Bill Summaries: S 344 UNFAIR REAL ESTATE AGREEMENTS ACT.

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  • Summary date: Mar 21 2023 - View Summary

    Identical to H 422, filed 3/21/23.

    Enacts new Article 7, Prohibition of Unfair Real Estate Service Agreements, in GS Chapter 93A, providing as follows. Sets out the Article's purpose and sets out and defines terms used in the Article. Defines Real Estate Service Agreement as a written contract between an Agent, Service Provider, Person, and the owner of Residential Real Estate or a potential buyer of Residential Real Estate to provide services, current or future, in connection with the maintenance, purchase, or sale of Residential Real Estate. Defines residential real estate as real property in the State used primarily for personal, family, or household purposes, by an owner, tenant, or any other party. 

    Makes a Real Estate Service Agreement unfair if it is effective and binding for more than one year from the effective date of the Real Estate Service Agreement and has any of the following characteristics: (1) the Real Estate Service Agreement purports to run with the land or is binding on future owners of Residential Real Estate identified in the Real Estate Service Agreement; (2) the Real Estate Service Agreement expressly allows for assignment of the right to provide those services without notice or consent of the owner or buyer; or (3) the Real Estate Service Agreement purports to create a lien, encumbrance, or other real property security interest. Sets out eight types of agreements that are excluded from the Article.

    Makes an agreement that is in violation of these provisions an Unfair Real Estate Service Agreement and void and unenforceable. Specifies that an Agent, Service Provider, or Person has no right to a refund of the consideration paid to the owner or buyer in connection with the Unfair Real Estate Service Agreement.

    Makes the recording of any Unfair Real Estate Service Agreement, or notice or memorandum thereof, that is in violation of this Article also a violation of GS 14-118.6(a) (making it a Class I felony to present for filing or recording in a public record or a private record generally available to the public a false lien or encumbrance against the real or personal property of an owner or beneficial interest holder, knowing or having reason to know that the lien or encumbrance is false or contains a materially false, fictitious, or fraudulent statement or representation). Specifies that a violation of the Article is an unfair or deceptive trade practice. Allows a party whose real property is encumbered by an Unfair Real Estate Service Agreement to bring a cause of action against the Agent, Service Provider, or Person and to be entitled to the relief available in GS Chapter 75 (Monopolies, Trusts and Consumer Protection). Provides that any recoveries available under GS Chapter 75 will not be offset by the consideration paid by an Agent, Service Provider, or Person to the owner or buyer in connection with the Unfair Real Estate Service Agreement. Gives the Attorney General enforcement power. 

    Prohibits an Unfair Real Estate Service Agreement, or notice or memorandum thereof, from operating as a lien, encumbrance, or security interest. Prohibits requiring an owner or buyer from recording any document voiding an Unfair Real Estate Service Agreement, or notice or memorandum thereof, recorded in violation of these provisions. Allows but does not require the register of deeds to refuse to accept an Unfair Real Estate Service Agreement, or notice or memorandum thereof, for recordation. Specifies that recordation does not provide actual or constructive notice to any party interested in the Residential Real Estate identified in the Unfair Real Estate Service Agreement.

    Allows a party with an interest in the real estate under which an Unfair Real Estate Service Agreement, or notice or memorandum thereof, is recorded in this State, to recover damages, costs, and attorneys' fees. Specifies that actual damages, costs, and attorneys' fees that are proved against the Agent, Service Provider, or Person will not be offset by the consideration paid by the Agent, Service Provider, or Person to the owner or buyer of the Unfair Real Estate Service Agreement.

    Makes conforming changes to GS 6-18.