Florida brokerage signs unfair agreements with homeowners in exchange for cash
Colorado’s real estate regulators have revoked the license of Florida-based brokerage MV Realty over its use of controversial “homeowner benefit agreements.”
The decision comes after an investigation by the state’s Department of Regulatory Agencies (DORA) into the firm’s business practices, which regulators say could have harmed hundreds of Colorado homeowners.
MV Realty has agreed to surrender its license, pay a $23,000 fine, and face public censure. This action is part of an effort by regulators to crack down on what they describe as predatory agreements that target financially vulnerable homeowners.
“Licensees hold a position of trust in our communities and with this agreement, Colorado consumers will be protected from future harm,” Marcia Waters, the director of DORA’s Division of Real Estate, said in a press release. “All members of the public should be informed of the importance and long-standing ramifications of executing any documents which encumber or purport to encumber their property before signing such a document.”
The agreements allowed homeowners to receive up to $5,000 in cash in exchange for granting MV Realty exclusive rights to sell their property for the next 40 years. These agreements, known as "right-to-list" contracts, also enabled the company to place a lien on the homeowner’s property for 3% of its sale price.
For a median-priced home in Colorado, which was around $594,000 in August, this could mean MV Realty would recoup nearly $18,000, even if the homeowner only received a small cash advance.
The Division of Real Estate’s investigation reviewed seven specific claims but estimates that more than 900 Colorado homeowners could be affected by MV Realty’s agreements. Attorneys general from 12 states, including California, Florida, Illinois, and Ohio, have filed lawsuits against the company, alleging that it misled consumers.
Despite the backlash, MV Realty has defended its business model, calling the agreements "innovative."
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In response to concerns raised by regulators, Colorado lawmakers passed Senate Bill 23-77 in 2023, which outlawed certain provisions in homeowner agreements, including those that create liens or encumbrances without a homeowner’s consent. Similar legislation has passed in other states, including Arizona, Utah, Nevada, and North Carolina.
Colorado is one of 30 states to prohibit MV Realty from enforcing these homeowner agreements, joining states like Utah, which was the first to take action in March 2023. Many states have followed suit by adopting model legislation backed by the American Land Title Association (ALTA), which aims to protect homeowners from what it describes as predatory real estate fee agreements.
Facing mounting legal challenges, MV Realty filed for Chapter 11 bankruptcy protection in 33 states in September 2023. At the time, the company had over 500 agents operating nationwide.
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