A sign is posted in front of a home for sale on Aug. 7, 2024 in San Rafael, California. (Photo by Justin Sullivan/Getty Images)
State regulators last month revoked the license of a large real estate brokerage over its marketing of predatory “homeowner benefit agreements” that may have ensnared hundreds of Colorado homeowners.
The move comes two years after an arm of the state’s Department of Regulatory Agencies opened an investigation into MV Realty, a Florida-based brokerage. In addition to forfeiting its license, MV Realty also agreed to pay a fine of $23,000 and face public censure, according to a copy of the agreement obtained by Newsline.
“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 announcing the brokerage’s license revocation. “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.”
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MV Realty has operated in Colorado for several years but recently found itself in hot water with regulators over certain terms that are included in its homeowner benefit agreement, also referred to as a right-to-list agreement.
Under such agreements, homeowners in a financial pinch could reach out to MV Realty and request up to $5,000 in cash. In return, the brokerage was granted exclusive rights to sell their home for the next 40 years. MV Realty then placed a lien for 3% of the home’s sales price on the homeowner’s home, making it more difficult for a homeowner to sell their property before the agreement expires.
Assuming a Colorado homeowner owns a median priced home — roughly $594,000 as of August 2024 — MV Realty could recoup nearly $18,000 for giving a homeowner $5,000 or less.
In all, the division investigated a total of seven claims filed against MV Realty. But the agency believes there are more than 900 Colorado homeowners who may have been impacted by improper MV Realty agreements.
Attorneys general from 12 states, including California, Florida, Illinois and Ohio, have sued MV Realty over this agreement, alleging that it misleads consumers. MV Realty has consistently defended its agreements as innovative. The company did not respond to a Newsline request for comment.
The Division of Real Estate unanimously voted to revoke MV Realty’s license in August 2022 and has since “pursued a resolution” with the firm, according to the press release. The Division added that the revocation process took less time than it would have if the case had gone to court.
State lawmakers aided the Division’s efforts in 2023 by passing Senate Bill 23-77, which outlawed some terms included in MV’s homeowner agreements. For instance, the law prohibits brokerages from including terms in their agreements that “purport to create a recordable lien, encumbrance, or other real property security interest” without the homeowner’s consent.
Similar bills have passed in other states like Arizona, Utah, Nevada, and North Carolina.
Colorado is one of 30 states to prohibit MV Realty from enforcing its homeowner agreements altogether, according to the American Land Title Association. Utah was the first to do so in March 2023.
Many of the states passed model legislation backed by ALTA to “protect homeowners from predatory practice of filing of unfair real estate fee agreements in property record,” according to the association.
MV Realty filed for Chapter 11 bankruptcy protections in 33 states in September 2023. At the time, the firm had more than 500 agents nationwide.
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