New laws enacted to prevent the use of non-proprietary records protocols (NTRAPs) for personal services are sweeping the country, with critics denouncing what they call deceptive and predatory practices.
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The list of states that currently block companies from using exclusive listing agreements continues to grow as state lawmakers continue to crack down on what some consider predatory practices.
These agreements – also known as non-title records agreements for personal services (NTRAPs) – have come under scrutiny across the country in recent years.
Kentucky and West Virginia are the latest states to join a nationwide ban on the practice, in which brokerage firms offer cash advances to homeowners who agree to list their homes with them in the future.
“These unfair service agreements have been recorded in property records as home ownership deeds since 2018,” AARP West Virginia State Director Gaylene Miller said in a statement. “We commend The West Virginia Legislature and Representative (Patrick) Lucas stand up for consumers and protect them from fraud, deception and unfair practices.”
MV Realty brokerage is Prohibited from doing business in North Carolina Earlier this year, the state faced lawsuits and accusations that it engaged in fraud and deception by enforcing a 40-year-old exclusive listing agreement.
Laws similar to the new ones in Kentucky and West Virginia are now in effect in about a dozen states, according to the agency. American Land Title Association, has been leading the policy push. These states include Utah, Colorado, Georgia, Tennessee, Idaho, California, North Dakota, Virginia, Florida, Washington, North Dakota, Alabama and Iowa Huazhou.
“This practice targets homeowners, offering small cash incentives in exchange for a decades-long contract of exclusive rights to sell the property,” ALTA said. “NTRAPS are filed to be included in a lawsuit against a lien, covenant, encumbrance, or Property records that feature security interests in exchange for money create obstacles and increase the cost and complexity of transferring or financing real estate in the future.”
Kentucky’s bill would make NTRAPs unenforceable, limit and prohibit them from being recorded in property records, impose penalties if they are recorded on property records, and create a path to remove them if they are recorded.
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