Complaints prompt BBB to investigate property company | Local News
TRAVERSE CITY — The Better Business Bureau has investigated a Florida-based real estate company offering a new kind of contract to landlords in Michigan and more than 30 other states, after the nonprofit said it received nearly 50 complaints.
Consumers accused Delray Beach-based MV Realty of offering unfair contracts that are not fully explained, prompting the investigation, according to a statement posted earlier this month on the BBB website. .
“Additionally, some consumers have alleged that liens (or memoranda) have been placed against their properties,” the statement said.
The homeowner benefits program, developed by MV Realty of Delray Beach, pays money to homeowners in exchange for the right to put their home up for sale at some point in the future, the HBA contract says.
Homeowners who decide to sell must do so with MV Realty for a six percent commission.
If they choose to sell their home themselves or use another real estate agent during the 40-year agreement, they face a financial penalty equal to 3% of the market value of the house, indicates the contract.
Amanda Zachman, founding broker and executive director of MV Realty, said the company is working hard to further improve interactions with customers and prospects.
“We view all customer feedback as an opportunity to listen, learn and improve,” Zachman said, adding that 50 complaints among 30,000 customers over three years and counting were low and below what is. typical for other companies.
“Our goal is zero complaints,” Zachman said.
On August 10, MV Realty responded directly to the BBB inquiry promising that notaries would provide signatories with information on how the HBA works, including a reminder of the 40-year time limit and penalties for breach of contract.
Their response to the BBB also indicated that the notary would confirm with the signatories that they had agreed to allow MV Realty to file an HBA Contract Memorandum Lien on their property.
The company, in a previous statement emailed to the Record-Eagle, did not describe the HBA memorandum as recorded in county deed registry offices as a lien.
“In other words, the HBA is simply a contract between 2 parties whereby MV pays a sum of money and in return the owner makes a contractual promise to MV,” the company said.
“If the owner ever decides to sell their home, they agree to enter into a separate listing agreement with MV Realty for the sale of that home that fully complies with all applicable rules and regulations,” the company said.
But some questioned the legality of the contracts and expressed concern over the 40-year period.
“There’s definitely widespread concern about this,” Brandon Denby, president of the Michigan Association of Register of Deeds, said of the deals. “What this company seems to be doing is saying we’re going to give you a little stipend and now you’re stuck with us for 40 years.”
Denby, which is also the Livingston County Deeds Registry, confirmed that it had asked the local attorney’s office to investigate whether a ‘restriction on alienation’ clause in the state’s real estate law applied. at the HBA – an investigation, according to him, is ongoing.
Michigan like most states does not allow unreasonable restrictions on the sale of property although like most states does allow owners to place restrictions on their property and it is this problem that Denby has said he would like to have it clarified.
In the meantime, Denby and others say they fear economic stress could put landlords at risk of signing an HBA deal they might not otherwise consider.
“Obviously inflation is very high right now,” Denby said, “and there are a lot of people just trying to make ends meet. I’m afraid I’m going after low-income families.
HBA memoranda and MV Realty’s comprehensive agreements do not classify the contract as a lien, but that’s how the contract operates, Peggy Haines told the Grand Traverse County Deeds Registry.
Haines said she has raised concerns about the contracts with her colleagues about whether the upfront money landlords are paid by MV Realty is fair to the value of what they are signing.
Information on the MV Realty website indicates that homeowners who sign the agreements receive between $300 and $5,000.
A contract that lasts 40 years is way outside the norm, said Chris Lambert, co-owner of Northern Title Agency, compared to standard Michigan licensed realtor listing agreements that typically last three, six or 12 months.
The HBA contract states that the owners waive their right to be a party to a class action, agree to allow MV Realty to use photographs of them in company marketing materials, and agree that MV Realty may delegate any or all part of its obligations to others.
Obligations set out in the contract “run with the land” – real estate language meaning that the terms of the contract on the property live on with the beneficiaries, in the event that the owner dies during this 40-year period.
Hains said his office had so far received five memoranda — an abbreviated version of the HBA contract — registered four and rejected one for a notary issue.
Staff at the Deeds Registry Offices in Counties Antrim, Benzie and Leelanau have previously searched for listing agreements from MV Realty and reportedly found none.
Mecosta County Deeds Registry Karen Hahn said she registered a memorandum in January and rejected one, filed in December, also for a notary issue, although she said the company tried to submit Repeat the document five times without making the necessary changes.
“In a real estate transaction or agreement of this type, the notary signs his name in the signature area and in the acknowledgment area and these signatures must match exactly,” Hahn said. “There were discrepancies, so we rejected it.”
Hahn said the repeat submissions were of enough concern that she warned an e-filing provider — if MV Realty attempted to resubmit the document a sixth time, Hahn would ask the provider, Simplifile, to block MV Realty from the possibility of submit all future documents electronically.
“I don’t know if they were just trying to save it, or if they thought if they kept submitting it, they’d bring somebody else into the office and we’d take it,” Hahn said.
Federal and various state court records show that civil lawsuits have been filed in connection with the HBA contract, by landlords seeking to void the agreement or by MV Realty seeking to enforce its terms, attach a lien to a property seized or to be added as a creditor in a bankruptcy.
Additionally, on August 5, a Texas landlord received a $2,000 default judgment against MV Realty, after accusing the company of violating consumer protection law over the phone and making multiple phone calls. times his personal cell phone after registering the number with the national Do-Not organization. – Call register.
Court records show the caller did not identify himself or the business he represented, and the owner, Mabel Arredondo of El Paso County, was not interested but told the caller that she might consider their offer “for the sole purpose of identifying who was calling and/or the company responsible for the call.
An agent from MV Realty sent Arrendondo an HBA contract. Arrendondo responded, saying what she called “robocalls” were unauthorized telemarketing and she asked the company to stop contacting her.
Instead, court records show that when Arrendondo received more calls from MV Realty, she filed suit. MV Realty did not respond and U.S. District Court Judge David C. Guaderrama signed a default judgment order.
A federal lawsuit between MV Realty and an investment firm shows a broader purpose for MV Realty’s foray into listing right deals that, at least initially, went beyond real estate sales.
Documents filed in the United States District Court show that Innovatus Capital Partners, a New York-based investment advisory and portfolio management firm, approached a shareholder of MV Realty in 2017, with what a lawyer described as a new and fresh business opportunity.
In a nutshell, MV Realty would produce listing right agreements and Innovatus would securitize them, according to court filings. Federal Court filings by MV Realty in 2018 or 2019, the company had generated “well over” 10,000 listing right contracts in the United States
Innovatus, according to court filings, floated the idea that bundling large numbers of listing deals could reflect residential real estate appreciation and be attractive to investors.
However, the relationship between the two companies quickly deteriorated and is now the subject of a lawsuit in the United States District Court for the Southern District of New York.