BOSTON — A controversial Florida real estate company accused of duping thousands of homeowners into signing sales contracts on their homes for a small amount of cash upfront filed for bankruptcy in 33 states, including Massachusetts.
Court documents show MV Realty filed a voluntary petition for Chapter 11 bankruptcy. For months, the company has been the target of lawsuits and investigations, including a complaint filed by the Massachusetts Attorney General’s Office in Dec. accusing MV Realty of using deceptive and unfair sales tactics.
The AG’s lawsuit accused MV Realty of deceiving more than 400 Massachusetts homeowners into entering “abusive contracts” for several hundred dollars upfront in exchange for a 40-year exclusive power of sale mortgage on their property. Earlier this week, Florida’s attorney general asked a judge to freeze the company’s assets.
“[The bankruptcy] in a weird way may be a good thing [for consumers] because the bankruptcy court will have jurisdiction to order this debtor to withdrawal or remove the liens of record, which certainly seem improper,” said bankruptcy attorney Scott Shuker, who reviewed the case against MV Realty.
“This allegation, the business model set forth in [the Florida AG’s] complaint, is really troubling. You can’t encumber somebody’s property for 40 years. That’s just fraud,” Shuker said.
MV Realty said in a statement in December the company is “proud” of the client relationships it has developed with more than 550 Massachusetts households. The company describes itself as a real estate brokerage in Delray Beach that operates in 33 states, according to its website. The company advertises its Homeowner Benefit Program as an “innovative approach” that “offers a great way to receive quick cash without taking out a loan, paying interest, or having monthly payments.”
“The court is going to have to address the question of if these contracts are still valid,” said Sarah Mancini with the National Consumer Law Center. “When a company that has done something harmful to people files bankruptcy, the people harmed are in a way creditors of that company. They have potential claims and they have potential rights.”
Since Boston 25 and its Cox Media Group sister-stations launched a joint investigation, six state attorneys general have taken legal action, and 16 states have enacted legislation targeting the company’s controversial contracts and liens.
In March, a Massachusetts superior court judge issued a preliminary injunction that effectively blocks MV Realty from doing any business in the Bay State. However, many clients are still bound by the agreements.
MV Realty did not respond Friday to a request for comment. A copy of the bankruptcy filing is here:
This is a developing story. Check back for updates as more information becomes available.
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