(The Center Square) – A new North Carolina law aims to protect property owners from unscrupulous real estate contracts, though industry officials contend it eliminates “an alternative to traditional real estate relationships that directly benefits North Carolina homeowners.”
Gov. Roy Cooper on Thursday signed House Bill 422, the Unfair Real Estate Agreements Act, following unanimous passage in both chambers of the General Assembly on Aug. 16. The law was unanimously approved in both chambers every step of the way and immediately went into effect.
The legislation targets the business model for Florida-based MV Realty and other companies that solicit agreements from homeowners to sell the exclusive rights to list their homes for 40 years, typically for $5,000 or less.
The agreements come with a penalty of 3% of the home sale if homeowners under contract hire another realtor.
Complaints about the agreements triggered investigations in a half dozen states including North Carolina, both by the media and law enforcement. The North Carolina Justice Department sued MV Realty in March, seeking preliminary and permanent injunctions against the agreements, restitution and other penalties.
The department launched its investigation into MV Realty last fall after receiving about 60 complaints beginning in March 2022 and found the company has secured agreements with more than 2,100 North Carolina homeowners. MV Realty signed up more than 32,000 homeowners nationwide by targeting those facing financial hardships through online ads, robocalls, and texts, according to the Justice Department. Several homeowners told investigators they were unaware of the details of the agreements when they signed.
“I fell victim by means of a phone call after my house closing,” homeowner and MV Realty customer Yolanda Frasier said in a May news release about the legislation. “I didn’t know that the contract was for 40 years and 3% of whatever I sell my house for, as well as the exclusive rights for them to sell. I would’ve never signed up for this if I had known.”
HB422 prohibits the so-called “right to list” service agreements that are “binding for more than one year.” It also bans agreements that “run with the land or bind future owners” or “create a lien, encumbrance, or other real property security interest.”
The bill was sponsored by Republican Rep. Kyle Hall, a Stokes County realtor, with the backing of the AARP, The NC Land Title Association, NC Realtors, the NC Real Estate Commission, and Zillow. Additional lawmakers from both parties co-sponsored HB422 and an identical measure in the Senate.
The Future Listing Purchasers Association that represents MV Realty and others in the industry issued a statement following Cooper’s signature on Thursday that says “homeowners across the state will no longer be able to receive compensation for the right to list their home.”
“It’s regrettable that an alternative to traditional real estate relationships that directly benefits North Carolina homeowners is somehow being presented as abusive or deceptive,” the statement read.
The association, which did not respond to a request for comment from The Center Square, says HB422 is a product of traditional real estate groups lobbying lawmakers “with the intention to attack and undermine the creditability of this business model and stop this new alternative.”
“The reality is more than 2,200 North Carolina homeowners participated in Homeowner Benefit Agreements; of that, only 14 complaints have been identified following the attorney general’s two-year investigation,” the statement read. “Moreover, in the specifics of those complaints, it’s clear there was no proof of deception or abusive practices.”
