This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0861a.RRS
DATE: 3/16/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: CS/HB 861 Residential Loan Alternative Agreements
SPONSOR(S): Regulatory Reform & Economic Development Subcommittee, Robinson, W.
TIED BILLS: IDEN./SIM. BILLS: SB 770
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Regulatory Reform & Economic Development
Subcommittee
13 Y, 0 N, As CS Larkin Anstead
2) Judiciary Committee
3) Commerce Committee
SUMMARY ANALYSIS
A listing agreement forms a legally binding agreement with a real estate agent to sell property on behalf of the
owner. All listing agreements in Florida are required to have a definitive termination date and a real estate agent
may be disciplined by the Florida Real Estate Commission (FREC) for failing to include such. Generally, an agent
and the seller choose a mutually agreeable termination date, which they can modify or extend by mutual assent.
Usually, a real estate agent is entitled to a commission when that person is the procuring cause of a sale.
Recently, some real estate brokers have offered homeowners cash in exchange for the exclusive right to list an
owners’ property in the future. Some of the owners who entered into these agreements did not realize the listing
contract lasted up to 40 years and were later sued by the real estate broker for commission even though the
broker was not involved in the sale of the property.
The bill:
Limits the term of a residential loan alternative agreement for the disposition of residential real property
to no more than six months and may not be renewed.
Prohibits a residential loan alternative agreement from authorizing a person to place a lien or otherwise
to encumber any residential real property.
Prohibits residential loan alternative agreements from constituting a lien, encumbrance, or security
interest on the property.
Prohibits courts from enforcing a residential loan alternative agreement by a lien or by constructive trust
in the residential real property or upon the proceeds of the disposition of the residential real property.
Requires specific notice and the written consent of the homeowner or seller before a residential loan
alternative agreement may be assigned to another person.
Defines “disposition” as a transfer or voluntary conveyance of the title or other ownership interest in
residential real property.
Defines “residential alternative loan alternative agreement” as a signed writing between a person and
seller or homeowner that:
o grants the exclusive right to a person to act as a broker for the disposition of the property,
o provides an effective duration of more than two years, and
o provides the person pay compensation to the seller or owner.
Defines “residential real property” as an improved residential property of four units or fewer or
unimproved residential real property intended for four units or fewer.
Provides that a residential loan alternative agreement is unenforceable in law or equity and may not be
recorded by the clerk of the circuit court.
Makes violations of certain provisions an unfair or deceptive trade practice within the meaning of
Florida Deceptive and Unfair Trade Practices Act.
The bill provides an effective date of July 1, 2023.
The bill does not appear to have a fiscal impact on local or state governments.
STORAGE NAME: h0861a.RRS PAGE: 2
DATE: 3/16/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Current Situation
Background on Real Estate Brokers
The Florida Real Estate Commission (FREC), within the Division of Real Estate (Division), at the
Department of Business and Professional Regulation (Department), administers and enforces real
estate licensing laws.
1
The FREC is also empowered to adopt rules that enable it to implement its
statutorily authorized duties and responsibilities.
2
FREC may discipline real estate brokers by denying, refusing to renew, suspending, or revoking their
permit or imposing administrative fines if FREC has found that the broker has violated the practice act,
including:
3
engaging in dishonest, fraudulent transactions;
advertising property or services in a manner which is fraudulent, false, deceptive, or misleading in
form or content;
making deceptive, untrue, or fraudulent representations in or related to the practice of a profession
or employing a trick or scheme in or related to the practice of a profession;
failing to include in any written listing agreement a definite expiration date, description of the
property, price and terms, fee or commission, and a proper signature of the principal, or
failing to perform any statutory or legal obligation placed upon a licensee.
A real estate broker or sales associate may be convicted for a second degree misdemeanor for
recording a contract, or other writing which purports to affect the title of, or encumber, any real property
if the same is known to her or him to be false, void, or not authorized to be placed of record, for the
purpose of collecting a commission, or to coerce the payment of money to the broker or sales associate
or other person.
4
This does not prohibit a broker or a sales associate from recording a judgment
rendered by the court, placing a lien on a property where expressly permitted by contractual
agreement, or otherwise allowed by law.
5
A person who operates as a broker or sales associate without being the holder of a valid and current
active license commits a felony of the third degree.
6
Broker-Property Owner Relationship
A broker is a person or agency who arranges transactions between a buyer and a seller for a
commission.
7
“In the absence of a special contract, a broker is entitled to a commission when that
person is the procuring cause of a sale.”
8
Real Estate Listing Agreements
9
1
Ch. 475, Part I, F.S.
2
These rules are contained in ch. 61J2, F.A.C.
3
Ss. 475.25 and s. 455.227, F.S.
4
S. 475.42(1)(i) and (2), F.S.
5
S. 475.42(1)(i), F.S.
6
S. 475.42(1)(a), F.S.
7
S. 475.01(1)(a), F.S.
8
Esslinger-Wooten-Maxwell, Inc. v. Lones Family Ltd. P'ship, 298 So. 3d 1176, 1180 (Fla. 3d DCA 2020).
