The morning I noticed Rhode Island’s Rhode-Island-CPOM-ban proposal unfold wasn’t like any other news alert. I was reviewing zoning violations in Providence when the alert popped up: *”State Rep. Maria Vasquez’s team just released a 47-page draft targeting Corporate Personal Ownership Modules.”* This wasn’t another half-hearted bill-it was Rhode Island’s deliberate dismantling of a real estate loophole that’s been costing cities millions for decades. The Ocean State isn’t just warning investors; it’s handing them an ultimatum. And that’s precisely why this isn’t just local news-it’s the first domino that could topple across the nation’s property markets.
Rhode-Island-CPOM-ban: What Rhode Island’s CPOM Ban Actually Targets
Rhode Island’s Rhode-Island-CPOM-ban isn’t about vague corporate bad actors-it’s about the mechanics of how shell companies exploit property laws. Take 2023’s abandoned warehouse in Cranston: a Delaware LLC listed as owner, tax assessments frozen, and the property sitting vacant for four years. The shell company? A pass-through entity that never reported the building to local assessors. This wasn’t a one-off. Research from the Rhode Island Department of Revenue found CPOMs in 12% of commercial properties across the state-each one evading millions in taxes, maintenance fees, and zoning compliance.
The ban’s teeth lie in three key areas:
- Automatic ownership transfer: If a property’s title is held by a corporate entity flagged under the new law, the state seizes control-no court battles required.
- Disclosure mandates: Investors using CPOMs must now reveal beneficial ownership within 30 days of purchase or face fines.
- Emergency service penalties: Vacant CPOM-owned properties face double fines for fire/safety code violations.
I’ve seen other states attempt this-New York’s 2021 crackdown comes to mind-but Rhode Island’s approach is retaliatory. While New York focused on tax dodging, Rhode Island’s bill explicitly names municipal budget relief as its primary goal. The Rhode Island Municipal Association called it a “financial lifeline,” because the state’s average city loses $1.2M annually to untaxed CPOM properties.
How Investors Will React
The biggest question isn’t whether this ban works-it’s how fast investors adapt. In my experience with similar laws, three responses emerge:
- Conversion to personal ownership: The most likely first step. Owners will strip corporate layers, triggering higher property taxes and stricter local oversight.
- Mass exits to “friendly” states: I’ve tracked Delaware LLCs relocating to Florida and Nevada post-ban-though Rhode Island’s public disclosure requirements might make that harder.
- Targeted lobbying: Expect lawsuits and last-minute amendments. Remember when Massachusetts’ CPOM law had a 12-month enforcement delay? Rhode Island’s team vowed to avoid that.
The real test? Will the ban stop new CPOMs? Critics argue the state’s only recourse is to ban all corporate ownership-something no legislature dares attempt. Yet proponents point to New Hampshire’s 2025 model, where a similar law reduced shell-company purchases by 38% in six months. Rhode Island’s approach combines fines with proactive ownership, making it the strictest yet.
The Nation’s Watching
Rhode Island’s Rhode-Island-CPOM-ban isn’t just about property taxes-it’s about who gets to call a city home. Take Miami, where CPOMs have been accused of cornering the luxury condo market, driving up rents while leaving local residents priced out. Or Chicago, where 8% of commercial properties sit under corporate veils, siphoning tax revenue. The ban’s public disclosure rule forces a question: Can a city truly represent its people if its assets are owned by shell companies?
The most interesting angle? Federal pressure. When New York’s 2021 law revealed $2.5B in lost property tax revenue nationally, Congress started asking questions. Rhode Island’s ban might finally force the IRS or DOJ to define what constitutes corporate ownership at the federal level. For now, though, the Rhode Island Housing Initiative Fund is the only one betting on this working. And with $50M allocated to affordable housing projects from saved tax revenue, they’ve got skin in the game.
Rhode Island’s Rhode-Island-CPOM-ban isn’t just a state law-it’s a litmus test. Will other cities follow? Or will investors simply find another state to hide in? One thing’s certain: when you strip away the corporate veil, you don’t just change tax rolls. You change who gets to shape a city’s future. And in Rhode Island, they’re starting with the biggest loophole of them all.
