Attorney General Phil Weiser filed a lawsuit in Adams County District Court today against MV Realty over allegations that the company illegally locked hundreds of Colorado homeowners into unfair brokerage contracts with exorbitant fees and decades-long terms that even applied to their heirs. The lawsuit seeks to release all existing customers from their agreements, ban the company from doing business in Colorado, and force it to pay fines and restitution.
“MV Realty preyed on people who were struggling financially—many of whom were older homeowners—looking for help staying in their homes,” Weiser said. “Using deceptive ads, the company offered small payments to entice homeowners to sign contracts that had terms as long as 40 years, contained punishing fees for early termination, and even locked in their heirs. With this lawsuit, we are seeking to hold MV Realty accountable for their unconscionable behavior and get restitution for the homeowners who they deceived.”
Deceptive marketing, high pressure tactics
From 2021 to 2023, Florida-based MV Realty offered Colorado homeowners a cash payment in exchange for using the company as their real estate agent when selling their home. The company aggressively targeted people in financial distress, with ads that promised quick cash and no credit checks, framing their services as help for struggling homeowners, with no requirement to pay back the money.
In fact, MV was deceiving vulnerable homeowners into selling their homes with the company in exchange for payments that averaged less than $1,200 but were as low as $385. In exchange for these payments, the company gained significant concessions from homeowners that compromised their ability to sell their homes and put them at a considerable economic disadvantage.
MV used high-pressure sales pitches to entice customers to sign up, often without fully understanding the consequences. The company instructed salespeople to call sales leads at least four times in the first 24 hours after they expressed interest, and 14 times within the first several days. Salespeople sent notaries to prospective customers’ homes to get contracts signed as quickly as possible, with many homeowners signing up without a clear explanation of contract terms like the 40-year length, without any opportunity to get questions answered, or even a chance to read the contract in advance.
Marketing materials stated homeowners could receive cash without being obligated to sell their home. One homeowner reported that, after signing an agreement with MV in 2022 despite having no plans to sell in the near future, they were inundated with calls asking when they planned to sell. The calls lasted for weeks or months.
Illegal contract terms, poor real estate service
After the company hooked homeowners with the small cash payments, it virtually guaranteed a big return on that investment. If the homeowners ended up selling through MV, they would pay real estate commissions based on the future value of the home, an amount that could be significantly higher than the value when the agreement was signed. If real estate values dropped, the company hedged against that possibility by instituting a commission “floor” that was calculated by MV based on the home’s initial value.
The company’s contracts also included an early termination fee that it would assess against homeowners for reasons that extended beyond a simple termination, including asset splitting during divorce proceedings or through common financial transactions like mortgage refinancing or applying for home equity lines of credit. The early termination fee also extended to the homeowners’ heirs in the event of their death.
In one example, a homeowner who was at the time on active duty in the Army refinanced less than a year after receiving $1,100 under an agreement with MV. After learning the lender would not process the refinance while the agreement was still in force, the soldier ended up paying an amount ten times greater than what MV paid in the first place to be released from the agreement.
These terms violated Colorado law, which says brokers are entitled to a commission only when they find a buyer who agrees to the seller’s terms.
In addition to long contract terms and illegal commissions, MV compromised the home’s title by filing a document that stated that the owner had to pay the early termination fee before the title could be transferred to a new owner. That document amounted to a lien. The lawsuit cites at least one Colorado court that ruled MV’s filings constituted a spurious lien.
When customers did sell their home through MV, they received terrible service. Homeowners had trouble finding real estate agents, underpriced their homes, were pressured to take lowball offers, and encountered conflicts of interest. Some homeowners were unable to reach anyone at MV at all, only to be penalized when they sold their homes through a different listing agent. Another homeowner found that MV’s list of real estate agents included many who lacked Colorado licensure, or who were licensed but lacked experience.
State investigators also learned that the Colorado Real Estate Commission forced MV to surrender its real estate license after the commission found the company violated conflict of interest rules and rules for obtaining compensation, failed to use the commission’s standard forms, and engaged in conduct that constitutes dishonest dealing.
The lawsuit asks the court to end the company’s deceptive practices, release Colorado homeowners from the unlawful agreements, pay restitution and civil penalties of $20,000 to $50,000 per violation, and to pay the state’s court costs.
Original source can be found here.