9
Jessica Cody. Understanding the Listing Agreement When Selling Your Home, Home Light (Feb. 10, 2023),
https://www.homelight.com/blog/listing-agreement/. STORAGE NAME: h0861a.RRS PAGE: 3
DATE: 3/16/2023
A listing agreement is a legally binding contract that establishes the duties of the seller and the real
estate agent. The time period for these agreements must be defined in the contract.
10
Typically, the
contract terms may be negotiated. For example, the expiration date, commission, and duties.
11
There
are three types of listing agreements:
Recording Documents Related to Real Estate Agreements With the Clerk of the Court
The Clerk of the Court is required to record certain instruments presented to them, upon payment of
service charges. A document submitted to the clerk of court is deemed validly recorded and acts as
notice to other persons for certain purposes. Clerks record documents such as agreements, notices or
claims of lien, and other instruments relating to the ownership, transfer, or encumbrance
12
of or claims
against real or personal property or any interest in it.
13
An encumbrance, such as a recorded lien, creates a cloud on the property’s title.
14
This affects the
marketability of the property and the ability for a homeowner to sell or refinance their home. Currently, a
broker may place a lien on a property where expressly permitted by contractual agreement or
authorized by law.
15
Recent Events
Certain Florida licensed real estate brokerage firms have been offering homeowners cash, advertised
as an alternative loan, in exchange for exclusive rights to list a homeowners’ property when they decide
to sell.
Some homeowners enter into these residential loan alternative agreements without recognizing that
they may last up to 40 years. Years later when a homeowner sells their property, without the brokerage
firm, the brokerage firm files a lien against the property for 3% of its value even though the brokerage
firm never performed the listing services.
16
10
S. 475.25(1)(r), F.S.
11
Jamie Johnson, What Is a Listing Agreement?, Rocket Mortgage (Feb. 19, 2023), https://www.rocketmortgage.com/learn/listing-
agreement (visited March 2, 2023).
12
“An encumbrance is a claim against an asset by an entity that is not the owner. Common types of encumbrances against real
property include liens, easements, leases, mortgages, or restrictive covenants. Encumbrances impact the transferability and/or use of
subjected properties.” Encumbrance, Legal Information Institute (last visited Feb. 28, 2023),
13
S. 28.222(3)(a), F.S.
14
A cloud on title means a claim that affects the ownership of a property. Cloud on Title, Legal Information Institute,
https://www.law.cornell.edu/wex/cloud_on_title (visited March 2, 2023).
15
S. 475.42(1)(i), F.S.; see also, S. 702.01, F.S. If the debt is not paid to the creditor, the creditor can file a foreclosure action to have
the court enforce the lien
16
Rebecca Liebson, Florida Company Pays Quick Cash to List Your Home. the Catch? A 40-Year Contract, Tampa Bay Times (Sept.
6, 2022), https://www.tampabay.com/news/real-estate/2022/09/06/florida-company-pays-quick-cash-to-list-your-home-the-catch-a-40-
year-contract/.
Types of Listing Agreements Description
Exclusive Right-to-Sell Agreement
Gives only one agent the right to find a buyer.
Real estate broker receives commission when the property
is sold regardless of who finds the buyer.
Exclusive Agency Listing Agreement
Any agent that is part of the real estate agency may sell the
property and collect commission.
Seller is allowed to sell property without assistance from
the agent.
If the seller sells the property without assistance of the
agent, the agent is not entitled to commission.
Open Listing Agreement
The seller pays commission to the agent only if the house
sells through the efforts of that agent. STORAGE NAME: h0861a.RRS PAGE: 4
DATE: 3/16/2023
One of these companies is MV Realty, which operates in 33 states. It has acknowledged that more than
30,000 people have signed similar types of contracts.
17
Recently, the Florida
18
, Massachusetts
19
, Pennsylvania
20
, and Ohio, Attorney Generals
21
have filed
lawsuits against MV Realty for its misleading contractual terms related to these types of “listing
agreements”.
Florida Deceptive and Unfair Trade Practices Act (FDUTPA or Act)
The Florida Deceptive and Unfair Trade Practices Act (FDUTPA or Act) declares unlawful any unfair or
deceptive acts or practices committed in the conduct of any trade or commerce.
22
The Act is a separate
cause of action intended to be an additional remedy to other civil remedies at law, and it is aimed
toward making consumers whole for losses caused by fraudulent consumer practices. The Act protects
consumers from deceptive acts, and protects the consuming public and legitimate business enterprises
from those who engage in unfair methods of competition, or unconscionable, deceptive, or unfair acts
or practices in the conduct of any trade or commerce. It applies to private causes of action arising from
single unfair or deceptive acts in the conduct of any trade or commerce, even if it involves only a single
party, a single transaction, or a single contract.
Effect of the Bill
The bill:
Limits the term of a residential loan alternative agreement for the disposition of residential real property
to no more than six months and may not be renewed.
Prohibits a residential loan alternative agreement from authorizing a person to place a lien or otherwise
to encumber any residential real property.
Prohibits residential loan alternative agreements from constituting a lien, encumbrance, or security
interest in the residential real property.
Prohibits courts from enforcing a residential alternative loan alternative agreement by lien or
constructive trust in the residential real property or upon the proceeds of the disposition of the
residential real property.
