Published: April 25, 2023 | Updated: April 24, 2023

New law codifies protection for vulnerable homeowners

A new law that will protect vulnerable homeowners and provide relief for existing property owners who have fallen victim to Unfair Service Agreements was recently signed into law, with support from Idaho Realtors and the Idaho Land Title Association.

"We are thrilled Idaho has joined the growing number of states that have outlawed Unfair Service Agreements, a predatory practice that has been harming vulnerable homeowners,” said Idaho Realtors President Denise Lundy. “These practices are recorded in counties across Idaho, burdening property owners with unnecessary complexity and costs. We want to thank Gov. Little for signing our bill into law and Realtor and educator Rep. Chenele Dixon, as well as Sen. James Ruchti, for their leadership in sponsoring and supporting this important legislation."

The new law also outlaws future unfair and deceptive trade practices in real estate transactions.

What are Unfair Service Agreements?

Unfair Service Agreements are a practice by service providers of offering homeowners nominal upfront monetary compensation in exchange for an agreement for future services. These agreements are recorded in property records and purport to run with the land, binding future successors and adding cost, complexity and barriers to transferring or financing their property.

Unfortunately, some real estate brokerage firms are offering nominal cash to homeowners if they sign a listing agreement, which claims to be binding for up to 40 years.

Since 2018 these types of Unfair Service Agreements have been recorded in property records as covenants and encumbrances on the title to homes. Homeowners have faced penalties of 3% of their property value, as determined at the sole discretion of the vendor, if they wish to have the encumbrance removed because they want to list their property with another brokerage firm or for other uncontemplated occurrences such as:

• Transferring property title to a family member

• Foreclosure

• Transfer on death

• Conveyance due to divorce

• Sale to a developer or other person or entity not involving licensed real estate professionals

In addition, if the homeowner fails to pay this penalty, the firm can file a lien on the home, further clouding the title.

What financial incentive is offered to consumers for signing Unfair Service Agreements?

The nominal monetary value being offered to consumers for a 40-year listing agreement has been seen to be as low as $300.

How do Unfair Service Agreements impact consumers?

These agreements obligate the current and future property owners to utilize the service providers for up to 40 years.

Why are Unfair Service Agreements harmful to consumers/homeowners?

Consumers do not have the expertise of real estate professionals or attorneys. They may not have the benefit of legal counsel and may not fully understand the agreement or the long-term implications to the ability to transfer or finance their property.

Elderly homeowners or those in need of the financial incentives being offered are particularly at risk, and Unfair Service Agreements can result in significant monetary loss when transferring or financing their home. Additionally, Unfair Service Agreements provisions allow the listing agreement to be assigned without notice to the property owner.

“We are proud to be a part of a strong coalition working on behalf of our customers, the real estate industry and all Idahoans, especially vulnerable homeowners,” said Denise Potts, Idaho Land Title Association president. “Thank you to Idaho Realtors for their collaboration with our team along with the Idaho AARP in their support of H. 238.”


• Outlaws Unfair Service Agreements in Idaho

• Deems existing Unfair Service Agreements unenforceable by law

• Adds this predatory practice to the Idaho Consumer Protection Act

Idaho is one of seven states to pass Unfair Service Agreement legislation this year; others include Colorado, Florida, Georgia, North Dakota, Tennessee and Utah.