A real estate brokerage contacts you and offers you a cash advance of as much as $6,000. You are told, “you NEVER repay these funds.” All you have to do is sign a Home Owner Benefit contract. . . Does this sound too good to be true? Yes, according to the Attorneys General of Massachusetts, Florida, Pennsylvania, and potentially other states, that have filed lawsuits that accuse this business of misleading consumers. 

According to the Massachusetts Attorney General, the catch is that the contract states that if the homeowner ever sells the home in the next forty years, the homeowner will owe the brokerage a commission. For other transfers, including a foreclosure or the death of the owner, the brokerage will be entitled to a hefty fee. The contract is then recorded, creating a lien against the property. 

The complaints also claim that the brokerage targets low-income and elderly homeowners by advertising grants. According to the Rhode Island Department of Business Regulation, the brokerage is not licensed in Rhode Island as of January 30, 2023. American Land Title Association has proposed model legislation to prohibit businesses from recording unfair service agreements.

For more information, please contact the RIAR Legal Department at 401-432-6945 or email [email protected].