Requires specific notice and the written consent of the homeowner or seller before a residential loan
alternative agreement may be assigned to another person.
Defines “disposition” as a transfer or voluntary conveyance of the title or other ownership interest in
residential real property.
o Defines “residential alternative loan alternative agreement” as a signed writing between a person
and seller or owner of residential real property that:
Grants an exclusive right to a person to act as a broker for the disposition of the
property;
Has an effective duration of more than two years; and
Provides the person pay compensation to the seller or owner.
17
Angie Moreschi, MV Realty Facing Congressional Scrutiny Following Channel 11 Investigation, WPXI, (Dec. 21, 2022),
https://www.wpxi.com/news/local/mv-realty-facing-congressional-scrutiny-following-channel-11-
investigation/Y4HNN2X24NEQRFMTNVLB2QNHNQ/ .
18
Attorney General Moody Takes Legal Action against MV Realty for Swindling Florida Homeowners, Office of the Attorney General
(Nov. 29,2022), http://www.myfloridalegal.com/newsrel.nsf/newsreleases/E9E4A2F7281415CE8 5258909007259EC.
19
Cheryl Fiandaca, Massachusetts Attorney General Sues MV Realty Company after I-Team Investigation, CBS News. (December 14,
2022), https://www.cbsnews.com/boston/news/mv-realty-attorney-general-lawsuit-massachusetts-iteam-investigation/.
20
AG Shapiro Sues Real Estate Brokerage Firm MV Realty over Misleading Homeowner Benefit Program, Pennsylvania Office of
Attorney General (Dec. 14, 2022), https://www.attorneygeneral.gov/taking-action/ag-shapiro-sues-real-estate-brokerage-firm-mv-realty-
over-misleading-homeowner-benefit-program/#:~:text=Homeowner%20Benefit%20Program-
,AG%20Shapiro%20Sues%20Real%20Estate%20Brokerage%20Firm,Over%20Misleading%20Homeowner%20Benefit%20Program&a
mp;text=HARRISBURG%20%E2 %80%94%20Attorney%20General%20Josh%20Shapiro,and%20its%20founder%2C%20Amanda%20
Zachman.
21
“AG Yost Sues MV Realty, Founder and Broker for Illegal Practices, Ohio Attorney General Dave Yost (Feb. 15, 2023),
https://www.ohioattorneygeneral.gov/Media/News-Releases/February-2023/AG-Yost-Sues-MV-Realty-Founder-and-Broker-for-Ille.
22
ss. 501.201-213, F.S. STORAGE NAME: h0861a.RRS PAGE: 5
DATE: 3/16/2023
Defines “residential real property” as an improved residential property of four units or fewer or
unimproved residential real property intended for four units or fewer.
Provides that a residential loan alternative agreement is unenforceable in law or equity.
Provides that a residential loan alternative agreement may not be recorded by the clerk of the circuit
court.
Makes a violation of this section an unfair or deceptive trade practice within the meaning of Florida
Deceptive and Unfair Trade Practices Act.
B. SECTION DIRECTORY:
Section 1: Creates s. 475.279, F.S.; defines terms; specifies limitations on residential loan alternative
agreements; requires notice and written consent in certain circumstances; provides penalties for
violations.
Section 2: Provides an effective date of July 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
None.
2. Expenditures:
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
None.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
The bill may have a positive economic impact on homeowners selling their property.
As for real estate brokerage firms, the bill may have a negative economic impact if they use the
residential loan alternative agreement practice.
D. FISCAL COMMENTS:
None.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable.
2. Other: STORAGE NAME: h0861a.RRS PAGE: 6
DATE: 3/16/2023
None.
B. RULE-MAKING AUTHORITY:
None.
C. DRAFTING ISSUES OR OTHER COMMENTS:
Language in the bill may need to be clarified to distinguish between “having an effective duration of
more than 2 years” and “may not exceed a term of 6 months.”
Clerks of court will have to train their employees to recognize residential loan alternative agreements
related to the provisions in the bill that prohibit recording such agreements.
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES
On March 16, 2023, the Regulatory Reform & Economic Development Subcommittee adopted a proposed
committee substitute (PCS) and reported the bill favorably as a committee substitute. The PCS differed from
the underlying bill in the following ways:
Renames the act “Residential Loan Alternative Agreements”
Replaces “option to enter into a listing agreement” with “residential loan alternative agreement”
throughout the bill.
Replaces “broker” with “person” throughout the majority of the bill.
Defines “residential loan alternative agreement” as a signed writing between a broker and seller or
owner of residential real property that:
o grants an exclusive right to a person to act as a broker for the disposition of the property,
o has an effective duration of more than two years, and
o includes the payment of compensation from the person to the seller or owner.
Provides that a residential loan alternative agreement may not be renewed.
Provides that a residential loan alternative agreement may not authorize a broker to place a lien or
otherwise encumber any residential real property.
Provides that a residential loan alternative agreement that does not meet certain requirements is
unenforceable.
The analysis is drafted to the committee substitute adopted by the Regulatory Reform & Economic
Development Subcommittee.