SAVANNAH, Ga. (WSAV) — Georgia lawmakers and real estate professionals are cracking down on what they call predatory business practices that are impacting the future of Georgia homeowners.
The practice in question is Non-Title Recorded Agreements for Personal Service, NTRAPS, an agreement that targets homeowners over 60.
NTRAPS offers a small cash gift in exchange for signing a minimum of 40-year contract where if you sell the house before that time a lien is placed on the property.
- (Side note, your average mortgage caps at 30 years.)
“A lot of the homeowners that have NTRAPS in their title, they may think I’m going to get this much money from the sale of the property,” said Deborah Bailey, board governor of the American Land Title Association, ALTA, who protects consumer property rights.
“But when you factor in the payoff, it’s stripping away the equity that they have. So, it’s really cutting off their ability to accumulate equity and keep that equity.”
Bailey says that ALTA, which has been fighting against NTRAPS, started to see these agreements pop up in 2020 not tied to real property but are recorded on your property record.
She states that ALTA found over 3,300 NTRAPS filings in Georgia with around 1,000 of them being over 60 years old.
“This agreement starts as long as 40 years. Statistically, that person is not gonna survive the agreement, and so what’s gonna happen? Is that their heirs would inherit through them,” said Bailey.
MV Realty in Florida, which does a lot of dealings in Georgia, allegedly made over half a million calls to consumers convincing those who were having financial difficulties into signing NTRAPS.
“What we’re constantly seeing in the feedback we’re getting from consumers is that they really didn’t understand,” said Bailey.
“Until we get this released, you cannot sell the property.”
Bailey notes that MV Realty “did have legal advice which discouraged them against using the method that they did and they went against the advice that they were given by counsel.”
To combat this practice, Georgia Attorney General Christopher Carr filed a complaint and joined six other state attorneys against the Florida-based real estate brokerage for their unfair fee agreements.
Georgia being a business-friendly state, Bailey notes there’s a belief that if you’re business-friendly it comes at the cost of the consumer.
“But what Georgia is showing the world is that you can do two things at once, you can walk and chew gum, you can protect the consumer and at the same time, be a very business-friendly environment,” said Bailey.
Advice on avoiding these practices
- Reach out to professionals, there are plenty of real estate professionals that Bailey says would be more than happy to answer questions from the public for no cost.
“We’re in every community. We are hundreds of thousands of businesses that are in your community, but most people don’t even know, we exist,” said Bailey “So it would be helpful to develop relationships with professionals who they can reach out to.”
Helpful and responsive, these professionals are able to provide resources and check your contract before you sign them.
- Utilize your community Clerk of Court, who communicates with professionals in the field and can connect you to those with answers.
“They know how to connect us to people so if they have difficulties. If they, for example, encounter an NTRAPS there will be people who can help,” Bailey said.
- You can also reach out to the Attorney General’s Office
“And so people automatically think that, ‘Oh, it’s always gonna cost me a lot of money.’ Generally it’s not, and that’s a that’s a beautiful thing about,” said Bailey.
“When you’re working with professionals, we are sensitive to all the issues, and we will also work hard to get you the product at a fair.”
Future actions
ALTA is working on a plan to reach further into the community to make affordable homeownership more of a reality.
Bailey notes that the lawsuit process will take time, but in the meantime, they are working with lawmakers and industry partners to educate consumers of risky products like NTRAPS.
As of 2024, 16 states have enacted legislation to combat these practices, with SB 90 in Georgia, and more states are planning on taking action.
ALTA’s goal is to get legislation passed to outlaw such products and to help the 3,300 in Georiga who have already signed these binding agreements.
“I’m really excited to be part of this process to get rid of these NTRAPS, because I wouldn’t want it for myself, and I sure wouldn’t want that for you,” said Bailey.
“I want consumers to know, feel empowered. You are a lot smarter than you’re giving yourself credit for.”
