In a recent development, California Attorney General Rob Bonta announced a settlement with HomeOptions, a real estate company based in Oakland, California. The settlement comes after an investigation uncovered a predatory real estate scheme that affected more than 500 homeowners in the state. This investigation was conducted in collaboration with Napa County District Attorney Allison Haley and Santa Barbara County District Attorney John T. Savrnoch.
The investigation revealed that HomeOptions engaged in unethical practices, enticing financially vulnerable homeowners with upfront payments in return for a long-term listing agreement. In exchange for a few hundred to a few thousand dollars, homeowners were locked into a 20-year exclusive agreement naming HomeOptions as their real estate agent. These agreements violated multiple laws, including California's Real Estate Law and various state and federal telemarketing and lending regulations.
In addition to misrepresenting the nature of their agreements, HomeOptions unlawfully recorded liens on homes and imposed hefty fees for their removal. This created financial challenges for homeowners who wanted to transfer titles or secure home loans. As a result of these findings, HomeOptions will terminate all liens and void all contracts with California homeowners. The company will issue full restitution to affected individuals and pay civil penalties.
“HomeOptions’ business practices can be summed up in one word: predatory. This settlement holds the company accountable and provides immediate relief to California homeowners,” said Attorney General Bonta. "Homeowners will regain full control over their homes, without having to worry about a HomeOptions lien ever again. And homeowners who have already paid early termination penalties to HomeOptions will get all of their money returned. Let there be no doubt that, in California, we will enforce the law against unscrupulous businesses that exploit vulnerable consumers.”
The agreement involves HomeOptions paying over $400,000 in restitution, in addition to approximately $170,000 in civil penalties. It also mandates the termination of liens recorded against homeowners' properties and voiding harmful contracts. Attorney General Bonta highlights that the state of California will continue to enforce laws against exploitative business practices. Similarly, District Attorneys Allison Haley and John T. Savrnoch echoed this sentiment, emphasizing the importance of protecting homeowners from fraudulent schemes.
“Napa will not stand mute to the predation of those who victimize our citizenry,” said Napa County District Attorney Allison Haley. “I am gratified that by our action, all the exclusive listing agreements with California consumers are rendered void and unenforceable.”
“Homeowners are entitled to be safe in their homes and not fall prey to scams intended to extract their home equity,” said Santa Barbara County District Attorney John Savrnoch. “This settlement rightly provides full restitution to all victims and prevents HomeOptions and its CEO from engaging in these practices again.”
Following the passage of legislation sponsored by Attorney General Bonta, California has put measures in place to prevent similar schemes from occurring. AB 1345, which was signed into law by Governor Gavin Newsom in October 2023 and took effect on January 1, 2024, restricts residential exclusive listing agreements to two years and prohibits their recording with a county recorder. HomeOptions ceased entering into new agreements with California homeowners in 2024.