U.S. Trustee Program’s Advocacy Preserves Consumers’ Rights in MV Realty Bankruptcies

More than 40,000 consumers allegedly lured into predatory 40-year listing agreements will have more opportunity to raise their claims in the bankruptcies of a Florida-based real estate company and its affiliates, thanks to efforts by the United States Trustee Program (USTP).

On November 30, the Bankruptcy Court for the Southern District of Florida granted a motion by the USTP’s Miami office to extend the deadline for creditors to file claims in the chapter 11 bankruptcies of MV Realty PBC LLC and its nearly three dozen affiliates. The court’s order extends the original Dec. 1 deadline to Feb. 1, 2024. The court also directed the MV Realty entities to serve – at their expense – copies of the order on all parties to the bankruptcies, including roughly 38,000 homeowners whom MV Realty listed as current contract holders but not as creditors. Additionally, the companies must provide claim forms to about 2,850 other consumers who may have been forced to pay damages after terminating their agreements; those consumers were neither listed as creditors nor notified of the bankruptcy cases.

MV Realty opposed the USTP’s motion, citing the costs of additional service. Its objection was overruled.

“This ruling protects the due process rights of thousands of people across the country who were affected by MV Realty’s business practices,” said Director Tara Twomey of the Executive Office for U.S. Trustees. “The U.S. Trustee Program does not represent consumers directly, but it is committed to ensuring that they have a fair chance to access the bankruptcy courts, whether as creditors or debtors. I commend our Miami field office for their work to safeguard the interests of justice by preserving consumers’ rights to have their voices heard in these bankruptcy cases.”

MV Realty, which operates in 33 states, has been the subject of lawsuits by several state attorneys general alleging deceptive trade practices. In 2018, MV Realty began marketing homeowner benefit agreements (HBAs), under which consumers receive one-time payments of 0.3% of a property’s value in exchange for a 40-year exclusive right for MV Realty to market the property if the consumer decided to sell. Breaching an HBA – for example, by retaining a different real estate agent – could render a consumer liable for damages of up to 3% of the property value. In other words, consumers who received upfront payments of a few hundred dollars could end up owing thousands under an HBA. Additionally, MV Realty files liens or memoranda in the official records to encumber title to the properties.

Amid increasing state and federal scrutiny of the HBA program and MV Realty’s marketing practices, MV Realty and 35 affiliates filed for chapter 11 relief on Sept. 22. In addition to filing the motion to extend the claims deadline, the USTP’s Miami office has also appointed a committee specifically to represent the interests of all HBA holders.

The U.S. Trustee Program is the component of the Justice Department whose mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors and the public. The USTP consists of 21 regions with 89 field offices nationwide and an Executive Office in Washington, D.C. Learn more about the Program at www.justice.gov/ust.