Utah Passes Legislation Limiting Residential Property Service Agreements

The Utah legislature recently passed a bill limiting the use of residential property service agreements (Agreements), sometimes referred to as Non-Title Record Agreements for Personal Service (NTRAPS), which are agreements between a residential property owner and a company or person that will provide services related to preparation of the residential property for sale or sale of the residential property.

Under the new law, any Agreement made after May 3, 2023, may not include residential property sale services or sale preparation services that would begin more than a year after the Agreement is fully signed.  It also would not allow Agreements that: run with the land; bind any future owner of the property; create a security interest; or are assigned, unless the owner received notice and agreed.  An Agreement violating these limitations would be void.

The new law also prohibits any recording of a void Agreement or notice of Agreement.  If these documents are recorded, the filer may be sued by a property owner for actual damages and the filer may be in violation of the state’s Wrongful Lien Act.  If a person is licensed or is required to be licensed under the Real Estate Licensing and Practices Act, violating this law is grounds for disciplinary action.

The legislation also revised other parts of the real estate law including adding a reporting requirement for appraisal management companies and clarifying restrictions on commissions for brokers and sales agents.  The new law will become effective on May 3, 2023.