Illinois has become latest state to file a lawsuit against MV Realty, accusing the company of tricking struggling consumers into 40-year brokerage contracts.
According to Illinois Attorney General Kwame Raoul’s lawsuit, MV Realty provides “financially distressed” homeowners with an upfront cash payment if they sign a “Homeowner Benefit Agreement” with the company becoming the exclusive real estate listing agent when the homeowner decides to sell. The upfront payments are usually about 0.3% of the home’s value.
However, the contract includes “early termination fees” if the consumers seek to sell or transfer their homes. These fees can cost tens of thousands of dollars. The contract also includes a “memorandum” that restricts the consumer’s ability to sell or refinance for decades. If the homeowner dies, the 40-year agreement is extended to the heirs. And if either the homeowner or the heirs list the home with another agent, MV Realty becomes entitled to 3% of the sale price.
Raoul’s lawsuit cited Florida-headquartered MV Realty PBC LLC, which operates in 33 states, and MV Realty of Illinois LLC along with corporate managers Amanda Zachman, Antony Mitchell and David Manchester. Raoul noted the defendants face additional lawsuits from the state attorneys general of California, Georgia, Florida, Indiana, Massachusetts, Missouri, North Carolina, New Jersey and Pennsylvania. MV Realty filed for Chapter 11 bankruptcy protection in Florida last September, but that action is being challenged by state prosecutors and federal investigators who claim the company is seeking to evade responsibility and maintain the legality of its contracts.
“MV Realty takes advantage of vulnerable consumers by trapping them in 40-year contracts with steep termination fees that make it nearly impossible to sell or refinance their homes,” Raoul said. “I am committed to seeking enforcement against businesses that violate the law to take advantage of Illinois consumers.”
The lawsuit aims to declare contracts between the defendants and consumers affected by the unfair and deceptive practices void, unenforceable, or rescinded. Raoul also seeks to prohibit the defendants from working in the real estate industry in any capacity and to pay full restitution to all affected consumers along with civil penalties.
