Brokerage Allegedly Scams Sellers with their 40-Year Listing Agreements!
What if a realty company offered you hundreds or even thousands of dollars if you simply gave them the exclusive rights to act as your realtor when you decided to sell your home? Sounds like free money, right? That’s why reading the fine print before signing documents is vital. It turns out that this agreement with Delray Beach-based MV Realty locked homeowners into a 40-year contract with extremely high penalties for any breach.
Florida’s Attorney General Ashley Moody is now seeking to freeze MV Realty’s assets and operations. In a lawsuit, the AG seeks to prohibit enforcement of MV Realty’s contracts with consumers and enjoin its future unfair and deceptive practices, return the money that the defendants have wrongfully taken from homeowners, and impose civil penalties for their willful violations of the law.
The Homeowner Benefit Program
MV Realty’s Homeowner Benefit Program (HBA) touted that homeowners would receive between $300 and $5,000 in cash with no obligation to sell their home, no credit check, no need to make payments, and that the program was not a loan. It did state that the program was a “40-year agreement,” or “long-term relationship.”
The positive reviews on the site target the desperation and vulnerability of some homeowners who signed up for the program. “Just wanted to let you know that today alone allowed me to fill the car with gas and make a monthly payment on our life insurance,” wrote Amy R. For Janet V., MV Realty was “very knowledgeable and professional and very fast…no gimmicks…I got my money the same day, and she even came to my house to drop it off.”
While the website does state that after the HBA is signed, a memorandum will be filed in the county where the property is located, the only warning is that selling the home without an agent or with another brokerage results in a termination fee equal to the amount of commission. It fails to mention that the agreement is a lien on the property and causes title issues. Yet, the FAQs on the website expressly state that no liens are being placed on homeowner’s properties.
Under the agreement, if the homeowner wants to cancel the contract or list the house with another agency, MV Realty receives between 3 and 6 percent of the property’s value. Adding insult to injury, it is MV Realty, as per the agreement, that decides what the property is worth. If the homeowner dies and bequeaths the property to heirs, MV Realty still gets its percentage. If the homeowner ends up in foreclosure, MV Realty still profits from their misfortune.
As per the AG, in Hillsborough County alone, MV Realty has filed at least 440 Memoranda of HBA documents, which affect a consumer’s title and ability to sell or refinance their home. Statewide, MV Realty has made more than 9,123 public record filings that cloud homeowners’ titles.
Deceptive, Unfair, and Unconscionable
Moody terms MV Realty’s practices as “deceptive, unfair, and unconscionable.” The lawsuit filed by the AG states that the defendants “engage in a complex and deceptive scheme that attempts to skirt existing Florida law with the goal of swindling consumers out of their home equity.”
The lawsuit states that the defendant’s practice of recording liens against homeowners prevents many consumers from being able to use financial tools, such as refinancing, home equity lines of credit, and reverse mortgages, that tap the equity in their homes.
Bombarded With Voicemails
According to the lawsuit, MV Realty bombards consumers “with millions of unwanted prerecorded voicemails.” The telemarketing calls ignore the fact that many of the recipients have put themselves on the national Do Not Call registry. This practice violates the Telemarketing Sales Rule and constitutes a violation of Chapter 501, Part II, Florida Statutes, the Florida Deceptive and Unfair Trade Practices Act.
82-Year-Old Woman, 40-Year Contract
Elder law attorney Joseph Karp brought MV Realty’s practices to the attention of the Attorney General’s office. The lawyer was looking through an 82-year-old client’s files when he came upon her MV Realty agreement. He was appalled that the company subjected a woman of 82 to a 40-year agreement and notified the St. Lucie’s Attorney’s Office. From there, the case made its way to the state AG.
MV Realty appears to have especially targeted elderly homeowners in its agreement scheme. Many of these individuals speak English as a second language or have limited cognitive capacity. As per the lawsuit, some homeowner complaints state that forged signatures or procured the signatures of vulnerable or mentally incompetent individuals who were solicited in their homes.
Home solicitation is common. Consumers state that they were not able to see the HBA or have it explained to them during the home visit. Further, notaries who have notarized the HBAs signed by consumers state that they were advised not to explain the HBA to consumers before they sign, according to the lawsuit.
New Law Passed
Karp is also indirectly responsible for legislation passed on July 1, 2023, in response to the MV Realty situation, as lawmakers acted to block the enforcement of such agreements. Florida Statute 475.279 states that a “residential loan alternative agreement may not authorize a person to place a lien on or otherwise encumber any residential real property. A residential loan alternative agreement may not constitute a lien, an encumbrance, or a security interest in the residential real property.”
Fifteen other states have legislation outlawing MV Realty-type contracts.
Not Just Florida
MV Realty wasn’t just operating in the Sunshine State. The company did business nationally, and it isn’t just Florida that is coming after them. To date, MV Realty has been sued by six state AGs.
Bankruptcy Filing
On September 24, 2023, MV Realty filed for Chapter 11 bankruptcy in the 33 states in which it operates. Besides the thousands of Florida homeowners MV Realty swindled, there are thousands more in other parts of the country. Overall, about 30,000 homeowners signed MV Realty’s HBA.
