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Right to list agreements banned by five more states

These states join Utah in banning the practices employed by firms like MV Realty

More states are taking action against real estate firms that employ right to list agreements as part of their business model. Five states: Colorado, Georgia, Tennessee, Idaho and North Dakota, have now joined Utah in banning right to list agreements like the ones used by MV RealtySellWhenever and HomeOptions.

According to the American Land Title Association (ALTA), the laws follow a model bill the trade group helped draft with the input of national stakeholders.

“The property rights of American homebuyers must be protected,” Elizabeth Blosser, ALTA’s vice president of government affairs, said in a statement. “A home often is a consumer’s largest investment, and the best way to support the certainty of landownership is through public policy. We have to ensure that there are no unreasonable restraints on a homebuyer’s future ability to sell or refinance their property due to unwarranted transactional costs.” 

In a press release, ALTA said the laws are designed to help “protect homeowners from predatory practice of filing of unfair real estate fee agreements in property record.”

These laws make right to list agreements unenforceable by law. They also restrict and prohibit the recording of right to list agreements in property records and provide for the removal of right to list agreements from property records while allowing for recovery of damages.

Under the Tennessee law in particular, which is highlighted as the most restrictive, violators will also be fined $10,000 per violation.

“Prior to passage of the bill, over 800 of these agreements had been filed across Tennessee and being treated as liens when there was no authority for the filing of these documents,”  Joseph Kirkland Jr., a Tennessee Land Title Association (TNLTA) past president and current co-chair of the TNLTA Legislative Committee, said in a statement. “This is a tremendous victory for the title insurance industry and consumers of Tennessee.” 

After Utah passed a bill banning right to list agreements in early March, Ken Trepeta, the executive director of the Real Estate Services Providers Council, predicted a wave of similar legislation would follow.

“It is not clear whether right to list agreements run afoul of any current laws or rule so it is not surprising a legislature is not leaving the matter to chance and taking action to address the long term consumer protection concerns raised by these agreements,” Trepeta wrote in an email in early March. “I wouldn’t be surprised if other states followed suit.”

Similar bills have also been introduced in California, Florida and Washington.

“MV supports the adoption of legislation that provides comprehensive oversight and licensure of participants in the marketplace,” an MV Realty spokesperson wrote in an email. “Any legislation should clearly spell out prohibited practices and outline specific terms that are transparent and easy to read in the language of the individual involved in the agreement. 

“The bills the American Land Title Association are advocating for rob homeowners of a valuable asset – the right to be compensated for providing a licensed realtor the listing of their home. Put simply – this bill will take money out of homeowners pockets and protect giant title insurance companies from their own negligence,” the spokesperson’s email continued. “Instead we hope to work with lawmakers to adopt legislation that would allow for the effective oversight and prevention of abuses and consumer protection, while allowing homeowners the option to be compensated for providing a licensed realtor the listing of their home.”

MV Realty, which faces lawsuits from five states attorneys general alleging that it misleads and confuses homeowners through its Homeowner Benefit Program, announced in late February that it was pausing the signing of new Homeowner Benefit Agreements.

In early March, a judge granted the Massachusetts attorney general’s preliminary injunction, restricting MV Realty from engaging in unfair and deceptive marketing practices, prohibiting the company from obtaining or recording additional mortgages during the pendency of the litigation, and requiring the company to release existing mortgages.

This article was updated with comments from MV Realty.