MOUNT VERNON — A new twist for selling real estate is legal, but as with any contract, homeowners need to be aware of what they are signing.
A Florida-based company, MV Realty, offers homeowners cash in return for the homeowner signing a Homeowner Benefit Agreement. The agreement gives the company the exclusive right to sell the home, if and when the homeowner decides to sell.
The catch is that it is a 40-year agreement, and it runs with the land. If a homeowner dies or gifts the property to another, the heir or new owner is obligated to the terms of the contract.
When the agreement is signed, the company files a memorandum with the county recorder's office. Oftentimes a new owner becomes aware of the contract when they go to sell the property or the property is foreclosed on, and they discover the lien memorandum.
Knox County Recorder Tanner Salyers said the agreements are more prevalent in urban populations, but they are starting to trickle in across the states. MV Realty operates in 33 states, including Ohio.
And Knox County.
“The problem we have in Knox County is people see MV and they think it's Mount Vernon. It's not a local company, it's out of Delray Beach, FL,” Salyers said. “It states Homeowner Benefit Agreement, but it's a contract. The people who get you to sign are notaries. Often people don't realize what they are doing at the time.”
According to MV Realty's website, the company's Homeowners Benefit Program pays homeowners between $300 and $5,000 to sign. However, examples found in an internet search showed many homeowners were paid less than $1,200.
If the company sells the home, it gets a 6% commission. If a homeowner sells their home through another agent, MV Realty still gets 3%.
“If you get buyers remorse, you have to pay an early termination fee. The early termination fees we've heard about are from $6,00 to $8,000 to $10,000,” Salyers said.
Salyers said that MV Realty's claim is that the homeowner benefit agreement is no different that what other Realtors do.
“There's not a single real estate company that records single-seller agreements,” he said. “That's the difference.”
As of Dec. 1, there are only two such liens filed with the Knox County Recorder's office. Salyers said companies cannot e-record; they must mail in the document or walk it through.
Salyers said that while he might disagree with the practice, it is legitimate.
“Some counties have outright rejected these documents. I have not. They do need to meet our recording standards; many have not,” he said.
According to Salyers, Ohio prosecutors voted to request that Ohio Attorney General Dave Yost AG produce an opinion as to the recordability of these documents. Until Yost issues an opinion, Salyers said he is not moving forward.
Salyers said that discussions through the Ohio Recorders Association identify the agreements as a “buyer beware” situation, but some counties are reluctant to get involved. Salyers disagrees.
“We are essentially the only elected official that deals with real estate,” he said. “If we see a situation like this, it's our job to protect our residents and alert people to what's going on.
“My concern is that leaving the door open like this is we will start seeing more and more companies doing this. They target seniors, distressed properties, and foreclosed properties, and Knox County has all three of those.”
Ohio is not the only state concerned about homeowner benefit agreements. Florida, Georgia, North Carolina, Michigan, and Pennsylvania are among the states scrutinizing MV Realty's practice. On Nov. 30, Florida Attorney General Ashley Moody filed a complaint against the company for relief from “deceptive, unfair and unconscionable business practices that result in homeowners signing away home equity for a paltry upfront payment.”
Salyers recommends homeowners contact the county recorder's office, an attorney, or a Realtor if they have questions about selling their home or a homeowner benefit agreement.
“People need to know what they are getting into and what they are signing. If it seems too good to be true, if it seems a little off, then it probably is,” he said.
“I always tell people to deal with local people. It's easy for someone who is not local, who does not have to worry about bumping into you in the store or deal locally with legal ramifications, to come in and write you a check for a fraction of your home's value and later make 100% profit on what you lost out on.”
Salyers said homeowners can guard against potential fraud through PropertyCheck, a free service through the recorder's office that alerts homeowners when an official document has been filed against their property.
He also noted that companies target individuals who put information such as birth month or favorite colors online through “games” such as discovering your holiday elf name.
“If you put your information online, that's where they target you,” he said. “People think it's funny, but people are giving up information that is in passwords and not available in the public domain. They will use that information to generate fictitious documents.”