MOUNT VERNON — Getting up to $5,000 in cash for signing with a realty company is enticing, but it is definitely a buyer beware situation.
Florida-based MV Realty offers homeowners cash in return for the homeowner signing a Homeowner Benefit Agreement. The agreement — which is a formal contract — 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 homeowner signs the agreement, the company files a memorandum with the county recorder's office. The memorandum includes a lien placed on the property.
When Knox County Recorder Tanner Salyers spoke with Knox Pages last December about the practice, MV Realty had recorded two such liens in the county. Salyers declined to record further memoranda until Ohio Attorney General Dave Yost issued an opinion as to the recordability of the documents.
In his opinion issued Feb. 6, Yost said county recorders must record documents specifically required or authorized under the Ohio Revised Code. They have discretion whether to record documents not specifically required.
Yost also said that the courts must decide whether Homeowner Benefit Agreement contracts fall under the category of documents required or authorized.
In other words, it is up to the recorder whether or not to record the memorandum.
“After discussions with the county prosecutor, we feel compelled to record these documents when they come as they do affect title and title searches,” Salyers said. “I had been rejecting these documents until the AG opinion was rendered, but now, if they arrive, they will be recorded and on record and in force.
“I urge people to be very, very careful with proceeding with these agreements and always be aware of what they are signing and who they are signing in front of,” he added.
Despite giving county recorders discretion regarding recording the benefit agreements, Yost is seeking preliminary and permanent injunctions against MV Realty of Ohio, the company’s founder, and its principal broker "to stop them from negotiating real estate contracts that violate Ohio law and from practicing real estate without proper licensing."
His office filed the request in Franklin County Common Pleas Court on behalf of its client, the Ohio Department of Commerce’s Division of Real Estate and Professional Licensing.
“Deliberately tricking people to make money off their homeownership is a shameful business model,” Yost said in a Feb. 15 press release. “If it’s truly a good deal, all the details will be clearly explained in writing. Ohio doesn’t need to tolerate the defendants’ deceitful practices.”
The lawsuit alleges that MV Realty founder Amanda Zachman and broker Diana Remar confuse and mislead homeowners with the company’s Homeowner Benefits Agreements because the contracts omit crucial information and language required by state law.
Specifically, they deceive Ohioans by providing clients cash as a “loan alternative” in exchange for using MV Realty as their exclusive real-estate listing broker for a given period.
According to the release, if the homeowner lists the property for sale during that 40-year time period without using MV Realty as its broker, the home is foreclosed upon, if the homeowner’s heirs try to sell the home, or the homeowner wants to cancel the deal, the defendants seek to be paid 3% of the property value — with both the percentage and the property’s value determined by MV Realty, per the misleading agreement created by the defendants.
Whenever such an instance occurs, the defendants take out a lien on the homeowner’s property, issuing an additional memorandum asserting MV Realty’s exclusive right to list the house, thus binding the property owner to the terms of the agreement.
What MV Realty’s agreements leave out, Yost’s lawsuit says, are these state-mandated details:
--The name of the agent to be used
--Required fair housing language
--Required anti-blockbusting language
--A clear statement for the expiration of the agreement
--A clear statement of representation
The lawsuit also maintains that Zachman, who lives in Delray Beach, FL, is not licensed in Ohio as a real estate salesperson but is illegally acting as one through MV Realty and Remar, who is a licensed Ohio broker.
Yost is asking the court to put their unlicensed practice out of business.
Ohio is not the only state concerned about homeowner benefit agreements. Georgia, North Carolina, Michigan, and Pennsylvania are among the states scrutinizing MV Realty's practice. On Nov. 30, 2022, 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.”
Consumers who have been affected by a contract with MV Realty can file a complaint with the Division of Real Estate and Professional Licensing. Consumers who suspect unfair practices should contact the Ohio Attorney General's Office at OhioProtects.org or 800-282-0515.
