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:
- Making NTRAPS unenforceable
- Restricting and prohibiting the recording of NTRAPS in property records
- Creating penalties if NTRAPS are recorded in property records
- 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
California Becomes Latest State to Sue MV Realty
California became the seventh state to file a complaint against MV Realty, alleging the company misled consumers over the terms of the brokerage's “Homeowner Benefit Program.”
State, National Efforts Could Protect Homeowners from Predatory Liens
I’ve got some good updates about a national and Ohio effort to stop what has been called a predatory act by some companies to offer quick cash in exchange for an exclusive agreement to sell a home for 40 years.
Brokerage Firm Hit With Lawsuits Files for Bankruptcy
Facing lawsuits from attorneys general in six states, MV Realty filed for Chapter 11 bankruptcy protection in 33 states.
Entrapment is the Name of the Game
Non-Title Recorded Agreements for Personal Services (NTRAPS) were first identified in Florida in 2017. The majority of the 25,000 cases in 32 states currently on record happened in 2022, according to the title agents and consumer protection advocates investigating this elusive scam. “The scope is large, although I always say, just one is unacceptable when you’re talking about an unfair agreement that can have such a devastating impact on a consumer,” said Elizabeth Blosser, vice president of government affairs at the American Land Title Association (ALTA), which joined forces with AARP last year to draft legislation addressing NTRAPS.
Indiana Joins List of States Filing Complaints Against MV Realty
Indiana became the sixth state to file a complaint against MV Realty, alleging the company misled consumers over the terms of the brokerage's “Homeowner Benefit Program.”
Agencies Warn Homeowners of 'Predatory' Agreements
The American Land Title Association (ALTA) and AARP came together Wednesday with a warning about what they called predatory agreements aimed at homeowners. The agreements are known as Non-Title Recorded Agreements for Personal Service (NTRAPS) and came into the groups’ radar last year when they were flagged by a number of title agents.
Nevada Just Outlawed a Predatory Title Scheme, but not Before 800+ Homeowners Fell for It
It works like this: Someone thinking about selling their home heads to the internet to look for some info. They see an advertisement offering a free market analysis — actually, it’s better than free, because this company is offering to pay the homeowner now, a show of how seriously they want to build a relationship with you.
U.S. Senators Press MV Realty for Info About Alleged Predatory Business Practices
Several U.S. senators recently sent a letter demanding answers from MV Realty about its current legal scrutiny over allegations of predatory business practices targeting older adults, people of color and people with disabilities. The letter seeks information about MV Realty’s Homeowner Benefit Program (HBP), which court documents have alleged misleads and unfairly targets consumers.
Nevada Passes Law Protecting Homebuyers from Predatory Contracts
ALTA, the AARP and the Nevada Land Title Association (NLTA) applauded Nevada for passing the legislation. Nevada joins 13 other states that have passed versions of bills that address Non-Title Recorded Agreements for Personal Services (NTRAPS).
Ohio, Maine Pass Bills Banning Unfair Real Estate Fee Agreements
Other states to pass versions of bills that address Non-Title Record Agreements for Personal Service include Alabama, Colorado, Florida, Georgia, Idaho, Iowa, Maryland, North Dakota, Tennessee, Utah and Washington.
Protecting Homeowners from Predatory Business Practices
During National Homeownership Month, homeowners should be wary of a new business practice preying upon vulnerable homeowners — non-title recorded agreements for personal service (NTRAPS), long-term listing agreements that entrap consumers, writes ALTA Vice President of Government Affairs Elizabeth Blosser.
Maryland Passes Bill Banning Unfair Real Estate Fee Agreements
Maryland joined a growing list of states to pass legislation that protects homeowners from the predatory practice of filing of unfair real estate fee agreements in property records, known as Non-Title Record Agreements for Personal Service (NTRAPS). The legislation, which goes into effect June 1, is supported by ALTA, the Maryland Land Title Association (MLTA), AARP and AARP Maryland.
States Introducing Legislation to Stop Deals Similar to Those Made by MV Realty
Pennsylvania’s attorney general and others across the county sued MV Realty and the company voluntarily gave up its practice. Now, an industry organization is taking action. “It’s very disconnecting to see business models that seek to siphon people’s home equity,” said Elizabeth Blosser with the American Land Title Association. “Our primary purpose is to protect people’s property rights.”
5 More States Pass Legislation Banning Unfair Real Estate Fee Agreements
Colorado, Georgia, Tennessee, Idaho and North Dakota became the latest states to pass legislation protecting homeowners from the predatory practice of filing of unfair real estate fee agreements in property records, known as Non-Title Record Agreements for Personal Service (NTRAPS). ALTA has prioritized combating this abusive and anti-consumer activity in the marketplace, and worked with national stakeholders to design model legislation to ban this practice.
N.C. Becomes Fifth State to Sue Brokerage Firm Over Right-to-list Agreements
North Carolina became the fifth state to file a lawsuit against real estate firm MV Realty alleging that the company violated laws prohibiting unfair and deceptive practices by tricking homeowners into signing 40-year real estate agreements. ALTA has worked with national stakeholders to design model legislation to make these types of unfair agreements unenforceable, prevent the recording of the agreements in land records and provide consumers with options for seeking damages.
Massachusetts Court Orders MV Realty to Stop Recording 40-year Liens
ALTA has prioritized combating this abusive and anti-consumer activity in the marketplace, which adds costs and complications to the transfer or financing of real estate. ALTA has worked with national stakeholders to design model legislation to make these types of unfair agreements unenforceable, prevent the recording of the agreements in land records and provide consumers with options for seeking damages. Utah became the first state that passed legislation protecting homeowners from the predatory practice of filing of unfair real estate fee agreements in property records. ALTA helped draft the bill with input from national stakeholders.
Ohio AG Joins Other States Filing Lawsuits Against MV Realty
ALTA has prioritized combating this abusive and anti-consumer activity in the marketplace, which adds costs and complications to the transfer or financing of real estate. ALTA has worked with national stakeholders to design model legislation to make these types of unfair agreements unenforceable, prevent the recording of the agreements in land records and provide consumers with options for seeking damages. Seven states have already introduced legislation this year to address this issue.
Real Estate, Right to List Agreements, and Rumpelstiltskin
As firms look to modernize and revamp the way we buy and sell homes, some companies have turned to cash incentives and right to list agreements to generate new business. The most notable firm taking this route is MV Realty with its Homeowner Benefit Program. This caught the attention of the American Land Title Association, whose CEO Diane Tomb said the trade group is concerned about the duration and enforcement of these agreements, as well as consumer understanding of their implications.