California the latest state to sue MV Realty
The brokerage, which has been the target of multiple lawsuits and investigations alleging predatory practices, filed for bankruptcy in September.
The State of California has filed a lawsuit against embattled Florida-based brokerage MV Realty accusing the company of violating several state laws. It's the seventh state to sue the firm over its alleged deceptive practices.
What are the claims? The lawsuit, filed on Dec. 13 by California Attorney General Rob Bonta, alleges that at least 1,443 California homeowners signed Homeowner Benefit Program contracts with MV Realty, but these agreements were not in line with state law, and the company used "deceptive and unlawful online advertising and telemarketing" which "targeted homeowners looking for financial help."
The company also allegedly filed illegal liens against the properties to force homeowners to repay MV Realty's upfront costs, according to the lawsuit, which referred to the Homeowner Benefit Program as "a scheme intended to guarantee that, in the vast majority of cases, homeowners will be forced to pay back MV Realty's initial cash offer … at least tenfold."
The complaint states that MV Realty's practices violated California's False Advertising Law, Unfair Competition Law and Do Not Call Law, and because the company did not have a licensed California broker sign its agreements, those contracts are null and void.
What is MV Realty's plan? In September, MV Realty filed for Chapter 11 bankruptcy protections in the U.S. Bankruptcy Court for the Southern District of Florida. Adam Stein-Sapir, a bankruptcy expert at Pioneer Funding Group, told Real Estate News at the time that the filing suggests MV Realty plans to continue operating its business.
In October, MV submitted a financial summary to the bankruptcy court claiming to have just over $8.9 million in total assets and more than $56.3 million in liabilities.
What other states are involved? California's lawsuit is the latest in a series of legal actions filed against MV Realty. State Attorneys General in Florida, Ohio, Massachusetts, North Carolina, Pennsylvania and New Jersey have also sued MV Realty over its Homeowner Benefit Program. The FCC is also investigating the firm.
All of the lawsuits allege that MV Realty's Homeowner Benefit Program — which offers homeowners between $300 and $5,000 in cash in exchange for a 40-year right-to-list agreement — is deceptive and misleading. MV Realty has denied the allegations.
What is MV Realty saying? Real Estate News reached out to MV Realty for comment about the bankruptcy filing but did not immediately receive a reply. They have previously defended their business model as "innovative."