What are Non-Title Recorded Agreements for Personal Services (NTRAPS)?
The practice by service providers of offering homeowners nominal upfront monetary compensation in exchange for an agreement for future services. These agreements are recorded in property records and purport to run with the land, binding future successors and adding cost, complexity and barriers to transferring or financing their property.

Are NTRAPS currently being used in the marketplace?
Real estate brokerage firms are offering nominal cash to homeowners if they sign a listing agreement that is binding for up to 40 years. Since 2018 these types of NTRAPS have been recorded in property records as covenants and encumbrances on the title to homes. Homeowners have faced penalties of 3% of their property value, as determined at the sole discretion of the vendor, if they wish to have the encumbrance removed because they want to list their property with another brokerage firm or for other uncontemplated occurrences such as:

  • Transferring property title to a family member
  • Foreclosure
  • Transfer on death
  • Conveyance due to divorce
  • Sale to a developer or other person or entity not involving licensed real estate professionals

In addition, if the homeowner fails to pay this penalty, the firm can file a lien on the home, further clouding the title.

Examples: You can read press coverage on these NTRAPS here.

What financial incentive is offered to consumers for signing NTRAPS?
The nominal monetary value being offered to consumers for a 40-year listing agreement has been seen to be as low as $300.

How do NTRAPS impact consumers?
These agreements obligate the current and future property owners to utilize the service providers for up to 40 years.

Why are NTRAPS harmful to consumers?
Consumers do not have the expertise of real estate professionals or attorneys. They may not have the benefit of legal counsel and may not fully understand the agreement or the long-term implications to the ability to transfer or finance their property. Elderly homeowners or those in need of the financial incentives being offered are particularly at risk, and NTRAPS can result in significant monetary loss when transferring or financing their home. Additionally, NTRAPS provisions allow the listing agreement to be assigned without notice to the property owner.

Has there been regulatory action on NTRAPS?
In Florida, Ohio, Pennsylvania, Massachusetts and North Carolina, the Attorney Generals have filed complaints stating NTRAPS being used in the marketplace are deceptive, unfair, and unconscionable business practices.

What does the model bill seek to accomplish?
The model bill removes impediments to transferring or financing the impacted real estate by:

  1. Making NTRAPS unenforceable
  2. Restricting and prohibiting the recording of NTRAPS in property records
  3. Creating penalties if NTRAPS are recorded in property records
  4. Providing for the removal of NTRAPS from property records and recovery of damages

Why is this legislation drafted broadly?
While the NTRAPS agreements in the market today are generally real estate listing agreements, other businesses have tried to implement similar business practices in the past. The goal of this legislation is to protect consumers and provide a remedy for existing NTRAPS, while discouraging future unfair and deceptive trade practices in real estate.

Are there any exemptions in the model bill?
Yes. Exemptions include:

  • A home warranty or similar product that covers the cost of maintenance of a major home system (for example, plumbing, HVAC or electrical wiring) for a fixed period
  • An insurance contract
  • An option to purchase or right of refusal
  • A declaration created in the formation of a common interest community or an amendment thereto
  • A maintenance or repair agreement entered by a homeowners’ association in a common interest community
  • A mortgage loan or a commitment to make or receive a mortgage loan
  • A security agreement under the UCC relating to the sale or rental of personal property or fixtures
  • Water, sewer, electrical, telephone, cable, or other regulated utility service providers
  • Mechanics’ liens

Can legislators and regulators work collaboratively to protect consumers?
The proposed legislation protects consumers and provides state regulators with the ability and authority to assist consumers in seeking damages caused by NTRAPS.

NTRAPS Articles

Recent 2024 2023 2022

States Crack Down on Predatory Real Estate Deals
AARP  |  May 14, 2024

In less than two years, more than half of all states around the country have passed AARP-backed laws that protect consumers from unfair real estate agreements, in which brokers trade a small up-front cash payment for the future right to sell a person’s home. AARP worked with the American Land Title Association (ALTA) to create model legislation for states to follow, with a goal of passing a law in all 50 states.

Five More States Ban Unfair Real Estate Fee Agreements
May 9, 2024

Nearly half of the states in the country now have passed bills protecting homeowners from the predatory practice of filing unfair real estate fee agreements in property records, known as Non-Title Recorded Agreements for Personal Services (NTRAPS). The latest states to pass bills over the past month include Arizona, Nebraska, Kentucky, Oklahoma and West Virginia.

Missouri Sues Real Estate Firm for Filing Unfair Real Estate Fee Agreements
March 19, 2024

Missouri became the 10th state to sue MV Realty and certain affiliates for filing unfair real estate fee agreements in property records, known as Non-Title Recorded Agreements for Personal Services (NTRAPS).

Indiana Becomes 17th State to Protect Homebuyers from Predatory Contracts
March 7, 2024

Indiana became the latest state to pass legislation that protects homeowners from the predatory practice of filing unfair real estate fee agreements in property records, known as Non-Title Recorded Agreements for Personal Services (NTRAPS).

A Closer Look: ‘Predatory’ Agreements Targeting Georgia Homeowners
WSAV TV  |  March 4, 2024

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.