Both my handsets say Line in Use even though nobody is on the phone, no fax is coming through and no phones are off the hook.

A "Phone Off Hook" message is not an error. It simply indicates that a telephone receiver isoff the hook(the handset is lifted) and the telephone line is open. This message would be expected in the following situations:

• A modem on the phone line is accessing the Internet.
• A phone connected to the HP fax (or the same phone line) is using the line, or the handset has been lifted.
• A credit card machine is using the phone line.
• Another electronic device is using the phone line.
• The Start Fax button was pressed with no telephone number entered. Pressing Stop or Cancel should return the display to a ready state.

When the other device is no longer using the phone line, the display should revert to the normal message.
Lets try the following,
Disconnect the phone cable from the back of the HP product and the message should clear. If the message does not clear, unplug the power cable from the back of the unit, wait 15 seconds, and then plug in the power cable.
if issue still exists try the followign
Disconnect the phone cable from the HP product and connect it to a single line phone. Pick up the handset and listen for a dial tone. If no dial tone is present, replace the phone cable. If a dial tone is still not present, a problem exists with the phone system.
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Make sure that the phone line coming from the wall is plugged into the port labeled "L". The other port, with the image of a telephone, is for an extension phone or answering machine. If this doesn't fix the issue, and if the handset is securely in its cradle, then your machine may need to be serviced.

If this appear for the first time see the follow, if this started to appear after a time of usage you will need to call a Ricoh technician, sorry but i cannot gain some help in this type of problems.
see do you use a cord with two wires or four for Ricoh when using some telephone centrals like a Panasonic it's better to use a two wired cord for the line, if this still do not help, you will need to call the telephone central technician to set the line for the Ricoh fax.

hi there!

i have seen the article below that may help you deal with the error. It contains diagnosis and troubleshooting procedures. Hope this helps!

http://h10025.www1.hp.com/ewfrf/wc/document?docname=c00322712&cc=us&lc=en&dlc=en&product=441125

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A Phone Off Hook message may notbe an error. It simply indicates that a telephone receiver is off thehook (the handset is lifted) and the telephone line is open.This message would be expected in the following situations:

• A modem on the phone line is accessing the Internet.
• A phone connected to the HP fax (or the same phone line) is using the line, or the handset has been lifted.
• A credit card machine is using the phone line.
• Another electronic device is using the phone line.
• Telephone Answering Machine using the phone line.
• TheStart Fax button was pressed with no telephone number entered. PressingStop or Cancel should return the display to a ready state.When the other device is no longer using the phone line, the display should revert to the normal message.

First thing to check is the condition of the phone line, if the machine has a handset make a phone call from the handset, is the line clear? Is there any static or Echos on the line?
Is the machine on a shared line with computers or an answering machine?
Call the Fax machine from a phone, is the line clear? did the machine generate its handshake burst? Did anything else try to answer the line?
Check the phone cable input, it should be going onto the LINE jack on the back of the machine.

Replace the phone line cable.
Remove the handsetn or at least unplug it.

Hope this is of some help.
ED

connect a phone with 4521 in the back side jack of phoneout,
for outgoing fax
place original in the adf or glass for fax
Press hookdial and dial your sending fax number in 4521 after number dialing pull the phone handset to ear when you leason fax tone from the dialing number press start button to send fax.

for incoming fax (in not automoated)
press hook dial and press start to receive

A "Phone Off Hook" message is not an error. It simply indicates that a telephone receiver is off the hook (the handset is lifted) and the telephone line is open. This message would be expected in the following situations:

• A modem on the phone line is accessing the Internet.
• A phone connected to the HP fax (or the same phone line) is using the line, or the handset has been lifted.
• A credit card machine is using the phone line.
• Another electronic device is using the phone line.
• The Start Fax button was pressed with no telephone number entered. Pressing Stop or Cancel should return the display to a ready state.

When the other device is no longer using the phone line, the display should revert to the normal message. Checking the phone line The most common reason for this message is when a dial-up modem is accessing the Internet on the same phone line. Just as two phone calls cannot come in at the same time, two devices cannot use the phone line at the same time. If a broadband modem (such as DSL or ISDN) is on the same phone line and the message appears all the time, please contact your Internet provider for assistance. Even if a dial tone is present when listening to the phone line, the HP product may detect the broadband data connection at the higher line frequencies. Broadband modems must have a line filter installed to work correctly. Contact the telephone company for assistance. Please follow the directions below to verify functionality.

1. Verify that the phone cable going into the HP fax product from the wall jack is a two-conductor cable type, not four-conductor. A two-conductor cable, like the one that ships with the HP product, has two copper leads in the connector. The connectors are usually clear, making it possible to see how many copper leads are inside the cable. Replace a four-conductor cable with a two-conductor cable.
2. Disconnect the phone cable from the back of the HP product and the message should clear. If the message does not clear, unplug the power cable from the back of the unit, wait 15 seconds, and then plug in the power cable. If the message persists, see the "Problem still exists" section below.
3. Disconnect the phone cable from the HP product and connect it to a single line phone. Pick up the handset and listen for a dial tone. If no dial tone is present, replace the phone cable. If a dial tone is still not present, a problem exists with the phone system. Continue with the steps below if a dial tone is present.
4. Plug the phone cable back into the HP product and hang up any phones with a lifted handset.
5. Disconnect, one at a time, other phones and devices using the same phone line. Check the HP product display after disconnecting each phone or device. If the message clears after disconnecting a phone or device from the line, the problem is with that phone or device.
6. If the message still exists after unplugging all other phones or devices, see the "Problem still exists" section below.
7. Problem still exists
8. If the problem still exists after performing the steps above, the line interface unit (LIU), the part that the phone line plugs into, may be defective or the HP product may need to be serviced.

I had the same problem. Something makes the phone's memory get "stuck."  Take the battery out of the phone for a minute and then put it back. Then unplug the phone and plug in again. You need to do this with all extensions. The problem goes away. 

Some things to check-

I know you said it wasn't unplugged but check the phone line is plugged into the line socket. I don't know how many times I had people who people unknown to them (children, cleaners) have knocked out the line cord and plugged it back in the wrong socket.

Hit the on-hook or hook button and check for dial tone. This will check if the line is still working.

Also the fax will have a mode button. If it has been bumped while moving it could be on manual mode (the machine will not automatically pick up)