California Attorney General Rob Bonta has obtained a preliminary injunction against MV Realty, a Florida-based company that engaged in what Bonta called a predatory real estate scheme called Homeowner Benefit Agreements.
Bonta said the company lured vulnerable homeowners looking for financial help with an immediate payment and then locked them into the agreement, which he said required homeowners to exclusively use MV Realty to sell their homes for the next 40 years or pay a penalty of 3% of the home’s value.
MV Realty also placed illegal liens on homes and charged homeowners the 3% penalty to remove the lien, Bonta chargged. In addition to blocking home transfers, the lien could impede, delay, or prevent a homeowner from obtaining or refinancing home loans.
“To the nearly 1,500 California homeowners who were tricked into entering into the unlawful listing agreements with MV Realty, today is a good day,” Bonta said. “The court found that we are likely to prevail on our claim that those homeowners were intentionally misled by MV Realty. The court also found that MV Realty’s conduct imposed ‘imminent irreparable harm’ to homeowners. As a result, the company is being ordered to stop violating state law, once again allowing homeowners the freedom to do with their property what they wish."
Problems in other states
MV Realty currently faces lawsuits in multiple states for allegedly misleading consumers and homeowners. In addition, the Florida-based firm has been essentially banned from operating in 14 states through legislation. It operated in 33 states and has more than 500 real estate agents, industry journals reported.
The company has filed for bankruptcy in many of the states in which it operated, according to press reports.
The American Land Title Associationhas worked to pass legislation at the state level to ban right-to-list agreements, such as those used by MV Realty.
“The property rights of American homebuyers must be protected,” Elizabeth Blosser, ALTA’s vice president of government affairs, said in a statement. “A home often is a consumer’s largest investment, and the best way to support the certainty of land ownership is through public policy.”
“We must ensure that there are no unreasonable restraints on a homebuyer’s future ability to sell or refinance their property due to unwarranted transactional costs,” Blosser said.
Suit filed in 2023
The preliminary injunction, which offers important protections to affected consumers, was issued by the Los Angeles Superior Court and was sought by Attorney General Bonta and the Santa Barbara County and Napa County District Attorneys’ Offices as part of the lawsuit they filed against MV Realty on December 13, 2023.
“No family should be trapped in unlawful contracts or face illegal liens on their homes. This preliminary injunction is a critical step in ensuring justice for those impacted by this harmful business model,” said Napa County District Attorney Allison Haley
The preliminary injunction requires MV Realty to:
- Remove the liens it has recorded statewide within 30 days of the court’s order, or within 5 days of notification from a California homeowner, or his or her agent, who needs the termination to be able to move forward with a transaction related to the homeowner’s property.
- Stop recording new liens.
- Not enforce, during the pendency of the litigation, the “Homeowner Benefit Agreements” it signed with California homeowners.