NEW JERSEY – New Jersey is the latest state to advance legislation targeting a business model that disguises predatory loans as real estate service agreements.
On Monday, the Assembly Regulated Professions Committee passed Assemblywoman Aura Dunn’s bill that limits exclusive listing contracts to five years and requires reasonable early termination options.
“New Jersey’s most vulnerable homeowners are unknowingly entering into 40-year real estate listing contracts for a little upfront cash. These unscrupulous real estate brokers and salespeople are preying on elderly and cash-strapped residents and scamming them out of their biggest financial investment, their home. It’s time to put a stop to these predatory practices and protect homeowners,” Dunn (R-Morris) said.
At least 15 other states have taken legal or legislative action against a Florida-based company, MV Realty, for misleading homeowners about the terms of their long-term contracts. Typically, exclusive listing agreements do not last more than one year, but MV Realty is paying homeowners cash upfront in exchange for the exclusive rights to sell the home for decades. Homeowners or their heirs have faced severe financial penalties for attempting to terminate the contracts early, Dunn said.
“An exclusive listing agreement isn’t all that unusual when someone wants to sell their home, but a contract that locks someone into unfair terms for their rest of their life and after their death certainly is. These morally bankrupt companies can cost real estate owners more than they ever imagined,” Dunn said.
MV Realty has a New Jersey branch located in Clark and an “F” rating with the Better Business Bureau. The company has more than a dozen recorded agreements in Morris County and allegedly several more throughout the state. The attorneys general in Pennsylvania, Massachusetts and Florida have sued the company for unlawful practices, Dunn said.
Dunn’s bill (A4962) passed the committee unanimously and awaits further consideration by the Speaker.
