Kentucky passes bill to end ‘harmful’ listing contracts 


Kentucky is on the brink of ending exclusive real estate listing contracts. The state’s General Assembly passed a bill to protect homebuyers from predatory contracts known as non-title recorded agreements for personal services (NTRAPS) or right-to-list agreements.

The practice of right-to-list agreements preys upon homeowners by offering small lump sums of cash  in exchange for decades-long contracts for the exclusive rights to sell the property.

For a homeowner in need of extra cash, somewhere between $300 to $5,000, a company will give them the cash they need without a loan. But there is a catch: They have to sign an agreement allowing the firm the right to list their home if they choose to sell in the future — obligating them for up to 40 years.

Recorded in property records since 2018, right-to-list agreements can be misleading in many instances, and they can create “impediments and increase the cost and complexity of transferring or financing real estate in the future,” according to a  news release from the American Land Title Association (ALTA), which supports the legislation.

Firms such as MV Realty (which has filed for Chapter 11 bankruptcy in more than 30 states), SellWhenever and HomeOptions generate home listing business through cash payments to homeowners and right-to-list agreements.

Sponsored by State Rep. Michael Meredith (R), the new bill will make right-to-list agreements unenforceable by law. It will also restrict and prohibit the recording of these agreements in property records, provide for their removal from existing records and allow for the recovery of damages. Penalties will be applied if NTRAPS are recorded in future property records. 

ALTA,  the national trade association of the title insurance industry, and the AARP lauded the Kentucky General Assembly on Monday for passage of House Bill 88.

“The property rights of American homebuyers must be protected,” Elizabeth Blosser, ALTA vice president of government affairs, said in a statement. “A home often is a consumer’s largest investment, and the best way to support the certainty of land ownership is through public policy. We have to ensure that there are no unreasonable restraints on a homebuyer’s future ability to sell or refinance their property due to unwarranted transactional costs.”

Other states such as Utah, Colorado, Georgia, Tennessee, Idaho, California, Florida, Washington, Virginia and North Dakota have passed similar bills in recent years. 

“The passage of HB 88 is a continuation of AARP’s advocacy efforts, undertaken in collaboration with ALTA in other states, to put an end to this harmful practice,” Samar Jha, AARP government affairs director, said in a statement. “We expect and hope to work on similar legislative solutions in other states to help protect homeowners against such predatory housing practices.”

Kentucky Gov. Andy Beshear is expected to sign HB 88 into law in the coming weeks.


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