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Kentucky<\/a> is on the brink of ending exclusive real estate listing<\/a> contracts. The state\u2019s 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.<\/p>\n The practice of right-to-list agreements preys upon homeowners by offering small lump sums of cash\u00a0 in exchange for decades-long contracts for the exclusive rights to sell the property.<\/p>\n For a homeowner in need of extra cash, somewhere between $300 to $5,000, a company will give them the cash they need\u00a0without a loan. But there is a catch: They have to sign an agreement allowing\u00a0the firm the right to list their\u00a0home if they choose\u00a0to sell in the future \u2014 obligating them for up to 40 years.<\/p>\n Recorded in property records since 2018, right-to-list agreements can be misleading in many instances, and they can create \u201cimpediments and increase the cost and complexity of transferring or financing real estate in the future,\u201d according to a\u00a0 news release from the American Land Title Association<\/a><\/strong> (ALTA), which supports the legislation.<\/p>\n Firms such as MV Realty<\/strong><\/a> (which has filed for Chapter 11 bankruptcy in more than 30 states), SellWhenever<\/strong> and HomeOptions<\/strong> generate home listing business through cash payments to homeowners and right-to-list agreements.<\/p>\n 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.\u00a0<\/p>\n ALTA,\u00a0 the national trade association of the title insurance industry, and the AARP<\/strong>\u00a0lauded the Kentucky General Assembly on Monday for passage of House Bill 88.<\/p>\n \u201cThe property rights of American homebuyers must be protected,\u201d Elizabeth Blosser, ALTA vice president of government affairs, said in a statement. \u201cA home often is a consumer\u2019s 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\u2019s future ability to sell or refinance their property due to unwarranted transactional costs.\u201d<\/p>\n Other states<\/a> such as Utah, Colorado<\/a>, Georgia<\/a>, Tennessee, Idaho, California, Florida, Washington, Virginia and North Dakota have passed similar bills in recent years.\u00a0<\/p>\n \u201cThe passage of HB 88 is a continuation of AARP\u2019s advocacy efforts, undertaken in collaboration with ALTA in other states, to put an end to this harmful practice,\u201d Samar Jha, AARP government affairs director, said in a statement. \u201cWe expect and hope to work on similar legislative solutions in other states to help protect homeowners against such predatory housing practices.\u201d<\/p>\n Kentucky Gov. Andy Beshear is expected to sign HB 88 into law in the coming weeks.<\/p>\n