California Becomes Latest State to Sue MV Realty

December 20, 2023

California became the seventh state to file a complaint against MV Realty, alleging the company misled consumers over the terms of the brokerage's “Homeowner Benefit Program.”

The lawsuit filed by California Attorney General Rob Bonta alleges MV Realty engaged in a predatory scheme to lock vulnerable homeowners into 40-year exclusive listing agreements and placed illegal liens on their homes. Filed in Los Angeles Superior Court, the lawsuit alleges that nearly 1,500 California homeowners have signed these unlawful agreements, known as Non-Title Recorded Agreements for Personal Services (NTRAPS). According to the lawsuit, MV Realty lured homeowners with an immediate payment of anywhere from a couple hundred to a couple thousand dollars in exchange for being the homeowner’s real estate agent should the homeowner sell their home in the future.

According to the lawsuit, MV Realty misrepresented the significant downsides of its agreements, including that it places a lien on the homeowner’s property that prevents homeowners and their successors from transferring their home without paying MV Realty 3% of the home’s value, even if the company fails to provide diligent realty services. MV Realty charges homeowners an illegal 3% penalty if they sell their homes without using MV Realty or otherwise cancel their agreement, and refuses to lift its liens unless homeowners pay this illegal penalty. In addition to blocking home transfers, this lien can also impede, delay, or prevent a homeowner from obtaining or refinancing home loans.

“MV Realty is a financial predator. Through its one-sided agreements, the company lined its own pockets at the expense of vulnerable homeowners in California, holding their most valuable assets hostage. To this day, it refuses to release homeowners from those agreements,” said Attorney General Rob Bonta. “MV Realty’s actions demand accountability. That’s why we have filed our lawsuit.”

Attorneys general in Florida, Indiana, Massachusetts, New Jersey, North Carolina, Ohio and Pennsylvania also have filed lawsuits against MV Realty.

Among other things, the lawsuit alleges that MV Realty:

  • Deceptively marketed its predatory exclusive listing agreements
  • Placed illegal liens on homes and charged homeowners illegal penalties for canceling or breaching the agreements
  • Signed its agreements through individuals not licensed to practice real estate in California, rendering those agreements void and unenforceable
  • Violated other California real estate laws, California’s do-not-call law, and the Truth in Lending Act

A number of states, including California, recently passed legislation that prohibit fraudulent schemes like the one MV Realty engaged in. On Oct. 8, 2023, California Gov. Gavin Newsom signed into law AB 1345, which goes into effect on Jan. 1, 2024. AB 1345, imposes a two-year limit on residential exclusive listing agreements and clarifies that these agreements cannot be filed with a county recorder. 

MV Realty filed for bankruptcy on Sept. 22, 2023. The California Department of Justice will also file motions as necessary to protect its interests in that bankruptcy action.

ALTA has prioritized combating this abusive and anti-consumer activity in the marketplace, which adds costs and complications to the transfer or financing of real estate. ALTA has worked with national stakeholders to design model legislation to make these types of unfair agreements unenforceable, prevent the recording of the agreements in land records and provide consumers with options for seeking damages.

“The property rights of American homebuyers must be protected,” said ALTA Vice President of Government Affairs Elizabeth Blosser. “A home often is a consumer’s largest investment, and the best way to support the certainty of landownership is through public policy. We have to ensure that there are no unreasonable restraints on a homebuyer’s future ability to sell or refinance their property due to unwarranted transactional costs.”

States to pass versions of bills that address NTRAPS include Alabama, Colorado, Florida, Georgia, Idaho, Iowa, Maine, Maryland, North Carolina, North Dakota, Ohio, Tennessee, Utah and Washington.


Contact ALTA at 202-296-3671 or