On April 4, Kentucky enacted HB 88, amending its laws related to illegal trade practices and prohibiting entities other than banks and trust companies from:
- Suggest that they are engaged in banking or trust business.and
- Use the Financial Institution's name, trademark, logo, symbol, or mark similar to the Financial Institution (unless such use has been consented to “in writing or electronic form”);
HB 88 also seeks to “establish guidelines and limitations for service agreements in residential real estate transactions to provide clarity and structure to the transactions.” This law provides that in service contracts related to residential real estate, from the date of commencement he may not establish rights or obligations that extend for more than two years. Additionally, unless an exception applies, such a contract may not:
- Binding future owners of real estate.
- Imposing a lien, encumbrance, or other real property interest on real property.
- Request or permit recording of contracts.
- Limit Dispute Resolution to Binding Arbitration.
- WAIVES OWNER’S RIGHTS TO CLASS ACTION RELIEF.or
- Permits you to transfer the Service Provider rights to any other party without the written consent of the Owner.
Practice: Nonbank entities operating in Kentucky are encouraged to review and strengthen their compliance programs to align with the requirements of the new law regarding marketing practices. Additionally, Kentucky's regulation of service providers focuses more on real estate brokers and follows on the heels of a recent settlement by the National Association of Realtors, which is still awaiting judicial approval.
