New NC law cracks down on 'deceptive' real estate deals
A bipartisan push to crack down on sketchy real estate deals became law today with Gov. Roy Cooper's signature.
House Bill 422 is a response to a real estate company that signed homeowners to contracts that guaranteed the company would be their real estate agent if they sold their home within 40 years. Attorney General Josh Stein sued the company in March, accusing it of deceptive business practices. Lawmakers levied similar accusations as the bill to prevent deals like this in the future was voted unanimously through the General Assembly.
State Rep. Kyle Hall, a Forsyth Republican and a real estate agent, said the company targeted senior citizens and other vulnerable people.
"People deserve the American dream," said Hall, who co-sponsored the bill. "They don't deserve to be ripped off in order to get it."
Stein said the bill restores "some power back to North Carolina homeowners." His office has sued MV Realty over some of these contracts. The case is due in court Friday on a preliminary injunction hearing, Stein said.
Asked for comment Thursday, MV Realty forwarded a trade association statement from Future Listing Purchasers Association Director Jim Terlizzi, who said the new law strips North Carolinians of "a fundamental right."
"Homeowners across the state will no longer be able to receive compensation for the right to list their home," Terlizzi said. "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."
Terlizzi said more than 2,200 North Carolina homeowners have signed one of these agreements and only 14 complaints were identified following the attorney general's investigation.
Stein's office said it received about 60 complaints.
In these contracts, homeowners agreed to use MV Realty as their listing agent if they decided to sell their home in the next 40 years. If they break the contract and sell their house using a different agent, they still have to pay MV Realty 3% of their home’s value. In exchange, the homeowner gets a check; anywhere from a few hundred to a few thousand dollars.
Stein said that if a homeowner wants out of the deal they would have to pay MV Realty at least 10 times that amount, and the contracts continue after a homeowner's death. He said some homeowners don't understand what they're signing and that these "oppressive and excessively long-term agreements ... undermine a person's ownership in their own home."
The new law outlaws real estate agreements that run for more than a year and "run with the land or bind future owners of residential real estate identified in the real estate service agreement," according to a legislative summary of the bill.
Stein's lawsuit seeks to put MV Realty out of business. The new law will make these sort of agreements illegal going forward.
