Would You Sign a
40-Year Contract for $300?

The housing market is hot right now, and new methods for securing listings from homeowners seem to pop up daily. We're always on the lookout to inform YOU, our clients, of these trends and protect your best interests.

The latest is a Florida-based, national real estate company setting up operations across the country, and yes, they’re in Oklahoma. Their Homeowner Benefit Program® offers $300 to $5,000 in instant cash in exchange for a contractual agreement to list your home with them when you’re ready to sell.

As the company states on their website…

“…only a small percentage [of sellers] are actually ready to buy or sell a home. […] we felt there was something missing. So we're offering something new.

The Homeowner Benefit Program®, Where Agents Pay You.

We're taking a fresh approach to real estate by giving value back to homeowners and building our business for the future. This innovative program allows us to create a long term relationship with our clients, well before a home is sold. To solidify that relationship, we're willing to pay you and in exchange you agree to use our services in the future.

The key phrases here are “long term” and “well before”, as homeowners across the country who’ve accepted the offer are finding the “relationship” they’ve contractually entered into lasts for 40 years and locks them in with a lien on their home.

Homeowners are obligated for 40 years to exclusively list their home with the company should they choose to sell, preventing the owner from choosing a different company and even "for sale by owner" for the entirety of those four decades. For those who wish to cancel the contract or find their own buyer, they are charged 3% of the home’s current value to release the lien on their home's title with the company never having listed or marketed the home.

Even for older homeowners who may not live to see the end of the contract’s 40-year term, the lien placed on their home's title means the agreement is bound to the home (not the owners themselves). This means even inheritors are also bound to the agreement—preventing any beneficiaries from selling the home with a different company or on their own unless the cancellation fee is paid.

Is It Legal?

Let’s be fair—the instant cash benefit may be a good value for those who intend to sell their home soon, and the practice is not technically illegal. Oklahoma real estate law says that all contracts require a start and end date, so the contract’s 40-year term technically qualifies as an end date. But an agreement with such a lengthy term that also places a lien on owners’ homes—while, as the company states is certainly innovative and new—is, until recently, unheard of and has states' real estate commissions and lawyers are investigating its fairness to homeowners.

What’s Being Done

At the Oklahoma Real Estate Commission’s last meeting on June 8th, OREC’s Executive Director, Grant Cody, brought the practice to the attention of Oklahoma’s Real Estate Commissioners. They did agree that the practice does deserve an investigation.

The commission considered passing an emergency ruling that could regulate the practice by the end of the year—possibly by limiting the term of the agreement from 40 years to something more reasonable (likely in single-digit years).

More and more local news outlets are reporting on homeowners locked into these contracts, and even Boston’s Attorney General is looking into the practice, and we expect other states will, as well.

What You Should Know

The public should be aware that REALTORS® follow a strict set of codes & ethics from national and state REALTOR® associations designed to protect buyers and sellers. A typical residential listing agreement with a REALTOR® is for 6 to 12 months. Should a seller decide to de-list their home, there are typically no cancellation fees other than possible reimbursement of marketing expenses (such as listing photos and ads) that came out of the listing agent’s own pocket to advertise the home.

We hope you'll speak with your Flotilla Real Estate Partner before signing off on any agreement you're not sure of. We'd be extremely happy to look over any contracts or agreements with you, and even pass them along to our legal experts to review the fine print. We'll continue to offer trusted, local, Oklahoma real estate experts—your friends & neighbors you can meet with face-to-face, who serve with integrity and have your best interest at heart.

© 2022 Flotilla Holdings, Inc.