Selling the Right to Sell Your Home For Next to Nothing! (don't fall for this scam)

1. DON'T SELL THE RIGHT TO SELL YOUR HOME.

A real estate brokerage based in Florida (Name does not matter) has signed more than 35,000 “homeowner benefit agreements” with unsuspecting "impoverished" homeowners since 2018. The agreements offer homeowners up to $5,000 in cash in exchange for the right to sell their home within the next 40 years. This scheme has been perpetrated in Southern California, but it could work it's way to Central and Northern California.

2. HOW IT WORKS

Under the so called "homeowner benefit agreements", the brokerage pays homeowners up to $5,000 (depending on the value of the home) in cash up front for signing a deal to agree that if the homeowner decides to sell their home anytime in the next 40 years, they will list the home with the transaction broker. A transaction broker is a neutral facilitator for a sale rather than a fiduciary looking out for the best interests of the buyer or seller. Such brokers do not owe clients a duty of loyalty or confidentiality, which is required by the California Civil Code of a real estate agent.

If any other real estate agent is involved, the homeowner will have to pay that agent, then additionally pay 3% to the broker.

The agreement is then recorded on Title as a lien on the property which will be satisfied (paid) when the home is sold, transferred or the 40 years has elapsed.

3. WHAT IS THE PROBLEM?

The broker provides homeowners with a service that has a market value of only a few hundred dollars, yet charges them thousands or tens of thousands of dollars if they sell or otherwise convey their home within 40 years. This agreement survives the homeowner, meaning that whoever inherits the house is going to have to pay the broker.

The agreement includes an arbitration clause and precludes the homeowner from participating in any class action litigation against the broker. 

4. WHAT CAN I DO?

Don't sign any agreement that sounds like this. It is not worth it. A few states (Florida, Utah, Washington, and Massachusetts) are trying to stop this type of lien on homes, but others have no restrictions. Protect yourself and your heirs by staying away from scams like this.