Illinois Legislature approves bill to prevent unfair real estate listing agreements

Legislation banning long-term and costly real estate listing agreements — like those peddled in Illinois by M.V. Realty, a Florida company — has been passed in the state House and Senate and now needs only Gov. J.B. Pritzker’s signature to become law.The bill, , passed in May, would make it illegal for people or companies to enter unfair listing agreements with homeowners. Real estate listing agreements would be prohibited if they ran more than a year into the future. And any agreements could not bind future owners of a property.Violators could be prosecuted under the Illinois Consumer Fraud and Deceptive Business Practices Act.For homeowners who’ve already signed an agreement, the legislation would provide a way out. Homeowners would be able to ask a judge to void the agreement, making it unenforceable.AARP and land title insurance groups praised the legislation for providing a remedy for consumers while discouraging similar schemes.State Rep. Terra Costa Howard, D-Glen Ellyn, a lawyer who sponsored the legislation in the Illinois House, said many of the homeowners who signed the long-term agreements didn’t understand the terms.“We know that our most vulnerable populations are often preyed upon,” Howard said. “People don’t realize what’s happening.”The measure is among a flurry of state-level moves around the country to protect consumers in the wake of the MV Realty controversy. The Boca Raton, Florida, company has been accused of deceptively grabbing homeowners’ equity through real estate listing agreements. Multiple lawsuits have been filed against MV Realty by state attorneys general, including those in Illinois and Indiana.In athat the business deceptively targeted homeowners who had equity in their homes but needed cash. MV Realty gave people upfront payments but locked them into 40-year exclusive listing agreements that carried hidden fees and limited their ability to refinance or sell, according to the suit.MV Realty did not respond to a request for comment.According to the lawsuit, the company’s listing scheme worked like this:MV Realty had more than 34,000 agreements nationwide, including more than 750 in Illinois. It said it stopped signing new listing agreements in 2022.Raoul’s lawsuit seeks civil penalties and the voiding of all the Illinois contracts.MV Realty’s corporate managers included Amanda Zachman, known as the “villain” in season 15 of CBS’s “Big Brother.” The bulk of the company’s funding came from Chicago’s Monroe Capital Management Advisors, which invested $40 million in July 2021.MV Realty filed for Chapter 11 bankruptcy protection last year in Florida but withdrew its petition last month. The U.S. bankruptcy trustee had argued for a dismissal or conversion to a Chapter 7 liquidation bankruptcy.The U.S. Department of Housing and Urban Development, which enforces civil rights laws against discriminatory housing practices, is investigating the company, as is the federal Consumer Financial Protection Bureau.