(The Center Square) – The practice of offering an upfront cash payment in exchange for a decades-long contract for exclusive rights to sell the property may soon be illegal in Illinois.
Non-Titled Recorded Agreements for Personal Services, known as NTRAPS, are contracts between a service provider, such as a real estate firm, and a homeowner in which the homeowner is offered a small amount of money in exchange for signing an agreement for future services.
“What we saw happening in the marketplace was real estate brokerage firms were going to homeowners and paying them as little as $300 dollars to sign a listing agreement that could last for as long as 40 years,” said Elizabeth Blosser, Vice President of Government Affairs with the American Land Title Association.
If the homeowner used another listing agent, they could be forced to pay a penalty, sometimes up to 3% of the purchase price.
“The financial impact of these predatory contracts can then fall onto family members who inherit the property and are put through obstacles during an already challenging time” State Sen. Ann Gillespie, D-Arlington Heights, the sponsor of the measure.
Illinois is one of 30 states that have passed legislation making NTRAPS unenforceable. If signed into law, the measure would prohibit businesses from entering into these real estate contracts. It would also protect property owners from financial loss in the event a contract is included within their property record.
“What we’ve found as we promoted this legislation the last two years is this is definitely not a partisan issue, it is a consumer protection issue,” said Blosser.
