Real estate company offering cash for exclusive home-selling rights barred from Minnesota

At first, Dr. Elizabeth Goodchild thought the certified letter she received from a Florida-based real estate company was some sort of scam.

Before her brother had died while cognitively impaired, he fell victim to several frauds, sending Western Union transfers to people he met on social media with addresses in far-flung countries such as Costa Rica. But after consulting with her lawyer, she learned the notice from the real estate company demanding a nearly $10,300 payment was in fact real.

While the family was in the middle of selling her brother’s house, Goodchild said the company demanded payment before the deal could go through. In getting her brother to sign in the first place, she said the company took advantage of a vulnerable, desperate man.

“His ability to make a decision of that size was definitely impaired. And I believe that they were predatory in their approach,” Goodchild, a Burnsville psychologist, said Wednesday.

The company, MV Realty, is now permanently banned from doing business in Minnesota for giving upfront cash under allegedly predatory contracts loaded with massive penalties that took 3% of a home’s value, according to the Attorney General’s Office.

While consumers bought into a fast and easy way to receive upfront cash, the state alleges the company reaped lucrative rewards when homeowners failed to abide by extreme and hostile contract terms.

MV Realty offered payments to homeowners, often worth less than $500, under a so-called Homeowner Benefit Agreement in order to obtain exclusive rights to sell the property someday if it ever went up for sale. The company would then file a lien against the property, usually without an owner’s knowledge, according to the state.

MV Realty became the subject of a state investigation that culminated in a September lawsuit that alleged deceptive trade practices and false advertising. On Tuesday, Attorney General Keith Ellison announced a settlement that nullifies all the company’s standing contracts in Minnesota, provides $20,265 in restitution, imposes a $1 million penalty if the company violates terms, and bans it from doing business in the state.

MV Realty said in a court filing in November that it denies the attorney general’s allegations.

Three of the company’s officers — Anthony Mitchell, David Manchester and Amanda Zachman — are barred from acting as residential real estate brokers for a period of five years under the deal. The state also fined Zachman $10,000.

“Minnesotans deserve to know what they’re signing up for, not just in some fine print buried a sub-contract away, but up-front and obvious,” Ellison said in a statement, adding hundreds of Minnesotans would never have signed the “deceptive, oppressive” contracts had they known the true consequences.

The Minnesota Star Tribune contacted MV Realty via email through its designated news media inquiries tab on its website Wednesday morning. A company representative who answered the main phone line in the afternoon also took a message. The company did not immediately return the newspaper’s requests for comment.

Company representatives solicited services by phone and over the internet. Notaries visited interested consumers at their homes, presenting a printed contract without all the listed terms, according to sworn court testimony.

Among the contract terms homeowners were unaware of was a flat, $500 administrative fee and the 3% home value penalty for breaking the agreement.

Consumers were also told MV Realty would file a “memorandum” that the state says was actually a lien against the house. In some cases, the liens were not discovered until a signatory died, leaving heirs to inherit the claim.

Sellers were also instructed to misrepresent core tenets of the agreement, according to the Attorney General’s Office. Former employees of MV Realty testified to withholding important details from consumers, such as contract obligations that could potentially outlive them.

So-called “transfer specialists” told homeowners the payments did not constitute a loan and those receiving payments would not be asked to repay the money. Sellers were instructed to stick to scripts prepared by MV Realty and never disclose details outside that limited scope.

Real estate agents employed by MV Realty were generally aware of the poor terms of the contracts, according to the attorney general. State investigators found every contract sale carried a $500 commission, and MV Realty required its agents to make a minimum 150 calls to homeowners per week to receive compensation.

In December 2023, state investigators used a list of MV Realty customers to conduct a survey. Nearly all Minnesota customers — 99% — reported no knowledge of a lien on their home. Most also were unaware of provisions outlining the inherited debt, the 40-year life of the contract or the expensive early termination fee.

MV Realty officials used different language around liens when speaking to customers vs. investors, according to the attorney general. The state contends MV Realty openly admitted to filing liens on every one of its contracts within two days when seeking private equity investment.

Attorneys general in Florida, Massachusetts, North Carolina and elsewhere have taken legal actions against the company for unlawful or improper business practices.

In Minnesota, several affected residents filed affidavits supporting the attorney general’s civil lawsuit against MV Realty.

Goodchild, the psychologist, said in official testimony her brother suffered a serious decline after retirement that came with a heart condition that affected his blood circulation. The scams he fell victim to led to nearly $100,000 in losses and he took on substantial debts “that he had no hope of paying.”

She said the company “took advantage of my cognitively impaired brother, then continued to victimize our family after he passed.”

Brett Losinski, retired as a fully disabled U.S. Army veteran injured while serving in Iraq, said in a sworn statement he frequently feels financial pressure as a provider for his wife and three children. For several years, Losinski was unaware the contract he signed was actually a lien against his home that his family would be responsible for it if he died.

He initially believed the company was paying him to make a gamble on someday getting a payoff by selling his house — but later came to realize “it was no gamble” and the company intended “to make thousands of dollars from me, one way or another.”

“I feel like I am the victim of a bait-and-switch,” Losinski said in the affidavit.