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Sued by states, real estate company seeks bankruptcy protection

by Kianna Warburton

MV Realty, a real estate company based in Delray Beach, Florida, has recently filed for bankruptcy protection from creditors. This move came after the company faced lawsuits from six states, including Florida, for engaging in what the Florida Attorney General described as “deceptive, unfair and unconscionable business practices.”

MV Realty’s controversial “Homeowner Benefit Program” offered upfront cash to homeowners, ranging from $300 to $5,000 depending on the value of their homes, without any interest or fees. However, in return, homeowners were required to sign a contract committing to use MV Realty if they decided to sell their homes at any point over the next 40 years.

According to the contract, if homeowners used another real estate company, if their homes were foreclosed upon, or if they wanted to cancel the deal, they would have to pay MV Realty 3% of the home’s value. The contract also required the payment of 3% if a homeowner died and left the home to a beneficiary.

The company’s bankruptcy filing covers 33 states and follows lawsuits filed by Florida, Ohio, Massachusetts, Pennsylvania, New Jersey, and North Carolina. The Florida Attorney General, Ashley Moody, had previously requested a temporary injunction to freeze the company’s assets and prohibit new benefit agreements in the state. Moody’s office sued MV Realty in November 2022, accusing the company of carrying out a deceptive scheme to exploit consumers.

The complaint against MV Realty argued that the company used deceptive and abusive telemarketing and advertising practices to promote its program. It alleged that customers were told they owed nothing to MV Realty unless they sold their homes. However, in reality, MV Realty encumbered the properties for 40 years and charged excessive fees if homeowners tried to cancel the agreement or if the homes were transferred through foreclosure or other circumstances not commonly understood as a sale.

MV Realty reportedly used telemarketing calls, even reaching out to people who had registered their phone numbers on the Do-Not-Call Registry. Consumers who did not answer were bombarded with unwanted prerecorded voicemails. The complaint argued that MV Realty’s filing of liens violated state laws that prohibited real estate brokers from encumbering properties to collect commissions or coerce payment.

Moody’s action aims to void MV Realty’s contracts, return wrongfully taken money, impose civil penalties, and prevent violations of Florida’s Deceptive and Unfair Trade Practices Act. MV Realty has been licensed in Florida since 2014, and three principals, Amanda J. Zachman, Antony Mitchell, and David Manchester, are listed as defendants in Moody’s lawsuit.

MV Realty filed for bankruptcy under Chapter 11, intending to reorganize its debt for the benefit of creditors. The filing will temporarily pause the lawsuits against the company and prompt the appointment of a receiver to determine how creditors will be paid.

The controversial practices of MV Realty have led to the enactment of laws in 16 states, including Florida, that prohibit long-term real estate contracts. Additionally, a federal lawsuit filed against the company stated that over 30,000 homeowners in the United States had signed its Homeowner Benefit Agreement. MV Realty has also filed numerous lawsuits against homeowners who violated their agreements, clouding their titles.

Despite a new law in Florida prohibiting long-term real estate contracts, MV Realty continued to sign up new consumers and enforce previous contracts nullified by the law. In January, the Federal Communications Commission ordered major phone carriers to block robocalls from MV Realty. Courts in North Carolina, Ohio, and Massachusetts have also granted preliminary injunctions against the company.

Overall, the bankruptcy filing by MV Realty signifies the company’s attempts to address its financial troubles amidst facing numerous legal challenges. The outcome of the bankruptcy proceedings will determine how MV Realty’s creditors will be paid and the fate of its operations.

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