Fighting Back Against Unscrupulous Brokerage Companies
RALEIGH -- Several real estate companies have been using a predatory business model to target seniors and financially insecure homeowners. These companies cold call people, even those on the Do Not Call Registry, providing cash payments, typically less than $1,000, to homeowners in exchange for agreeing to exclusively utilize that company’s services to list their property at any time in the next 40 years.
The property owner agrees by signing a contract which includes a memorandum that is filed with the county as a lien on the property’s title. The contract purports to be binding on current homeowners and property heirs and the lien complicates the homeowner’s ability to refinance, access home equity, or transfer their property. Property owners can terminate agreements early but must pay a penalty equal to 3% of the market value of the property (i.e., the commission the company would have earned for listing the home) and the company gets to determine the home’s value pursuant to the contract.
Problem’s Scope: These types of agreements have resulted in numerous complaints from misled consumers. A search of the 4 largest Multiple Listing Services (MLSs) in the state for the last 2.5 years reveals that more than 2,000 homeowners have an agreement with one of these firms with 86 listed properties.
The Solution: The Protect NC Homeowners Act, HB 422 (sponsored by Representatives K. Hall, Miller, Blackwell, Alston) and SB 344 (sponsored by Senators Krawiec, Overcash, Lowe) prohibits the use of Real Estate Service Agreements that are unfair to owners of residential real estate and others who may become owners of real estate in the future, including heirs to the property, by doing the following:
According to the American Land Title Association (ALTA), Attorney General Stein is the fifth attorney general to sue MV Realty over its right-to-list agreements. Four other attorneys general filed lawsuits, including Florida Attorney General Ashley Moody, Massachusetts Attorney General Maura Healey, Ohio Attorney General Dave Yost and Pennsylvania Attorney General Josh Shapiro. The lawsuits allege MV Realty misled consumers regarding the terms of the company’s “Homeowner Benefit Program.” Earlier this month, Utah became the first state to pass legislation protecting homeowners from the predatory practice of filing of unfair real estate fee agreements in property records.
“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.”
North Carolina Supporters: AARP, NC Association of Registers of Deeds, NC REALTORS, The NC Department of Justice, The NC Land Title Association, The NC Real Estate Commission, and Zillow
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This story is provided by AARP North Carolina. Visit the AARP North Carolina page for more news, events, and programs affecting retirement, health care, and more.
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