Aug. 28—TRAVERSE CITY — The Better Business Bureau investigated a Florida-based real estate company offering a new kind of contract to homeowners in Michigan and more than 30 other states, after the business-rating nonprofit said it received nearly 50 complaints.

Consumers accused Delray Beach-based MV Realty of offering unfair contracts that are not fully explained, prompting the investigation, a statement posted earlier this month on the BBB website reads.

"In addition, some consumers have alleged liens (or memorandums) have been placed against their properties," the statement says.

The Homeowner Benefit Program, developed by MV Realty of Delray Beach, pays up front money to homeowners in exchange for the right to list their home for sale at some possible point in the future, the HBA contract states.

Those homeowners who decide to sell must do so with MV Realty at a six percent commission.

If they opt to sell their home themselves or use another realtor during the 40-year length of the agreement, they face a financial penalty equal to 3 percent of the home's market value, the contract states.

Amanda Zachman, MV Realty's founding broker and executive director, said the company was working hard to further improve interactions with clients and prospects.

"We view all customer feedback as an opportunity to listen, learn and improve," Zachman said, adding that 50 complaints among 30,000 customers over three plus years was low and below what's typical for other firms.

"Our goal is zero complaints," Zachman said.

MV Realty on Aug. 10 responded directly to the BBB inquiry with a promise to have notaries provide signers with information about how the HBA works, including a reminder of the 40-year timeframe and penalties for violating the contract.

Their response to the BBB also said the notary would confirm with signers they'd agreed to allow MV Realty to file a memorandum lien of the HBA contract on their property.

The company, in a previous emailed statement to the Record-Eagle, did not describe the HBA memorandum as recorded in county Register of Deeds offices as a lien.

"In other words, the HBA is simply a contract between 2 parties whereby MV pays an amount of money and in exchange the homeowner makes a contractual promise to MV," the company said.

"If the homeowner ever decides to sell their home then they promise to enter into a separate listing agreement with MV Realty for the sale of that home that fully complies with all applicable rules and regulations," the company said.

But some questioned the legality of the contracts and expressed alarm over the 40-year time frame.

"There is definitely a concern across the board about these," Brandon Denby, president of the Michigan Association of Register of Deeds, said regarding the agreements. "What it appears this company is doing is saying we're going to give you a small stipend and now you're stuck with us for 40 years."

Denby, who is also the Register of Deeds for Livingston County, confirmed he asked the local prosecutor's office to research whether a "restraint on alienation" clause in state real estate law applies to the HBA — an inquiry he said is ongoing.

Michigan, like most states, does not allow unreasonable restraint on the sale of property, though also like most states, does allow owners to place deed restrictions on their property and it is this issue Denby said he'd like to have clarified.

In the meantime, Denby and others say they are concerned economic stress could put homeowners at risk of signing an HBA contract they might not otherwise consider.

"Obviously inflation is really high right now," Denby said, "and there are a lot of people just trying to make ends meet. I'm concerned about preying on lower income families."

MV Realty's HBA memorandums and full agreements do not categorize the contract as a lien, but that is how the contract functions, said Grand Traverse County Register of Deeds Peggy Haines.

Haines said she has expressed concerns about the contracts to colleagues, regarding whether the upfront money homeowners are paid by MV Realty is equitable when compared to the value of what they are signing away.

Information on MV Realty's website states homeowners who sign the agreements receive between $300 and $5,000.

A contract that lasts 40 years is far outside the norm, Chris Lambert, co-owner of Northern Title Agency, previously said, when compared with standard listing agreements from licensed realtors in Michigan which typically last three, six or 12 months.

The HBA contract states homeowners waive their right to be party to a class action lawsuit, agree to allow MV Realty to use photographs of them in company marketing materials and agree MV Realty can delegate some or all of its obligations to others.

Obligations spelled out in the contract "run with the land" — real estate language meaning the terms of the contract on the property lives on with beneficiaries, in the event the homeowner dies during that 40-year timeframe.

Hains said her office has so far received five memorandums — a shortened version of the HBA contract — recorded four and rejected one for a notary issue.

Staff with Antrim, Benzie and Leelanau counties' Register of Deeds offices previously searched for MV Realty listing agreements and reportedly found none listed.

Mecosta County Register of Deeds Karen Hahn said she's recorded one memorandum in January and rejected one, filed in December, also for a notary issue, though she said the company tried to re-submit the document five times without making the necessary change.

"In a real estate transaction or an agreement of this sort, the notary signs their name in the signature area and in the acknowledgement area and those signatures have to match exactly," Hahn said. "There were discrepancies so we rejected it."

Hahn said the repeated submissions were concerning enough that she put an electronic filing vendor on notice — if MV Realty tried to re-submit the document a sixth time, Hahn would ask the vendor, Simplifile, to block MV Realty from the ability to submit any future documents electronically.

"I don't know if they were just trying to get it on record, or they thought if they just kept submitting it they'd get someone else in the office and we'd just take it," Hahn said.

Records in federal and various state courts show civil lawsuits have been filed in relation to the HBA contract, by homeowners seeking to vacate the agreement or by MV Realty seeking to enforce its terms, attach a lien to a foreclosed property or be added as a creditor in a bankruptcy.

Additionally, on Aug. 5, a Texas homeowner received a $2,000 default judgement against MV Realty, after accusing the company of violating the Telephone Consumer Protection Act and repeatedly calling her personal cell phone after she'd registered the number with the national Do-Not-Call Registry.

Court records show the caller did not identify themselves or the company they were representing, and the homeowner, Mabel Arredondo of El Paso County, wasn't interested but told the caller she might consider their offer "for the sole purpose of identifying who was calling and/or the company who was responsible for calling."

An agent with MV Realty emailed Arrendondo a HBA contract. Arrendondo replied, stating what she called "robo calls" were unauthorized telemarketing and she asked the company to cease contacting her.

Instead, court records show, when Arrendondo received more calls from MV Realty, she filed suit. MV Realty did not respond and U.S. District Court Judge David C. Guaderrama signed an order for the default judgement.

A federal lawsuit between MV Realty and an investment firm show a larger purpose for MV Realty's foray into right-to-list contracts that, initially at least, went beyond real estate sales.

U.S. District Court filings show Innovatus Capital Partners, a New York-based investment advisor and portfolio management firm, approached a shareholder of MV Realty in 2017, with what one attorney described as a new and novel business opportunity.

In a nutshell, MV Realty would produce right-to-list contracts and Innovatus would securitize them, court filings show. Federal court filings by MV Realty state as of 2018 or 2019, the company had generated "well over" 10,000 right-to-list contracts in the U.S.

Innovatus, according to court filings, spearheaded the idea that bundling large numbers of listing contracts could mirror residential real estate appreciation and be attractive to investors.

The relationship between the two companies soon soured, however, and is now being litigated in the U.S. District Court for the Southern District of New York.