Homeowner benefit agreements’ in spotlight amid MV Realty probe

TERRY S. LORINCZ, OWNER, FORTITUDE SETTLEMENTS LLC - Excerpted from article originally published at Inman News - Andrea V. Brambila

A brokerage that offers cash-strapped homeowners’ money in exchange for a 40-year contract to list their home is under investigation by state regulators.

Florida-based MV Realty, which operates in 33 states and has more than 500 licensed agents, has been offering “homeowner benefit agreements” since 2018. Under these 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.

The agreements, which more than 30,000 homeowners have signed across the country, have attracted attention because some consider them deceptive and predatory, which MV Realty denies.

“I can confirm that our office is investigating MV Realty,” Nazneen Ahmed, press secretary for North Carolina’s Department of Justice and Attorney General’s office, told Inman via email. “Because this investigation is ongoing, I’m unable to comment further.”

“The North Carolina Real Estate Commission has received 6-7 consumer complaints about MV Realty’s Homeowner Benefit Program,” Janet B. Thoren, the commission’s legal counsel, told Inman via email. “It is my understanding that a number of other state Attorneys General are looking at this program, including our own. Our investigation has been going on for a few months now, and it is not over.”

“I think [customers] don’t fully understand the terms of the contract, and what that means, and at the time most of these people are desperate, and they are in need of some cash,” Thoren told the news outlet.

Regarding memorandums that MV Realty files on the deeds of properties, she added, "It's been treated as a lien by the closing attorneys, as well as by the title insurance companies, and so that lien has to be satisfied before the property can be sold."

According to MV Realty's homeowner benefit agreements, 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.

If there is no buyer broker involved, MV Realty receives a minimum of 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.