Thirty states have passed legislation to protect homeowners from the predatory practice of filing unfair real estate fee agreements, often referred to as non-title recorded agreements for personal services (NTRAPS).
A release from the American Land Title Association (ALTA) and AARP noted NTRAPS offer small, upfront cash payments in exchange for decades-long contracts for exclusive rights to sell the property, even after the homeowner has passed away. If the homeowners or their heirs sell the property using a different listing agent, they could be forced to pay a penalty far greater than the original cash payout, often up to 3 percent of the purchase price.
They note the following 30 states have passed legislation making NTRAPS unenforceable: Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Indiana, Kentucky, Louisiana, Maine, Maryland, Minnesota, Nebraska, Nevada, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Utah, Virginia, Washington and West Virginia. In Hawaii and Illinois, bills are awaiting the governor’s signature.
“Enactment of this important consumer protection legislation in 30 states is a monumental win for safeguarding people’s property rights,” ALTA Vice President of Government Affairs Elizabeth Blosser said. “We applaud the bipartisan efforts of lawmakers championing homeownership by making clear these types of unfair agreements are unacceptable in their states. Hopefully, the swift action taken by lawmakers, along with state attorneys general, will be a strong deterrent to those looking to perpetuate similar schemes that strip hard-earned equity from people’s homes.”
Including NTRAPS in property records as liens, covenants, encumbrances or security interests in exchange for money creates impediments and increases the cost and complexity of transferring or financing real estate in the future. Legislation passed across the country provided a way to end existing NTRAPS while discouraging real estate companies from engaging in practices that take advantage of unsuspecting, often older and lower-income homeowners.
“Older adults can be particularly vulnerable to unfair service agreements promising quick cash. The legislation passed in these states helps safeguard homeowners from deceptive practices and protects property rights,” said Jenn Jones, vice president of government affairs, financial security & livable communities, AARP. “We look forward to advocating for legislative solutions in more states to protect homeowners from predatory housing practices.”