A new law in Rhode Island invalidates a controversial real estate practice involving non-title recorded agreements for personal services (NTRAPS) — popularly known as right-to-list agreements — amid growing national efforts to curb the use of such contracts.

The legislation — House Bill 5185 and Senate Bill 133 — was signed into law in June by Gov. Dan McKee.

NTRAPS are agreements filed in property records that can impose long-term fees or obligations on homeowners, often without clear disclosure or understanding.

Critics have called the agreements predatory and said they can create financial burdens or complicate real estate transactions by placing hidden encumbrances on properties.

Under the new law:

  • NTRAPS are legally unenforceable in Rhode Island.
  • The recording of such agreements in public property records is prohibited.
  • Penalties apply to those who attempt to record NTRAPS.
  • Homeowners have the right to remove NTRAPS from their records and may pursue damages.

Legislation draws praise

“The property rights of American homeowners must be safeguarded,” said Elizabeth Blosser, chief of strategy, communications and innovation at the American Land Title Association (ALTA). “It is essential to ensure there are no unreasonable restraints on a homeowner’s ability to sell or refinance their home in the future due to unwarranted transaction costs.”

Rhode Island becomes the 33rd state to pass legislation targeting NTRAPS — following a steady trend started by Utah in March 2023.

“The passage of HB 5185/SB 133 is a continuation of AARP’s advocacy efforts, undertaken in collaboration with ALTA in other states, to put an end to this harmful practice,” said Samar Jha, government affairs director for AARP. “We look forward to working on similar legislative solutions in more states to help protect homeowners against this predatory real estate practice.”

The New England Land Title Association (NELTA) also supported the legislation.

“The New England Land Title Association appreciates the work conducted by the legislature and the governor to curb this type of predatory practice and protect the consumers of Rhode Island,” said Mark Bennett, executive director of NELTA.

Consumer protection advocates say the law is particularly significant for older homeowners.

“For older Rhode Islanders, their home is often their greatest asset,” said Catherine Taylor, state director for AARP Rhode Island. “Without adequate protections against the predatory nature of these types of agreements, they could lose their financial security that they’ve worked so hard for.

“We thank (Rhode Island State Sen. Matthew LaMountain) and (State Rep. Susan Donovan) for their leadership and dedication to protecting Rhode Island homeowners.”

Use of right-to-list agreements

A prominent example of NTRAP agreements has been promoted by MV Realty through what it calls the “Homeowner Benefit Program.”

Under the arrangement, homeowners were offered a one-time payment ranging from $300 to $5,000. In return, they committed to allowing the company exclusive rights to list their home for sale — with a 3% listing commission — for a period of 40 years.

In late February 2023, MV Realty announced that it was pausing the signing of new right-to-list agreements.

That same fall, the company filed for Chapter 11 bankruptcy in 33 states. The firm had more than 500 real estate agents.

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