Legislation banning long-term and costly real estate listing agreements has been passed by the Illinois House and Senate, sending it to Gov. J.B. Pritzker for final approval.
The bill, stemming from the MV Realty controversy, aims to prohibit unfair real estate listing agreements that extend beyond a year and bind future property owners, the Chicago Sun-Times reported.
The legislation provides an exit strategy for homeowners who have already signed such agreements. It allows them to petition a judge to void the contract, rendering it unenforceable.
The move has been lauded by AARP and land title insurance groups for protecting consumers and deterring similar schemes.
Many homeowners were unaware of the contract terms they had signed, said State Rep.Terra Costa Howard, a lawyer and the bill’s sponsor in the Illinois House.
“We know that our most vulnerable populations are often preyed upon,” Howard told the outlet. “People don’t realize what’s happening.”
The measure is part of a broader trend of state-level consumer protection efforts following the MV Realty scandal. The Boca Raton-based firm has faced numerous lawsuits for alleged deceptive business practices in at least 10 states.
Illinois Attorney General Kwame Raoul sued MV Realty in April, accusing the company of targeting homeowners with equity in their homes who needed cash. The company allegedly offered upfront payments in exchange for 40-year exclusive listing agreements, which included hidden fees and restricted the homeowners’ ability to refinance or sell their properties.
Financially distressed homeowners who signed MV Realty’s agreements received a one-time payment of about 0.3 percent of the home’s value, according to Raoul’s lawsuit. These agreements, filed with county offices, clouded property titles and extended to heirs without their knowledge. Breaching the agreement by listing the home with another agent entitled MV Realty to 3 percent of the sale price.
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MV Realty had over 34,000 agreements nationwide, including 750 in Illinois. The company ceased signing new agreements in 2022. Raoul’s lawsuit seeks civil penalties and the nullification of all Illinois contracts.
MV Realty filed for Chapter 11 bankruptcy protection last year but withdrew the petition recently. Investigations by the U.S. Department of Housing and Urban Development and the federal Consumer Financial Protection Bureau are ongoing.
—Quinn Donoghue