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3/18/2025
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House OKs Donovan bill to protect homeowners from predatory real estate schemes
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STATE HOUSE – The House of Representatives today approved legislation sponsored by Rep. Susan R. Donovan to prohibit an unfair real estate practice that is often targeted at older homeowners, sometimes resulting in a lien against their property or other problems.
The legislation, which now goes to the Senate, targets a scheme referred to as Non-Title Recorded Agreements for Personal Services (NTRAPS) in which a real estate broker offers money to a homeowner upfront in exchange for the rights to later sell their home. The agreement obligates the homeowner or their heirs to use that real estate broker or face financial penalties of up to 3% of the property’s value, and can stand in the way if the homeowner wishes to get a home equity loan, transfer the property to an heir, convey it in a divorce, and more.
“Unfortunately, there are agents who will offer older homeowners as little as a few hundred dollars and tell them all they have to do is list it with them down the road if they ever do sell it. But the agreement isn’t that simple. It usually includes financial penalties and potentially a lien if the homeowner wants to transfer the house another way, and can be a roadblock to refinancing or applying for a home equity loan,” said Representative Donovan (D-Dist. 69, Bristol, Portsmouth). “These agreements are predatory and don’t benefit homeowners. Rhode Island should join the growing number of states that prohibit this practice.”
Representative Donovan’s legislation (2025-H 5185A) would prohibit as an unfair service agreement any contract under which a person agrees to provide series in connection with the maintenance or purchase of residential real estate if the service is not to be performed within one year and either purports to be attached to the property and binding on future owners, allows for assignment of the right to provide service without notice to or consent from the property owner or purports to create a lien, encumbrance or other security interest.
Under the bill, if such an agreement is recorded, the homeowner or other person with an interest in the property could apply to the superior court to have the agreement declared unenforceable.
The bill is based on model legislation that has been adopted in 30 other states. The legislation is backed by AARP, the American Land Title Association and the National Association of Realtors.
The bill now heads to the Senate, where similar legislation (2025-S 0133) has been introduced by Sen. Matthew L. LaMountain (D-Dist. 31, Warwick, Cranston).
For more information, contact:
Meredyth R. Whitty, Publicist
State House Room 20
Providence, RI 02903
(401) 222-1923
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