic obsolescence.

Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.

Principles of substitution, contribution, conformity, progression, and regression explain how neighboring properties affect value.

A valid deed requires a grantor, grantee, words of conveyance, legal description, consideration, signature of the grantor, and delivery with acceptance.

A warranty deed includes covenants of title; a quitclaim deed transfers only the grantor's interest with no title warranty.

Recording a deed in the land evidence records gives constructive notice; priority among competing interests depends on recording statutes and notice.

Title insurance protects against covered defects arising before the policy date; a lender's policy protects the lender, and an owner's policy protects the owner.

Zoning regulates use, density, setbacks, height, and bulk; a variance grants relief from hardship, and a special use permit allows a listed conditional use.

Subdivision regulations require plat approval and public improvements; building codes set construction and safety standards.

Eminent domain allows government taking for public use with just compensation.

Police power includes zoning, building codes, and health and safety regulations; it does not require compensation unless regulation goes too far.

Rhode Island's Coastal Resources Management Council regulates coastal and shoreline development, and the Department of Environmental Management regulates freshwater wetlands.