NTRAPs now unenforceable in another state

Kentucky became the latest state to pass legislation prohibiting NTRAPS, or non-title recorded agreements for personal services, where homeowners find themselves tricked into signing contracts that impede their ability to sell their property in the future.

In late March, house Bill 88 passed unanimously by a vote of 96-0 in Kentucky's House of Representatives after similarly sailing through the Senate a week earlier. It is expected to be signed by Gov. Andy Beshear in the coming weeks. Rep. Michael Meredith was the bill's lead sponsor.

"Several real estate companies have been using a predatory business model to target seniors and financially insecure homeowners," said Gary Adkins, volunteer state president of AARP Kentucky, in a press release. 

"Invariably, older adults are targeted specifically, and therefore, need extra safeguards to be protected from such an unfair, deceptive, and abusive practice," he added. 

Businesses engaging in the practice frequently approach homeowners with offers of a cash gift in exchange for an agreement that obligates their services be used exclusively for any sale in the future. But the length of agreements and often hefty charges for early termination are hidden within the contracts, with the business' names sometimes appearing in title searches. 

NTRAPs have been observed in property records since 2018, according to the American Land Title Association. Among the alleged perpetrators of NTRAP activity is MV Realty, who began marketing the "service" in Florida in 2017. To date, 10 states have sued MV Realty, including Missouri, which is the most recent to file a lawsuit in mid March.  

Kentucky's bill will prohibit such agreements to appear in property records and penalize violators. The legislation will also provide a means to remove NTRAPs already appearing on records and make them unenforceable by state law.  

The passage of the bill adds further momentum to policy trends that began in 2023, when Utah became the first to pass legislation against NTRAPs. Since then, 16 other states have followed suit, with Gov. Jim Justice recently adding his signature to West Virginia's bill in March. Meanwhile, four other laws await signing alongside the Bluegrass State's after their passage, with chambers in both Indiana and Virginia giving approvals in the past several weeks. 

Both ALTA and AARP have been at the forefront of initiatives pushing for greater enforcement against NTRAPs. "A home often is a consumer's largest investment, and the best way to support the certainty of land ownership is through public policy," said Elizabeth Blosser, ALTA vice president of government affairs, in a press release.  

"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."