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MV Realty is now the subject of a fourth lawsuit from a state attorney general and a warning from the Federal Communications Commission.
Ohio last week became the latest state to file a lawsuit against MV Realty for alleged deceptive practices. The brokerage, which operates in 33 states and has more than 500 licensed agents, is currently under investigation by several state regulators over its “homeowner benefit agreements,” which MV Realty has been offering since 2018.
The attorney general of Florida, where MV Realty is based, became the first state to file suit against the company at the end of November, followed by Pennsylvania and Massachusetts in December. The brokerage offers impoverished homeowners cash in exchange for a 40-year contract to list their home and a lien on their property to secure MV Realty’s real estate commission.
“Deliberately tricking people to make money off their homeownership is a shameful business model,” said Ohio Attorney General Dave Yost in a statement. “If it’s truly a good deal, all the details will be clearly explained in writing. Ohio doesn’t need to tolerate the defendants’ deceitful practices.”
Ohio’s Feb. 13 complaint seeks preliminary and permanent injunctions against MV Realty of Ohio, the company’s founder Amanda Zachman and its principal broker, Diana Remar, to stop them from allegedly negotiating “misleading and confusing” real estate contracts that violate Ohio law and from allegedly practicing real estate without proper licensing. Zachman is not licensed in Ohio but the suit alleges she nonetheless illegally provides real estate services in the state.
In an emailed statement, MC Realty spokesperson Diana London told Inman, “We look forward to discussing with the Ohio state commission” on real estate and professional licensing.
Under MV Realty’s homeowner benefit agreements, the brokerage pays homeowners between $300 and $5,000 (depending on the value of the home) in cash up front for signing a deal in which they agree that if they decide to sell their home anytime in the next 40 years, they will list the home with MV Realty as a transaction broker.
If a buyer broker is involved in the transaction, the total commission must add up to at least 6 percent of the total sales price with MV Realty receiving at least 3 percent of the sales price or 3 percent of the property’s value at the time the agreement is signed, whichever is greater. MV Realty determines the property’s value.
If there is no buyer broker involved, MV Realty receives a minimum 6 percent of the total sales price or 3 percent of the property’s value at the time the agreement is signed, whichever is greater.
If the homeowner decides to list the home with another brokerage, the homeowner owes MV Realty 3 percent of the property’s value at the time the agreement is signed, which can add up to thousands of dollars.
The agreement binds any future heirs of a property and if a homeowner defaults, the agreement specifies that MV Realty will impose a lien or a mortgage on the property for the amounts owed. The agreement includes an arbitration clause and precludes the homeowner from participating in any class action litigation against MV Realty.
The brokerage also charges an early-termination fee equal to 3 percent of the value of the home if the homeowner decides to cancel the contract before the 40 years are up.
According to the complaint, MV Realty’s homeowner benefit agreements mirror exclusive right-to-list agreements and agency agreements and omit state-mandated information for such contracts, such as:
- The name of the agent to be used
- Required fair housing language
- Required anti-blockbusting language
- A clear statement for the expiration of the agreement
- A clear statement of representation
The Ohio attorney general’s office invited consumers affected by a contract with MV Realty to file a complaint with the state’s Division of Real Estate and Professional Licensing.
The American Land Title Association (ALTA), which said it has helped design model legislation to make agreements like MV Realty’s unenforceable and prevent their recording in land records, applauded Yost’s lawsuit against the brokerage.
“A home often represents a consumer’s largest financial investment, and their property rights must be protected,” said ALTA CEO Diane Tomb in a statement. “Good public policy should support the certainty of landownership by ensuring there are no unreasonable restraints on future ability to sell or refinance property due to unwarranted transactional costs.”
Separately, on Jan. 24, the FCC published a warning for all U.S.-based voice service providers to “effectively mitigate suspected illegal traffic from dialing platform PhoneBurner facilitating apparently illegal robocall traffic from real estate brokerage firm MV Realty to targeted consumers.” The agency said blocking the traffic, which the FCC deemed “an apparent homeowner-focused robocall scam campaign,” would be an example of effective mitigation.
According to the FCC’s public notice, the agency identified 11.9 million calls MV Realty made to numbers on the Do Not Call registry. Complaints from homeowners indicated that they did not give consent to be called, don’t have an established business relationship with MV Realty, and that the brokerage repeatedly called homeowners despite being asked to stop calling them, in violation of FCC’s telephone solicitation rules.
“Mortgage scams are some of the most pernicious types of robocalls we see,” said FCC Chairwoman Jessica Rosenworcel in a statement.
“Sending these junk calls to financially-stressed homeowners just to offer them deceptive products and services is unconscionable,” Rosenworcel added. “That’s why we are shutting down these calls right now.”
Editor’s note: This story has been updated with a comment from MV Realty.