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MV Realty, a Florida based company, is in the hot seat for its business practices. In exchange for payment of hundreds of dollars, a client of MV Realty signs a contract agreeing to use the company as the listing agent if they decide to sell their home. The terms of the contract allow MV Realty to obtain mortgages on the homes to enforce the terms, without the consent of the owners. The contracts are written to remain in effect for 40 years, and MV Realty receives thousands of dollars in fees if the company sells the property, if the homeowner cancels the agreement, and for any transaction in which the property changes hands, including when the owner loses a home through foreclosure or dies. The fees are based off a percentage of the home’s value as determined by the company. Homeowners often only become aware of this provision when they are trying to sell their home, and are having difficulty doing so because there is a mortgage lien on the property. When they try to get out of the contract by returning the $640, they are informed that the contract actually requires them to pay thousands of dollars to cancel the contract.
Clients of MV Realty state that they learned of the company through telemarketing calls, social media advertisements, or knocks on the door from MV Realty representatives who promoted ways that the homeowners could get cash immediately in exchange for agreeing to eventually use the company as their real estate agent. The homeowners being targeted often have financial needs and limited access to other financial alternatives.
In the last few days, Florida, Pennsylvania and Massachusetts Attorney Generals have initiated actions against the company aimed at preventing the company from engaging in the practice in the future, to enjoin enforcement of current contracts with consumers, return the money to consumers, and imposing civil penalties. Generally, these actions assert that the company’s sales pitch to the homeowners is often very different from the agreement they wind up signing, which is a practice that violates consumer protection laws. The trajectory of these cases is one to watch, so stay tuned for more blog posts on the topic.