The company that has been sued by various states for alleged deceptive business practices surrounding 40-listing agreements, has filed for Chapter 11 bankruptcy protection in 33 states.
Florida-based MV Realty came under scrutiny for allegedly paying homeowners a few hundred dollars in exchange for the right to be the listing agent in the event a homeowner decided to sell their home, CBS News reported.
Under the 40-year contracts, MV Realty would receive money if the company sold the property, the homeowner canceled the agreement or if the property was transferred in some other way, including foreclosure or a transfer when the owner dies.
The contracts also allegedly permitted MV Realty to obtain mortgages on the homes, unbeknownst to the homeowners.
North Carolina, Florida, Pennsylvania, and Massachusetts, among others, have sued MV Realty for alleged deceptive, unfair trade practices.
“I was shocked,” Philadelphia homeowner Timothy Calhoun, who entered into a contract with MV Realty, said at a hearing concerning MV Realty’s practices earlier this year. “They never told me that I was signing a mortgage. If I had known that I was gonna put a mortgage on my house, I would have never had signed the agreement.”
The lawsuits in every state seek to stop MV Realty from entering into new contracts, void the existing contracts and have courts assign civil penalties to the company.
MV Realty, which operates in 33 states nationwide, previously denied it engaged in any false or deceptive practices.
“We are confident that after a full airing of the facts, the conclusion will be that MV Realty’s business transactions are legal and ethical and that our team has operated in full compliance with [Massachusetts] law,” the firm said in a statement to CBS Boston.