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Scandal-scarred MV Realty has filed for Chapter 11 bankruptcy as the Florida-based real estate firm faces lawsuits from multiple states over its allegedly deceptive business practices, according to CBS News.
The company has come under scrutiny for its 40-year contracts, in which it paid homeowners as little as $300 for the exclusive rights to act as listing agent for their home should they ever decide to sell. The contracts are typically offered to impoverished homeowners in need of fast cash.
Under the controversial contracts, MV Realty would receive a payout if the company sold the property, the homeowner canceled the agreement, or if ownership of the house changed in any way, such as through a deed transfer, foreclosure or death of the owner.
The contracts allegedly also allowed the company to obtain liens on the homes, without the knowledge of the homeowners.
“Deliberately tricking people to make money off their homeownership is a shameful business model,” said Ohio Attorney General Dave Yost in a statement announcing the state’s lawsuit in February. “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.”
The brokerage operates in 33 states and has more than 500 agents. Over 30,000 homeowners across the nation have signed a “homeowner benefits agreement” with the company, which pays between $300 and $5,000 for the exclusive right to list their home.
Philadelphia homeowner Timothy Calhoun told city council members during a hearing on the company in Dec. 2022 that he was shocked when he received a notice from the city’s Department of Records that a lien had been recorded on his home. “If I had known,” Calhoun said, “I would have never signed the agreement.”
MV Realty did not respond to a request for comment from Inman on the bankruptcy filing. They have previously defended their business model as “innovative.”