By: Merideth Nagel, Esq.
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The 40 Year Listing Agreement Scam
Title Companies in Florida and around the United States are starting to see a rise in sellers that have signed a “40-year Listing Agreement”. Have you heard of it? Today we’re going to discuss what it is, how it impacts the real estate market in our community, and what has been happening in court.
So what is the 40-Year Listing Agreement?
MV Realty opened their first location in Delray Beach, FL and then began opening subsidiary companies all over the country. They were all doing the exact same work.
They would call people and they would say, “Guess what! I can give you $300 up to $5000. It’s not a loan, you never have to pay me back. All you have to do is list the property with me if you ever sell it. Oh, and by the way, you never even have to sell!”
They would convince them that it was somehow in their best interest to take these $500 dollars and all they do is sign a piece of paper promising that if they were ever going to sell it they would let MV Realty be the ones to list it. That doesn’t seem too scary, right?
These people were marketed first over the telephone but then they expanded their reach to all the socials with “click here now for no loan cash payout” ads. Unfortunately, they were preying, as part of their marketing strategy, on people that are most likely to fall for a scam. The poor, the elderly, and people who do not have English as their first language.
Then MV Realty would get a mobile notary to drive out there and have these people sign the documents in exchange for a check, but they didn’t even give people copies of the documents they signed.
The documents would state that they would list the house with MV Realty for 40 years. If the house sold through someone else, the homeowners are trying to get a refinance, or even if it got transferred at a foreclosure or on the death of the person who signed the agreement, MV realty would get 3% commission based on a value that MV Realty set for that property (not the appraiser). They then recorded this document in public records to create a title claim and did not tell the homeowners that they were doing this.
Now, when a title company is running title, they find out there is a memorandum of agreement and that MV Realty is owed commission.
Unfortunately, many homeowners that signed these agreements are reporting that even when they call to ask MV Realty to perform services, they won’t.
According to the Attorney General’s complaints it follows the same scheme that’s described in the other states that are suing them, which are up to 6 at the time of this blog. It seems kind of undisputed that this is what they did, the question is: was it illegal?
How many people does it affect?
It was a practice of around 32 states that we know of. It’s growing as more Attorneys General are piling onto the bandwagon. Florida was the first to sue since the company is primarily located in Delray Beach.
Out of the 11 million people that were directly solicited by phone plus an unknown number of million that reached out to them through their internet social platforms, they recorded over 300,000 of these agreements across the United States.
Can a homeowner get out of the deal?
First of all, MV Realty has taken the position that they refuse to negotiate the amounts due and as of the end of February, they have been sued in only 16 civil lawsuits in the state of Florida. That doesn’t seem like a lot, right? Stop and think about it, though.
Title companies or lenders reach out to get a pay off and MV Realty says, “we don’t negotiate, they owe the $5,000 or else.” Most sellers can’t afford to hire a lawyer to sue them for over $5,000 so instead, they just pay to make them go away. Lawyers are very expensive and we’re talking years for the case to proceed through court. What seller is going to hold up selling their property for that long? It’s heartbreaking.
Instead, homeowners are playing a waiting game while they wait for the Attorney General’s case in court.
So what happens now?
If we had to predict what would happen, we believe that the courts will decide these memorandum agreements are not binding at the very least so that sellers can sell their property without getting a “payoff”.
The Attorney General is aiming to get every agreement set aside and all the money that MV Realty collected given back to the consumers, then shut them down. There is also legislation pending in the Florida Legislature.
Until the court issues its opinion on the Attorney General’s case, MV Realty is still floating out there and we must deal with them. They are of the opinion that they did nothing wrong, so they are continuing business as usual with only small changes in their practices.
If you have any questions about this or would like the PowerPoint from our video above, please don’t hesitate to reach out to us at the office. Our number is: 352-241-8629.