Article Courtesy of The
Business Insider
By Robert Davis
Published December 7, 2022
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A Florida brokerage had offered homeowners upfront cash
payments in exchange for exclusive rights to sell their property.
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Florida's attorney general alleges MV Realty's 40-year
homeowner agreement is "deceptive" and "unconscionable."
Florida's attorney general is suing a real estate brokerage at a time when the
state's housing market is facing significant issues from rising property taxes
to increasingly severe weather.
On November 29,
Attorney General Ashley Moody filed a complaint against Del
Ray Beach's MV Realty, alleging that the firm's "Homeowner
Benefit Program," which offers sellers a cash payment in
exchange for rights to list their property for sale, is
deceptive and unlawful.
The program works like this: Interested homeowners can
receive between $300 and $5,000 in upfront cash incentives
if they agree to give the brokerage exclusive rights for up
to 40 years to sell their home. However, if homeowners
attempt to back out of the deal down the line, MV Realty can
place a lien on their property and collect up to 3% of the
home's value.
Considering how hot the Florida housing market has been in
the last few years, and how much Florida is expected to grow
in coming decades, MV Realty is effectively staking a claim
to some of an owner's future equity for pennies on the
dollar. The lawsuit seeks to impose civil penalties against
the company and stop them from using their agreement
altogether. |
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Aerial view of Jacksonville, Florida along the St.
Johns River.
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"For many Floridians, their home is their most important asset and the
cornerstone of their financial stability," AG Moody said in a press release.
"For a company to prey on unsuspecting homeowners in a way that locks them into
a 40-year obligation designed to siphon away equity from the property is
disgraceful."
Over the past year, the median home price in Florida has risen by 14.2% to
$392,000, according to data from Redfin. For comparison, the national average
home price has increased by 5% up to nearly $398,000 over the last 12 months.
Meanwhile, damages caused by hurricanes Ian and Fiona have dramatically reduced
Florida's already strained housing inventory levels at a time when demand for
homes in the Sunshine State is increasing. Data from the University of Florida
shows that the state did not have enough homes for low-to-moderate income
earners before the pandemic and that the shortage of homes has only increased in
the years since.
According to a Tampa Bay Times report from September, Florida's attorney
general's office has received 16 complaints directed at MV Realty's program
since 2020. However, local news reports show that homeowners in cities ranging
from Atlanta, Georgia to Malden, Massachusetts have had similar experiences with
the company.
Roy Brightwell, 70, is one complainant that the Tampa Bay Times interviewed
about his experience with MV Realty. Brightwell said he spent three years trying
to keep his Tarpon Springs, Florida home out of foreclosure only to have the
brokerage and his homeowner's association try to take more than $12,000 in fees
from him over an $879 cash benefit he received from MV Realty after he signed up
for their homeowner program.
"They've left me without a nickel," Brightwell told the Tampa Bay Times.
The lawsuit claims that MV Realty's agreement is illegal under Florida law
because it does not meet the statutory requirements for liens. MV Realty's
website says that the agreement is really a public memorandum outlining the
homeowner's responsibilities under the Homeowner Benefit Agreement and helps
ensure their agents earn a commission from the sale.
"This language does not reflect express consumer permission for a broker lien on
the property, but even if the consumer had provided express consent to the lien,
this type of personal contract is not enforceable as a lien on property," the
lawsuit reads in part.
When asked about the pending litigation, a spokesperson for MV Realty responded
to Insider suggesting that the practice is perfectly legal.
"We are confident that after a full airing of the facts, the Florida Attorney
General will find that MV Realty's business transactions are legal and ethical
and that our team has operated in full compliance with the law," Diana London,
MV Realty's communications and public relations lead, said to Insider. "We look
forward to and are fully committed to working with the attorney general's office
to regulate this process."
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