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Nevada just outlawed a predatory title scheme, but not before 800+ homeowners fell for it


Nevada just outlawed a predatory title scheme, but not before 800+ homeowners fell for it

Sep 19, 2023 | 9:00 am ET
By April Corbin Girnus
Nevada just outlawed a predatory title scheme, but not before 800+ homeowners fell for it
Nevada is among 16 states so far this year that have passed bans or established limits for NTRAPs. The legislation has largely been welcomed by lawmakers on both sides of the aisle. (Getty Images)

It works like this: Someone thinking about selling their home heads to the internet to look for some info. They see an advertisement offering a free market analysis — actually, it’s better than free, because this company is offering to pay the homeowner now, a show of how seriously they want to build a relationship with you.

Said homeowner clicks a link the company sends them and signs what it tells them to sign. They get a quick 500 bucks, maybe even $1,000. They forget the encounter ever happened.

It doesn’t matter.

Because what the homeowner unknowingly did was sign a 40-year agreement promising to use a singular company as the listing agent for their home. If they fail to use that company — perhaps because they never realized they signed a listing agreement in the first place — they must pay to the company 3% of the value of the home.

And death offers no reprieve. The agreement also applies to the homeowner’s heirs when they attempt to sell the home after the homeowner dies. Most likely, the first time anyone hears about the agreement is when a home is already in escrow, and at that point the best the homeowner can do is try to negotiate a smaller amount with the company from the internet ad.

In the real estate world, this is a business model known as non-title recorded agreements for personal service, or NTRAPS. As of June 15, signing these types of years- or decades-long agreements is illegal in Nevada.

“It’s really what I consider a deceptive trade practice,” said Assemblywoman Heidi Kasama (R-Las Vegas), who until recently worked at Berkshire Hathaway HomeServices Nevada Properties and saw the effects of NTRAPS firsthand. “(The companies) are clever. All they talk about in big print is, ‘Should the opportunity come to sell we’d like to be able to sell your home and be your agent of choice. People go, ‘Sure.’”

In one instance, Kasama says a desperate seller was forced to shell out $26,000 to release the lien and close on the house.

Kasama wasn’t the only person alarmed by the practice.

American Land Title Association (ALTA) members last year began reporting seeing a surge of NTRAPS in states across the country, said Elizabeth Blosser, the organization’s vice president of government affairs. ALTA quickly began drafting legislation and started pitching it to state legislatures early this year.

Sixteen states so far this year have passed bans or established limits for NTRAPs, according to Blosser. The legislation has largely been welcomed by lawmakers on both sides of the aisle.

“Homes represent the largest financial investment for most people,” said Blosser. “That should be protected.”

Sylvia Smith-Turk, division president of Stewart Title Company’s Western Division and former president of the Nevada Land Title Association (NLTA), says a statewide search found 818 of these types of agreements recorded in Nevada. Most of them were recorded within the last few years and associated with the same few companies.

Most of the affected homeowners  — roughly 600 — are in Clark County, which is to be expected given the distribution of the state’s population, adds Smith-Turk. But agreements were found recorded in every county in Nevada.

“They were hitting every county,” she said. “It wasn’t just Clark and Washoe.”

Kasama sponsored a bill to outlaw decades-long listing agreements. Her standalone bill, Assembly Bill 392, died on a legislative deadline day after failing to be called up for a full Senate vote — something the Republican assemblywoman and recently announced congressional candidate says was retaliation for speaking against legislative Democrats — but the NTRAPs language on the last day of the regular session was amended into a separate bill, Senate Bill 355, which did become law.

The new law limits listing agreements to a length of one year. Kasama said industry representatives agreed anything longer was unnecessary.

“If you are worth your weight and provide value, the seller will just extend the agreement,” she added.

Kasama says the state couldn’t legally void the 800 existing NTRAPS, but in an attempt to help those hundreds of homeowners, a provision was included requiring companies to file a new notice with counties specifying the terms of the agreement. If the companies failed to submit that required notice, the contract would be voided.

It is unclear so far what impact that part of the legislation has had.

Blosser of the ALTA recommends any homeowners who encounter NTRAPS reach out to the state attorney general’s office for possible help.

Seven state attorneys general, not including Nevada’s, have already taken legal action against one company — MV Realty — that lured customers in with advertisements promoting a “Homeowner Benefits Program.”

When presenting her legislation, Kasama identified MV Realty as a company that was actively pursuing such agreements in Nevada.

MV Realty in an emailed statement to the Current said it has “voluntarily and temporarily paused entering into any new agreements” but defended its NTRAPS program, describing it as “an innovative option that is first and foremost designed to benefit homeowners.”

“MV Realty remains confident that the Homeowner Benefit Program fully complies with the law and benefits consumers who select MV Realty as their listing agent,” read the statement. “We look forward to working with policy makers to address any concerns and continue this valuable program as an option to homeowners across the country.” 

Elderly homeowners are believed to be most at risk of having inadvertently signed an NTRAP. The AARP helped lobby to rein in NTRAPs.

Nevadans can find out if such an agreement has been recorded on their property at their county recorder. Clark County offers a free recording notification service, as do other counties across Nevada.

“People should take advantage of that,” added Blosser. “You can always go to a real, local title company if you have questions. And people should always be thinking twice about signing anything.”