Florida homeowners got swindled by brokers who paid them a paltry sum in cash upfront for the rights to sell their properties for 40 years

Aerial view of Jacksonville, Florida along the St. Johns River.

Art Wagner

• A Florida brokerage had offered homeowners upfront cash payments in exchange for exclusive rights to sell their property.
• Florida's attorney general alleges MV Realty's 40-year homeowner agreement is "deceptive" and "unconscionable."
• Florida has one of the hottest housing markets in the nation, with home prices rising more than 14% over the last year.

Florida's attorney general is suing a real estate brokerage at a time when the state's housing market is facing significant issues from rising property taxes to increasingly severe weather.

On November 29, Attorney General Ashley Moody filed a complaint against Del Ray Beach's MV Realty, alleging that the firm's "Homeowner Benefit Program," which offers sellers a cash payment in exchange for rights to list their property for sale, is deceptive and unlawful. 

The program works like this: Interested homeowners can receive between $300 and $5,000 in upfront cash incentives if they agree to give the brokerage exclusive rights for up to 40 years to sell their home. However, if homeowners attempt to back out of the deal down the line, MV Realty can place a lien on their property and collect up to 3% of the home's value.

Considering how hot the Florida housing market has been in the last few years, and how much Florida is expected to grow in coming decades, MV Realty is effectively staking a claim to some of an owner's future equity for pennies on the dollar. The lawsuit seeks to impose civil penalties against the company and stop them from using their agreement altogether. 

"For many Floridians, their home is their most important asset and the cornerstone of their financial stability," AG Moody said in a press release. "For a company to prey on unsuspecting homeowners in a way that locks them into a 40-year obligation designed to siphon away equity from the property is disgraceful." 

Over the past year, the median home price in Florida has risen by 14.2% to $392,000, according to data from Redfin. For comparison, the national average home price has increased by 5% up to nearly $398,000 over the last 12 months. 

Meanwhile, damages caused by hurricanes Ian and Fiona have dramatically reduced Florida's already strained housing inventory levels at a time when demand for homes in the Sunshine State is increasing. Data from the University of Florida shows that the state did not have enough homes for low-to-moderate income earners before the pandemic and that the shortage of homes has only increased in the years since. 

According to a Tampa Bay Times report from September, Florida's attorney general's office has received 16 complaints directed at MV Realty's program since 2020. However, local news reports show that homeowners in cities ranging from Atlanta, Georgia to Malden, Massachusetts have had similar experiences with the company. 

Roy Brightwell, 70, is one complainant that the Tampa Bay Times interviewed about his experience with MV Realty. Brightwell said he spent three years trying to keep his Tarpon Springs, Florida home out of foreclosure only to have the brokerage and his homeowner's association try to take more than $12,000 in fees from him over an $879 cash benefit he received from MV Realty after he signed up for their homeowner program.  

"They've left me without a nickel," Brightwell told the Tampa Bay Times. 

The lawsuit claims that MV Realty's agreement is illegal under Florida law because it does not meet the statutory requirements for liens. MV Realty's website says that the agreement is really a public memorandum outlining the homeowner's responsibilities under the Homeowner Benefit Agreement and helps ensure their agents earn a commission from the sale. 

"This language does not reflect express consumer permission for a broker lien on the property, but even if the consumer had provided express consent to the lien, this type of personal contract is not enforceable as a lien on property," the lawsuit reads in part. 

When asked about the pending litigation, a spokesperson for MV Realty responded to Insider suggesting that the practice is perfectly legal. 

"We are confident that after a full airing of the facts, the Florida Attorney General will find that MV Realty's business transactions are legal and ethical and that our team has operated in full compliance with the law," Diana London, MV Realty's communications and public relations lead, said to Insider. "We look forward to and are fully committed to working with the attorney general's office to regulate this process."

Read the original article on Business Insider

Contributer : Business Insider https://ift.tt/JLnh09l

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