LAST SUMMER, title professionals across the country noticed more and more right-to-list contracts being recorded on properties in various counties. Recognizing the threat these Non-Title Recorded Agreements for Personal Services (NTRAPS) have on homeowners, ALTA prioritized combating this abusive activity in the marketplace.
Over the past year, ALTA found NTRAPS recorded in 32 states.
“We have identified at least 25,000 and there are potentially quite a few more than that,” said Elizabeth Blosser, vice president of government affairs for ALTA. “So, the scope is large, although I always say just one would be unacceptable when you’re talking about an unfair agreement that can have such a devastating financial impact on a consumer.”
NTRAPS have been recorded in property records since 2018. The practice preys upon homeowners, offering small cash gifts in exchange for decades-long contracts for the exclusive right to sell properties. 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.
ALTA prioritized combating this abusive and anticonsumer activity in the marketplace. ALTA worked with national stakeholders including AARP 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.
ALTA released the model NTRAPS bill in December 2022. Since then, 16 states have passed the legislation. These states include Alabama, California, Colorado, Florida, Georgia, Idaho, Iowa, Maine, Maryland, Nevada, North Carolina, North Dakota, Ohio, Tennessee, Utah and Washington. Bills have been introduced in a handful of other states as well.
“A home often represents a consumer’s largest financial investment, and their property rights must be protected,” said ALTA CEO Diane Tomb. “Good public policy should support the certainty of landownership by ensuring there are no unreasonable restraints on future ability to sell or refinance property due to unwarranted transactional costs.”
While most of these legislative proposals follow ALTA’s model bill, a few take different approaches but still seek to accomplish the main goals of the model bill. For example, in Tennessee, the enacted legislation goes the furthest in the country by including provisions creating a $10,000 penalty per violation. In Washington, the enacted legislation requires the state real estate commission to establish a workgroup to examine the practice and publish a report of recommendations for consumer protections and potential regulations.
In Maine, ALTA submitted written testimony in support of the state’s bill. The Texas Land Title Association (TLTA) requested that Elizabeth Blosser testify in opposition to a bill that was filed to codify NTRAPS. Blosser provided background and insight on other state advocacy efforts to committee members during her testimony. The Texas bill failed and will not become law.