New law bars hidden contract agreements trapping homeowners with excessive fees
Minnesota has enacted a new law that protects homebuyers from predatory real estate contracts that can saddle them with excessive fees and restrict their ability to sell or refinance their property down the road.
This legislation signed by Gov. Tim Walz makes “non-title recorded agreements for personal services” (NTRAPS) unenforceable in the state. These arrangements, often tucked into closing paperwork, have trapped homeowners in long-term contracts with real estate brokers lasting up to 40 years.
“The property rights of American homebuyers must be protected,” said Elizabeth Blosser, vice president of government affairs for the American Land Title Association (ALTA). “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.”
The ALTA, along with AARP and the Minnesota Land Title Association, applauded passage of the legislation, which also allows the state attorney general to pursue restitution against firms using such contracts while empowering homeowners to seek damages in court.
“This legislation will ensure that Minnesota Attorney General Keith Ellison can pursue restitution against these bad actors and empower individuals to seek damages through the courts,” AARP Minnesota director Cathy McLeer said in a joint media release.
In addition to rendering NTRAPS void, the new law restricts recording them on property deeds and establishes penalties for violations. It also provides a process for homeowners to remove existing NTRAP agreements from their records.
“We look forward to working on similar legislative solutions in other states to help protect homeowners against this predatory real estate practice,” said Samar Jha, AARP’s government affairs director.
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Chad Novak, legislative co-chair of the Minnesota Land Title Association, said the reforms send a clear message: “Bad actors, you are not welcome here. While it is unfortunate to have to battle schemes like this one, it is nonetheless inspiring to see a broad selection of organizations come together in a single-minded effort to ensure that Minnesota homeowners are not preyed upon by purveyors of unsavory practices.”
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