Right-to-list agreement firm MV Realty has filed for Chapter 11 bankruptcy in 33 states. The story was first reported by CBS News.
MV Realty currently faces lawsuits in multiple states for allegedly misleading consumers and homeowners. In addition, the Florida-based firm has been essentially banned from operating in 14 states through legislation.
MV Realty operated in 33 states and has more than 500 real estate agents.
The firm’s legal troubles began in late 2022 when it was sued by attorneys general in Florida, Massachusetts and Pennsylvania over its 40-year contracts.
Under MV Realty’s Homeowner Benefit Agreement, the homeowner signs over the right to list their home for the next 40 years to MV Realty in exchange for a cash payment ranging from $300 to $5,000. This means that if a homeowner decides to sell their house sometime in the next 40 years, the company is entitled to list the home for a 3% commission, which is separate from the commission earned by the buy-side agent.
If the homeowner breaks the agreement or decides to terminate it early, they must pay the firm 6% of the appraised value of the home.
Since starting the program in August 2020, MV Realty says it has enrolled more than 35,000 homeowners in 33 states and has paid homeowners nearly $40 million.
Over the past year, the American Land Title Association has worked to pass legislation at the state level to ban right-to-list agreements, such as those used by MV Realty.
“The property rights of American homebuyers must be protected,” Elizabeth Blosser, ALTA’s vice president of government affairs, said in a statement. “A home often is a consumer’s largest investment, and the best way to support the certainty of land ownership is through public policy.”
“We must ensure that there are no unreasonable restraints on a homebuyer’s future ability to sell or refinance their property due to unwarranted transactional costs.”
MV Realty did not return a request for comment.
