Governor Roy Cooper signed into law House Bill 422 on August 24, protecting homeowners from a recent wave of unfair real estate agreements tying up their properties for 40 years.
The North Carolina Real Estate Commission’s staff worked for the past year in conjunction with the Attorney General’s office and the NC REALTORS® to draft this important piece of consumer protection legislation and support it through the legislative process.
The new law bans service-provider agreements that run with the land, are assignable without notice to a property owner and that create a lien against a property, with some exceptions such as for HOA maintenance agreements, home warranties, property management and insurance contracts.
The N.C. Tribune reports the measure targets a type of deal pioneers in this state by MV Realty, a Florida-based company that according to the N.C. Department of Justice has been offering four-figure upfront payments to home owners in return for a 40-year right to serve as listing agent if ever they decide to sell.
The catch is that the company puts liens on property and “will exact a penalty of at least 10 times the amount of the up-front incentive payment” if the owner elects to end the arrangement,” according to a lawsuit against MV Realty the department filed in March.
The suit further alleged that MV Realty makes most of its money via those early-termination charges, rather than actually by marketing and sell homes for its clients.