[WSBARP] The Point; Option Agreements; Homeowner Benefit Agreements

Tue Dec 6 06:44:36 PST 2022

I assume you're talking about Homeowner Benefit Agreements, and not "The 
Point."  I've personally not seen or heard of these.  The only thing I 
recall similar is some HOA covenants were being set up to require 
significant transfer fees, and to the developer, not to the HOA.  I 
recall there was a statute which limited those. But that is the extent 
of my recollection.

Kary L. Krismer
John L. Scott, Inc.
206 723-2148

On 12/5/2022 7:20 PM, Douglas Owens wrote:
> Dear listmates, I have a few questions.  Is it the sense that these 
> contracts are usually sold to the purchaser of the property by either 
> the listing or the selling broker in connection with the purchaser’s 
> transaction by which he or she comes into title?  Has anyone seen the 
> wording of one of these contracts?  The company’s website says that a 
> “memorandum" of the agreement is what is recorded.  Much would depend 
> on what the contract says, about such things as are usual in a listing 
> agreement such as the term of the listing, the efforts the broker must 
> make and the amount of the commission.  At a minimum it seems that 
> these contracts raise issues about restraint of trade, being explicit 
> barriers against the property owner using any other brokerage to sell 
> the property in the future, no matter what competitive offers such 
> brokers might make.  This might be a violation of Section 1 of the 
> Sherman Act if the company is out of state, or a violation of RCW 
> 19.86.050 if not.  Another question involves the disclosure given to 
> the property owner at the time of the signing of the agreement 
> concerning the potential securities issues.  By these contracts in 
> effect the property owner is receiving money currently in exchange for 
> a promise to pay the broker a much larger amount in the future if 
> certain conditions exist. I am not a securities expert and perhaps 
> others could indicate whether this issue is any thing a property owner 
> should be warned about.  Yours truly, Doug Owens
>
>> On Dec 5, 2022, at 12:26 PM, Dwight Bickel <dwight at dwightbickel.com> 
>> wrote:
>>
>> There are several messages on the King County real property lawyers’ 
>> listserve about something that I have not seen, but I believe similar 
>> to agreements that have been used around the country. Title companies 
>> confirm these are being sold in Washington, binding the property 
>> owner to use a certain firm for brokerage upon the next sale. On the 
>> national real property lawyers’ listserve, this was posted regarding 
>> actions that may need to be filed, and legislation may need to be 
>> passed, to protect against such contracts:
>> *From:*DIRT - Real Estate Lawyers Listserv 
>> <DIRT at LISTSERV.UMKC.EDU>*On Behalf Of*Whitman, Dale
>> *Sent:*Wednesday, November 30, 2022 11:11 AM
>> *To:*DIRT at LISTSERV.UMKC.EDU
>> *Subject:*[DIRT] Homeowner benefit agreements (so-called)
>> You may remember a previous conversation some months ago on DIRT 
>> about so-called homeowner benefit agreements, under which a real 
>> estate brokerage firm makes a cash payment to a homeowner. In return, 
>> the owner signs a contract promising to use the firm for brokerage 
>> services when the house is next listed for sale, any time in the next 
>> 40 years. The contract is recorded and purports to run with the land, 
>> binding future owners. It also has the effect of acting like a lien, 
>> discouraging or making impossible the refinancing of the house or 
>> placing a second mortgage or HELOC on it.
>> The brokerage firm will cancel the contract, but only on the payment 
>> by the homeowner of a substantial fee, typically 3% of the property’s 
>> current value. (One suspects that this is the firm’s main source of 
>> revenue from these contracts.) All of this is spelled out in the 
>> contract, of course, but is not well explained to the homeowner who 
>> is entering into the contract and receiving a check.
>> The Florida Attorney General’s office has just filed a suit against 
>> one of the main purveyors of these sorts of contracts. The AG seeks 
>> damages, penalties, and an injunction, relying mainly on the Florida 
>> consumer fraud statute. The word is that more state attorney 
>> general’s offices are readying similar suits. These things are 
>> predatory and deserve, IMHO, to be stamped out.
>> Dale
>>
>> To add or remove from this mailing list, please go to 
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>>
>> Dwight A. Bickel
>> Real Property Title Advisor
>> Washington Title Professional
>> Dwight at DwightBickel.com <mailto:Dwight at DwightBickel.com>
>> https:/dwightbickel.com <http://dwightbickel.com/>
>> 206-484-1976
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