Seller Beware
The state of Georgia is experiencing a real estate market that has seen a swift rise in home values and a big decrease in the number of homes that are available for sale. These conditions, along with the past couple of years of historically low interest rates has urged potential homeowners to take advantage of record-low mortgage rates, creating a surmounting interest in buying housing in Georgia.
This surge in the market for housing and limited inventory has stabilized into a seller’s market with sellers receiving offers well over their asking prices and the homes actual value. As this may be a great time for sellers to cash-in and sell their homes, some seeking to get a piece of the pie have hatched a plan to share in on the seller’s fortune.
While reviewing title for a seller who had recently entered into a contract with a buyer to sell her property, I discovered a lien on the property that I had never seen before. At first glance, it appeared to be just another exclusive right to sell contract between a seller and a realtor, even though I had rarely seen them recorded on title. A closer look revealed that the seller had entered into a 40-year listing agreement.
Immediately I believed that the document had to be breaking some law that would prevent enforcement of the contract so I began to research and see what I could find on the real estate company out of Florida called MV Realty. A quick search returned an article written by Channel 2 investigative reporter Justin Gray titled “Metro homeowners locked into 40-year contracts with real estate company.”
Based on the article, the seller was in bed recovering from a hospitalization for a fall when she entered into a contract with MV Realty. The real estate company advertises a “Homeowner Benefit Program,” in which they are essentially paying you to list with them. In return, for the next 40 years you are obligated to sell your home with them, or the sale will be blocked because of the lien that MV Realty places on your property. Although extremely expensive, there is one way to cancel. If you want to get out of bed with MV Realty you will have to pay the penalty of 3% of the value of your home. So, if your home is selling for $400,000.00, MV Realty will see a whopping $12,000.00 of your proceeds.
While MV Realty claims that the homeowner benefit program is fully compliant with Georgia law, one can certainly understand why a 40-year listing agreement might be frowned upon. As title insurance underwriters currently treat them as valid liens that must be paid and released, you can be sure that the Georgia real estate industry will figure out how to deal with the uncommon practices of MV Realty.