New Arizona law protects homeowners from 'predatory' real estate listing contracts

A bill to stop real estate firms from soliciting homeowners to sign “deceptive and predatory" agreements locking them into how they sell their property was signed into law by Arizona Gov. Katie Hobbs.

The legislation, Senate Bill 1218, was crafted to stop long-term listing contracts that cloud a house’s title and make it tougher for homeowners to sell.

“This new law is a response to recent examples of egregious and deceptive practices in the real estate industry, which underscored the need for stronger laws to protect homeowners,” Arizona Attorney General Kris Mayes said in a statement.

Her office also called the practices deceptive and predatory.

The new Arizona law prohibits exclusive property agreements lasting longer than a year and that bring a lien against a home. The new regulations also prohibit courts from enforcing property agreements that violate the rules.

One company, MV Realty, faces lawsuits in other states and complaints in Arizona over its practices that involve using robocalls to find homeowners who sign contracts that guarantee they use the firm to sell or pay a hefty price.

The Florida-based real estate firm typically paid homeowners $500 to $3,000 if they signed an agreement to pay MV Realty 3% of the sales price if they sold their house within 40 years and regardless if it was listed with the real estate firm, according to property documents and lawsuits.

MV Realty filed for bankruptcy in September and didn’t respond to requests for comment.

Arizona Department of Real Estate Commissioner Susan Nicolson said her office would continue to refer complaints against MV Realty to the state Attorney General’s Office for investigation.

“A company offering money in exchange for contractual terms that take advantage of consumers is unacceptable in any industry,” she said.

How does the new law protect homeowners?

According to a statement from the Attorney General's Office, the new law prohibits exclusive property listing agreements from:

• Lasting longer than 12 months.
• Purporting to run with the land.
• Being recorded in the county recorder’s office.
• Creating a lien or security interest on homeowners’ property.
• Binding future owners of interest except in specific circumstances.

The new law prohibits courts from enforcing exclusive property agreements that violate the requirements of the law, the Attorney General's Office said in a statement.

Did MV Realty operate in Arizona?

Tina Tamboer, senior housing analyst with the Cromford Report, tracked MV Realty title attachments from the agreements in metro Phoenix over the past few years. The company’s practices cost homeowners, she said.

“The agreements are problems for title companies and can hold up a homeowner’s refinance, line of credit and reverse mortgages,” she said. “A sale can’t be done without clearing one of the agreements on a title.”

Lawsuits and regulator investigations against MV Realty in other states, including California, Florida, Ohio and Massachusetts, allege homeowners didn’t realize MV essentially was attaching a lien to their titles that could stop a sale.

Last year, the Federal Communications Commission ordered telecommunications companies to block MV Realty's suspected illegal robocalls.

In Arizona, the Maricopa County Recorder's Office launched a new alert system last year to fight a rising number of title fraud schemes made easier by electronic filings.

A federal judge also ruled recently that lawsuits by state attorneys general trying to void MV Realty agreements can go on even though the company has filed for bankruptcy protection.

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Reach the reporter at catherine.reagor@arizonarepublic.com or 602-444-8040. Follow her on X, formerly Twitter: @CatherineReagor.