AN ACT RELATING TO PROPERTY -- PROHIBITION OF UNFAIR SERVICE AGREEMENTS .

Homeowners gain protection from unfair service contracts

Effective upon passage, the law makes certain unfair home service contracts unenforceable in Rhode Island. It covers maintenance, purchase, or sale services for properties used mainly for personal, family, or household purposes with one to four homes. Some service must be scheduled more than one year after signing. The contract must also claim to bind future owners, allow transfer of service rights without the owner's notice and consent, or create a lien or similar property claim. Entering into a covered unfair contract with a consumer counts as a deceptive trade practice. Recording the contract, or a notice or memorandum of it, in public land records is prohibited and is a misdemeanor. City and town clerks can refuse these documents. Even if recorded, they do not count as notice to a good-faith buyer or creditor. Anyone with an interest in the property can ask the superior court in the county of recording for an order declaring the contract unenforceable, and have that order recorded. They can also recover proven actual damages, costs, and attorney fees from the service provider who recorded the document. Exemptions cover fixed-term home warranties for major systems, insurance, purchase options or first-refusal rights, and documents creating or amending common-interest communities. They also cover homeowners' association maintenance or repair agreements, mortgage loans and commitments, certain Uniform Commercial Code security agreements for personal property or fixtures, and regulated utility services. Existing rights under Rhode Island's mechanics lien law remain unchanged.