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The list of states now blocking companies from using exclusive listing agreements continues to grow as state legislators proceed with an ongoing crackdown against a practice that some have deemed predatory.
The agreements — also known as Non-Title Recorded Agreements for Personal Services, or NTRAPs — have been under scrutiny nationwide in recent years.
Kentucky and West Virginia are the latest to join a nationwide push to ban the practice, in which brokerages offer cash upfront to homeowners who agree to list with them in the future when they sell their homes.
“Since 2018, these unfair service agreements have been recorded in property records as covenants on the title to homes,” AARP West Virginia State Director Gaylene Miller said in a statement. “We applaud the West Virginia Legislature and Delegate [Patrick] Lucas for standing up for consumers to safeguard them against fraud, deception and unfair practices.”
The brokerage MV Realty was barred from doing business in North Carolina earlier this year after the state faced a lawsuit and accusations that it conducted business by fraud and deception by enforcing exclusive listing agreements that lasted 40 years.
When the new laws in Kentucky and West Virginia take effect, 19 states will have banned NTRAPS, according to the American Land Title Association, which has been leading the policy push. Last year Utah became the first state to pass legislation prohibiting NTRAPS, with similar laws now on the books in Alabama, California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Maryland, Maine, Nevada, North Carolina, North Dakota, Ohio, Tennessee and Washington.
“The practice preys upon homeowners, offering small cash incentives in exchange for decades-long contracts for the exclusive rights to sell the property,” ALTA said. “Submitting NTRAPS for inclusion in property records characterized as liens, covenants, encumbrances or security interests in exchange for money creates impediments and increases the cost and complexity of transferring or financing real estate in the future.”
The Kentucky bill will make NTRAPs unenforceable by law, restrict and prohibit their recording on property records, creates penalties if they are recorded on property records, and creates a pathway to remove them if they have been recorded.
Editor’s note: This story has been updated to note that when the new laws in Kentucky and West Virginia take effect, 19 states will have banned NTRAPS.
