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Advocates Seek Limits on Long-Term Home Contracts

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A real estate company that promises homeowners quick cash in exchange for the future right to sell their property has come under fire from consumer advocates and the Ohio attorney general, who says its practices are “illegal” and “shameful.”

Florida-based MV Realty promotes its upfront payments, which run from $300 to $5,000, as a “loan alternative” and calls the offers mutually beneficial. But its contracts can bind the homeowner for as long as four decades—giving MV the exclusive right to sell the property or to collect a steep fee if the homeowner uses a different agent.

Ohio’s attorney general sued MV in February, saying its contracts are misleading and omit “crucial information and language required by state law.” Attorneys general in Florida, Massachusetts, North Carolina and Pennsylvania filed similar suits.

AARP Ohio is advocating for state legislation to curb such contracts. The House added language to the pending biennial budget that would make right-to-list service agreements “unenforceable.” But as of press time, it was not clear if that provision would survive final budget negotiations.  

Exclusive real estate agreements are legal and common in Ohio. Typically, though, they expire after a year or less. And they don’t include upfront payments and public records, akin to a lien, that cloud a property’s title.

Company defends program

Other companies offer similar upfront payment programs, but MV operates in more states and its contracts have sparked more scrutiny. California-based Home-Options offers agreements that run from five to 20 years. And Texas-based SellWhenever restricts homeowners to a network of affiliated agents.

Before pausing its program this year in response to legal challenges, MV operated in 33 states and signed about 35,000 legal agreements, says Diana London, MV’s communications director. Of 931 agreements in Ohio, about a quarter of homeowners were over 65, she says.

MV began its Homeowner Benefit Program in 2017 and expanded into Ohio by late 2021. There’s no obligation to sell, but if the homeowner pursues a sale through someone else without giving MV the first chance, they face a penalty of 3 percent of the sale price or home value. That’s $6,000 on a $200,000 house. If a participating homeowner dies, the property’s heir is still bound by the contract.

AARP worked with the American Land Title Association, the National Association of Realtors and others last fall to develop a model bill to limit such agreements. Ohio State Rep. Brett Hillyer (R-Uhrichsville), a real estate attorney, says the contracts add complexity for lenders, buyers and heirs. He says they could lead to a slippery slope for other service contracts.

In March, Utah became the first state to pass what’s become known as “unfair service agreement” legislation. Several other states soon adopted similar laws.

In addition to pushing for legislation, AARP is educating homeowners on how to spot questionable contract language.

“These agreements tie up what may be the homeowner’s most valuable asset” in a way that could cause serious problems down the road, says Amy Milam, AARP Ohio’s associate state director for outreach and advocacy.

MV says it’s willing to work with policymakers to continue operating in the state. MV provided the AARP Bulletin with testimonials from Ohio customers who said that they understood the contracts’ terms before signing and that they should be able to do what they want with their houses. MV says it “remains confident that the Homeowner Benefit Program fully complies with the law and benefits customers.”

Sarah Hollander is a writer living in Cleveland.

How to Sell Your Home for the Highest Price — AARP

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