THORNTON, Colo. — Judith Farkas de Zelaya was in the final stages of selling her mother’s home when an email surprised her.
It was a real estate company telling her she owed more than $30,000 in commission because of a contract her mother had signed years before she passed away in February.
“They just want the commission,” Farkas de Zelaya said. “They actually don't seem to want to do anything for the commission.”
Farkas de Zelaya’s mother, Mildred Farkas, was one of 900 Coloradans Steve On Your Side found who’d signed a Homeowner Benefit Agreement with MV Realty, a Florida based company. MV Realty has faced a torrent of legal trouble over the contracts, which, in exchange for a small payment to a homeowner up front, promised MV Realty exclusive rights to list a home for 40 years.
The agreements are filed with local clerk and recorders, meaning they effectively read like a lien on property, though the company has argued they aren’t liens. And the agreements are tied to the land, meaning even if the homeowner who signed them passes away, their heirs are still obligated to use MV Realty to sell the homes.
Farkas de Zelaya said she remembered when her mother, against her advice, signed the contract. But after her death, she assumed the contract would have been voided.
“They explained to me that that contract has a 40-year term, which means my children would inherit that debt, not just my mother or me,” she told 9NEWS Consumer Investigator Steve Staeger.
In 2023, Colorado lawmakers passed a law banning long-term listing contracts in the state in response to MV Realty’s agreements. This past fall, Colorado’s Division of Real Estate ordered the company to surrender their real estate brokerage license, meaning the company can’t act as a broker for real estate transactions.
Farkas de Zelaya said after she got the email from the company asking for the commission, she researched them and found a Steve On Your Side story about the company losing its brokerage license – and realized the company couldn’t technically list the home as the contract states.
“They can't meet their obligations of the contract,” she said.
A legal limbo
The Colorado Department of Regulatory Agencies, which regulates real estate, told Steve On Your Side that while the company’s brokerage license is invalid, the Division of Real Estate’s action did nothing to the current terms of MV Realty’s contracts. The contracts state that if the homeowner uses another real estate agent to sell a home, the homeowner still must pay MV Realty’s share of commission – 3% of the sale price of the home.
“I've never seen a contract purporting to lock somebody into a business obligation for a broker’s listing for 40 years,” said Mark Cohen, a real estate attorney and expert on contracts. “That's a first for me.”
Cohen said he believes the agreements are technically unenforceable because MV Realty can’t list properties in Colorado. But in order to void the contract, he said homeowners would need a court decree. And since the contracts all include an arbitration clause, he said homeowners would have a decision to make.
“What's cheaper- do I want to spend money to file an arbitration to get this declared to be void or is it cheaper just to pay MV Realty and get on with my life,” he said.
While Cohen said he couldn’t give specific legal advice, he said one option homeowners could try is to send the company a letter suggesting the contract is invalidated by the licensure issue and attach a copy of the DORA ruling.
State’s involvement
Six states have sued MV Realty over their homeowner benefit agreements, claiming they were predatory.
The state of California won a preliminary injunction from a judge, which throws out 1,500 current MV Realty contracts in the state pending the outcome of that court case.
But Colorado’s top law enforcement officer has been silent on the company and their hundreds of current contracts with Colorado homeowners. Each time Steve On Your Side has asked the Colorado's attorney general about MV Realty over the last year, his office has responded with a short statement claiming they can’t confirm or discuss any investigations.
Steve On Your Side asked MV Realty multiple times for comment about this story but hasn't heard back.
As for Farkas de Zelaya, days before she was set to close on her mother’s home, she said a legal technicality voided the agreement.
During an email exchange with a representative from MV Realty’s legal department, Farkas de Zelaya said she mentioned that her mother had been diagnosed with Alzheimer’s disease when she signed the agreement. After she sent along medical records, the company agreed to terminate the contract.
“I would like the attorney general for the state of Colorado to shut MV Realty down now,” she said. “We shouldn't have to suffer these predatory business practices that are well documented and well known. There's actually no excuse for this to still be continuing today.”
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