HousingWireHousingWire
California is the latest state to take a stand against the right-to-list agreement business plan of now bankrupt brokerage MV Realty.
On Tuesday, the office of California Attorney General Rob Bonta announced that it was granted a preliminary injunction against Florida-based MV Realty after filing a lawsuit in December 2023.
The AG’s office took issue with MV Realty’s Homeowner Benefit Agreement. Under the agreement, in exchange for a cash payment, the homeowner signs over the right to list their home for the next 40 years to MV Realty.
This means that if a homeowner decides to sell their house sometime in the next 40 years, MV Realty is entitled to list the home for a 3% commission, which is separate from the commission of a buyer’s agent. If the homeowner breaks the agreement or decides to terminate the agreement early, the homeowner must pay MV Realty 6% of the appraised value of the home.
The attorney general’s office also alleged that MV Realty placed illegal liens on homes and charged homeowners an illegal 3% penalty to remove the lien. Bonta’s office claims that these liens have blocked home sales, and could delay or prevent a homeowner from obtaining or refinancing a mortgage.
“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 in a statement. “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. While our legal battle is not yet over, we will continue fighting to hold MV Realty accountable.”
Under the terms of the preliminary injunction, MV Realty must remove the liens it has recorded within 30 days of the court’s order, or within five days of notification from a California homeowner and/or their agent. The company also must stop recording new liens and is not allowed to enforce the terms of any Homeowner Benefit Agreements signed in the state while the litigation is pending.
“This court order provides necessary protections to homeowners in Santa Barbara County, and the entire state, so they will not be further victimized during the course of this litigation,” Santa Barbara County District Attorney John T. Savrnoch said in a statement. “We strongly agree with the Court that affected homeowners would continue to suffer imminent irreparable harm in the absence of this injunction.”
The AG’s office noted that its motion of a preliminary injunction was supported in part by the California Department of Real Estate.
MV Realty previously operated in 33 states and had more than 500 real estate agents. Since starting its Homeowner Benefit Program in August 2020, MV Realty said it had enrolled more than 35,000 homeowners and had paid homeowners nearly $40 million. In February 2023, the company announced that it was pausing the signing of new right-to-list agreements.
Right-to-list agreements, also known as Non-Title Recorded Agreements for Personal Service (NTRAPS) — were banned in 30 states as of June 2024.
MV Realty did not return a request for comment.
