Attorney General Ellison sues telemarketing and real estate sales company for deceiving homeowners and suing their heirs

MV Realty promised quick cash for homeowners in exchange for serving as eventual realtor, unlawfully hid egregious and unfair contract details

September 25, 2024 (SAINT PAUL) — Attorney General Keith Ellison has filed a lawsuit against Florida-based MV Realty PBC, LLC, its Minnesota arm MV Realty of Minnesota, LLC, and their shared officer Amanda Zachman, alleging that they violated Minnesota consumer protection laws. The lawsuit alleges MV Realty sold contracts with oppressive terms to Minnesota homeowners, but deceptively concealed these unfair terms in their verbal sales pitches. Ironically, MV Realty named these contracts “Homeowner Benefit Agreements,” or “HBAs.” MV Realty entered into hundreds of these contracts with homeowners throughout Minnesota.

The lawsuit, filed in Ramsey County, accuses MV Realty of selling HBAs to Minnesotans as a way for a homeowner to receive, up-front fast and easy cash from MV Realty, with the homeowner’s only obligation being to use MV Realty as their realtor in the future, if the homeowner were ever to sell their home. If the homeowner agreed, a third-party notary with no information about the contract was sent to the home, where the homeowner was presented with a multi-page contract with small font and confusing legal jargon for the first time and told to sign. This business model was designed to hide terms from Minnesotans who would have found the contracts objectionable because:

• HBAs last for 40 years;
• HBAs bind the homeowner’s heirs and inheritors, including their children, as though those inheritors signed the contract themselves;
• HBAs contain unlawful and unenforceable liquidated damages clauses, dubbed “Early Termination Fees,” which penalize a homeowner (or their heirs) in the amount of 3% of their home’s value if they violate the contract by hiring another realtor;
• HBAs provide MV Realty with six months to successfully sell the house, and, if they fail, the homeowner has only 60 days to locate and hire a realtor, re-list the house, and sell it in a bona fide, arms’-length transaction for a price equal to or higher than what it was listed at with MV Realty; if the homeowner sells it on the 61st day, or for $1 less than the list price of the home under MV Realty, the homeowner is subject to the Early Termination Fee;
• HBAs contain language asserting they both are and are not a lien (the Attorney General alleges that HBAs are, in fact, liens);
• HBAs authorize MV Realty to file a “memorandum” on the homeowner’s property title, creating a cloud on title and preventing clean transfer or hiccup-less refinancing;
• HBAs alluded to a “Listing Agreement” that a homeowner would be required to sign if they chose to sell their home, disclosing the Listing Agreement only as a URL, even though the HBA was presented in paper, not digitally;
• HBAs do not disclose to homeowners that the hidden Listing Agreements contained a $500 Admin Fee; and
• HBAs entitle MV Realty to a 6% commission.

In return, the up-front cash payment MV Realty offered the vast majority of Minnesota homeowners was less than $1,000.

The lawsuit alleges that while MV Realty informed its private investors that the HBAs were liens on homeowners’ properties, MV Realty trained its real estate agents and salespeople to tell consumers that HBAs were “not liens.” Most homeowners reported not being aware of the terms in the contract, and many also reported that MV Realty agents deceived them about key terms, including telling homeowners that the contract length was far shorter than 40 years, or that the contract would terminate if MV Realty was unable to sell the home. MV Realty’s agents were strongly incentivized to get homeowners’ signatures, as agents earned a $500 commission for each signed HBA.

The lawsuit alleges a number of other violations, including that Amanda Zachman, who signed many HBAs for MV Realty, lacked proper Minnesota licensure to do so, and that every contract and every sale failed to comply with Minnesota’s Home Solicitation Sales Act.

“Companies have an obligation to tell you what they’re selling you,” Attorney General Ellison said. “They have an obligation to give you the truth about what you’re being asked to sign, not to give you some half-truths when they have reason to know that very few people would agree to the terms they’re hiding. And, obviously, companies are not allowed to lie to consumers. MV Realty’s behavior has been predatory, immoral, and illegal, and we will be holding them accountable for their actions.”

The lawsuit alleges that MV Realty routinely enforces its HBAs, going to far as to sue dead homeowners’ relatives to stop the sale of an estate to recover the exorbitant “Early Termination Fees.” MV Realty even sued a homeowner whose home had gone into foreclosure, thereby “violating” the HBA.

MV Realty faces similar lawsuits in California, Florida, Georgia, Illinois, Indiana, Massachusetts, New Jersey, North Carolina, Ohio, and Pennsylvania. Yesterday, the State of Florida prevailed in a motion for summary judgment against MV Realty. The Court found that MV Realty’s HBA contract is unconscionable under Florida law and violated Florida’s Deceptive and Unfair Trade Practices Act and Telemarketing Sales Rule.

Attorney General Ellison encourages Minnesotans to submit complaints about MV Realty, or any similar scheme, by filing a complaint with the Attorney General’s Office via its online complaint form. Minnesotans can also call the Office at (651) 296-3353 from within the Twin Cities or (800) 657-3787 from Greater Minnesota.