Company's long-term real estate contract with homeowners draw scrutiny, prompt new laws in Florida, elsewhere
MIAMI -- Testimonials on the MV Realty webpage show satisfied customers extolling their positive experience with the company's 'Homeowner Benefit program.'
A smiling couple from South Florida talk about the ease of signing up and what they liked about the program.
According to the terms, a homeowner agrees in exchange for a cash payment, to allow MV to be their realtor for 40 years, if they ever decide to sell their home.
A 'memorandum' is filed with the county where you live, and if you use another brokerage you agree to a termination fee.
But some homeowners who signed with MV now say they were not clear on the terms.
Joe Grudzinskas who lives in Davie says a woman who was an MV agent knocked on his door and he agreed to allow her to act as his real estate agent in exchange for cash.
That was three years ago.
Grudzinskas says he had just gotten home from the hospital after suffering a heart attack and needed money to pay bills
"They said we'll pay you $300 for the contract and $300 for every referral," he said. "It sounded like a good deal because I was really hurting."
Grudzinskas, who recently suffered a fall that's left him bedridden, says he decided recently to move to Orlando with his daughter.
He decided to use the realtor who initially sold him his home.
Afterwards he says he was told by his realtor that there was a lien on his property
"I got a possible subpoena that I needed to go to court to fight the lien."
He says MV Realty had taken him to court because he violated the contract.
And he wasn't alone.
CBS News Miami searched court records and found others in South Florida confronted with the same dilemma.
Similar cases happened statewide.
Last November, Florida Attorney General Ashley Moody sued MV Realty accusing it of '"deceptive, unfair and unconscionable business practices."
And attorneys seneral in Massachusetts, Pennsylvania, Ohio and New Jersey have also sued MV, alleging the company has violated consumer protection laws
The litigation is ongoing but MV is vigorously fighting the allegations and maintains they are in compliance with state laws.
News Miami requested to speak with a representative from MV Realty.
While they declined they allowed us to interview attorney James Terlizzi, who is director of the trade group The Future Listing Purchasers Association of which MV is a member.
"Contracting for a future listing is the subject of patents," Terlizzi said. "Some companies have made it work, some haven't."
Terlizzi says homeowner benefit programs have been around for at least a decade and there's a reason for the lengthy contract.
"Only 54 percent of homes trade in a given year so if the contract expired in 24 months it would be a mathematical certainty they would lose money," he said.
Terlizzi says the contracts are clear and everything is spelled out for the homeowner.
He says the trade group is an advocacy organization and they've tried to work with states on legislation to make the homeowner benefit process more understandable.
Terlizzi said they weren't successful in Florida.
During the last legislative session, lawmakers passed The Residential Loan Alternative Agreements, which puts guardrails in place for certain real estate contracts.
- It prohibits realtors from putting liens on residential property.
- It requires listing services to start within 90 days otherwise the contract is void.
Terlizzi is critical of the new law.
"Residents are giving away the right to list their property instead of getting compensated for it," he said. "The vast majority of people are satisfied and know what they are doing."
MV realty tells CBS News Miami they are voluntarily putting the Homeowner Benefit Program on pause for now
It is not known when the court cases brought by state AGs will be finished but the outcomes could affect the company and homeowners who signed contracts.
