Jefferson County Recorder of Deeds Debbie Dunnegan-Waters cautions homeowners to educate themselves before signing a long-term agreement that pays the signees up-front cash in exchange for allowing an out-of-state company the exclusive right to list their home for sale.
Dunnegan-Waters said she was at a meeting with other recorders when she learned about the program, which a Florida-based firm, MV Realty, markets as Homeowner Benefit Agreements.
According to the company’s website, it will pay a homeowner $500 to $3,000 up front without a loan. In exchange, homeowners agree that if they ever sell their home, they will use MV Realty as the listing agent.
That agreement is in force for 40 years.
“If you sell your home during that time, the company takes a percentage of the sale price as its commission, which is standard in the real estate industry,” Dunnegan-Waters said. “And while you’re not obligated to ever sell it, if it’s foreclosed on or if the title changes in any way, the homeowner owes the company 3 percent. And that 3 percent is determined by the company – not by the market, not by the Assessor’s Office or anyone else. It’s just a number they come up with.
“And the thing is – if you die before the 40 years are up and, say, your child inherits the house, the company calls them and tells them that they have a certain number of days to commit to the contract or else they have to pay the company the 3 percent,” she said.
“Imagine grieving over your parent and getting this call about a contract they probably have no idea that was in place.”
The company’s website says that in return for cash, a homeowner is asked to sign a “memorandum” that will be filed with the local recorder of deeds office but is not a lien against their property.
However, in such a “memorandum” obtained by the Leader, the document states that “the obligations of the Property Owner under the Agreement create a lien on the Property.”
“Is this a lien? On their website, it says no,” Dunnegan-Waters said. “But it’s right there, in big, dark letters. And it’s in effect for 40 years.”
MV Realty markets its Homeowner Benefit Agreements through telemarketing, mail, internet advertising, as well as by sending agents door to door.
“They’re the only (company) doing this that I’ve been informed about,” Dunnegan-Waters said.
She said the company has recorded agreements with 23 property owners in Jefferson County through her office.
“There are, thankfully, not many, and none this year so far,” she said. “Two of them the company has let out of their agreement. To do that, the property owner has to pay the 3 percent.
“No one has called my office to complain, but I’m not certain that they even know this document is a lien that has been filed against their title,” she said. “And I don’t know what the rest of the memorandum states – just what’s been filed with my office.”
MV Realty has been sued by the attorneys general in six states, but not Missouri. Each lawsuit, according to the Real Estate News website, alleges that MV Realty’s Homeowner Benefit Program is deceptive and misleads customers and that the company preys on cash-strapped people.
Company officials have denied those allegations, and its website says “it’s unusual for most businesses – especially newer businesses – to have zero complaints.”
According to the American Land Title Association, an advocacy and lobbying group for the real estate title industry, such agreements are called “non-title recorded agreements for personal services,” or NTRAPS. The site indicates that 16 states have enacted legislation regulating such agreements; Missouri is not yet one of those states.
Dunnegan-Waters recommends that any homeowner who believes he or she has signed such an agreement call the Missouri Attorney General’s consumer protection hotline at 1-800-392-8222.
“I’m guessing that Andrew Bailey has heard about this company’s practices, but you should let him know about your situation,” she said.
Dunnegan-Waters said those who are concerned about liens being filed against their land may use a service offered through her office, propertyfraudalert.com, or call 1-800-728-3858.
“If you sign up through this site, it will let you know within 24 hours whether a lien has been filed,” she said. “That’s better than learning 16 years down the line that you can’t sell or even refinance your home free and clear. Yes, you can get out of it, but it’s going to cost you. A lot.
“And understand, even though it’s a fraud alert service, I’m not saying what this company is doing is fraud,” Dunnegan-Waters said. “But I believe that what they’re doing is deceptive, and people ought to know about it before they sign anything.”