SANTA BARBARA COUNTY, Calif. — State Attorney General Rob Bonta announced Thursday that he has filed a lawsuit against a Florida-based real estate company for its role in a predatory scheme against California homeowners.
Florida-based company MV Realty allegedly tied homeowners to 40-year exclusive listing agreements and placed illegal liens on their homes, according to a lawsuit filed in Los Angeles Superior Court.
The Santa Barbara and Napa County district attorneys’ offices joined the state legislature in investigating the real estate company.
The lawsuit alleges that about 1,500 California homeowners signed contracts with MV Realty, which lured homeowners with immediate payments ranging from hundreds to thousands of dollars. The agreement also gave the homeowner’s real estate agent the power to sell the home to the homeowner in the future.
“MV Realty is a financial predator. Through one-sided agreements, the company has enriched itself at the expense of California’s vulnerable homeowners and held their most valuable assets hostage. Today. , the government has refused to release homeowners from these agreements,” said Attorney General Rob Bonta. “MV Realty’s actions demand accountability. That’s why we filed the lawsuit.”
According to the complaint, MV Realty also placed a lien on the homeowner’s property, preventing the homeowner and his or her successors from transferring the home without paying MV Realty 3% of the home price. It is said that he also gave false explanations about the negative aspects of the contract.
The Florida-based real estate company is also said to sometimes delay or prevent homeowners from obtaining or refinancing their mortgages.
The state alleges that MV Realty charges homeowners an “unlawful” 3% penalty if they sell their home without using MV Realty. MV Realty can also terminate the contract and refuse to release the lien unless the homeowner pays an “unlawful” penalty.
“Homeowners in Santa Barbara County and across the state deserve protection from unfair, one-sided, decades-old deceptive schemes that defraud them of their obligations.” said Santa Barbara County District Attorney John T. Savrnok. “We look forward to working with the California Attorney General’s Office and the Napa County District Attorney’s Office to pursue justice in this case.”
The state AG also claims that MV Realty:
- deceptively promoted a predatory exclusive listing agreement;
- placed an illegal lien on the home and imposed illegal fines on the homeowner for termination or violation of the contract;
- Signed a contract through an individual who is not licensed to practice real estate in California, rendering the contract invalid and unenforceable
- Violating other California real estate laws, the California Do-Not-Call Act, and the Truth in Lending Act.
California, along with other states, recently passed legislation prohibiting fraudulent practices such as claims against MV Realty.
Governor Gavin Newsom signed into law AB 1345 in October of this year, which will go into effect in early 2024. In AB 1345, the bill imposes a two-year limit on residential-only listing agreements and clarifies that the agreement cannot be filed with the county recorder. .
MV Realty filed for bankruptcy on September 22, 2023.
The state Department of Justice plans to file the necessary motions to protect its interests in the bankruptcy case.