MV Realty faces legal action for trapping homeowners in 40-year contracts

What is MV Realty and how did it operate?

MV Realty is a Florida-based company that offered cash payments to homeowners in exchange for signing a “Homeowner Benefit Agreement”. This agreement was presented as a non-binding memorandum that would allow MV Realty to sell the home in the future if the homeowner decided to do so. However, the agreement was actually a 40-year exclusive listing contract that placed a lien on the home and imposed hefty fees for cancellation. MV Realty operated in 33 states and claimed to have over 32,000 contracts by the end of 2022.

How did MV Realty deceive homeowners?

MV Realty used various tactics to deceive homeowners into signing its predatory contracts. Some of these tactics included:

Sending unsolicited mailers and flyers to homeowners, promising cash payments ranging from several hundred up to $5,000.
Using high-pressure sales tactics and misleading language to convince homeowners that the agreement was harmless and beneficial.
Failing to disclose the terms and conditions of the agreement, such as the 40-year duration, the lien on the home, and the cancellation fees.
Not having a licensed broker in California to sign the agreements, which is required by law.
Not maintaining a definite place of business in California, which is also required by law.

What are the consequences for homeowners who signed the agreement?

Homeowners who signed the agreement with MV Realty faced serious consequences, such as:

Losing control over their most valuable asset, as MV Realty had the sole right to sell their home for 40 years.
Having a lien on their home, which prevented them from refinancing, selling, or transferring their property without MV Realty’s consent.
Having to pay exorbitant fees to cancel the agreement, ranging from 25% to 50% of the home’s value.
Having to deal with legal threats and harassment from MV Realty if they tried to cancel the agreement or sell their home to someone else.
Having to cope with emotional distress and financial hardship caused by the agreement.

What are the legal actions taken against MV Realty?

MV Realty is facing legal actions from several states, including California, Florida, Massachusetts, Pennsylvania, North Carolina, Ohio, New Jersey, Indiana, and North Carolina. Some of the legal actions taken against MV Realty are:

A lawsuit filed by California Attorney General Rob Bonta, along with the Santa Barbara and Napa District Attorney’s Offices, alleging that MV Realty violated California’s False Advertising Law, Unfair Competition Law, and Consumer Legal Remedies Act.
A lawsuit filed by Florida Attorney General Ashley Moody, alleging that MV Realty violated Florida’s Deceptive and Unfair Trade Practices Act and the Florida Residential Landlord and Tenant Act.
A lawsuit filed by Massachusetts Attorney General Maura Healey, alleging that MV Realty violated Massachusetts’ Consumer Protection Act and the Massachusetts Real Estate Brokerage Law.
A lawsuit filed by Pennsylvania Attorney General Josh Shapiro, alleging that MV Realty violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law and the Real Estate Licensing and Registration Act.
Several court orders issued by different states, ordering MV Realty to cease encumbering homeowners’ homes with its illegal liens and other unlawful recorded documents.

What is the current status of MV Realty?

In September 2023, MV Realty filed for bankruptcy, citing the legal actions and the negative publicity as the reasons for its financial troubles. The bankruptcy filing triggered a letter to be sent to the homeowners who signed the agreement, informing them of the bankruptcy proceeding and their rights as creditors. The letter also stated that the bankruptcy court may void the agreement and release the lien on the home, but that is not guaranteed. The letter advised the homeowners to consult with an attorney and to file a proof of claim with the bankruptcy court by January 15, 2024.