WHEREAS, the Philadelphia Bar Association has a long history of supporting legislation which protects homeowners from unfair and predatory practices; and
WHEREAS, the Unfair Real Estate Service Agreements Act has been introduced in the Pennsylvania General Assembly (House Bill No. 657, Printer’s No. 2821) (the “Act”) to protect Pennsylvania homeowners from unfair real estate service agreements; and
WHEREAS, the Attorney General of Pennsylvania (the “AG”) has filed the action Commonwealth of Pennsylvania v, MV Realty PBC, d/b/a MV Realty of Pennsylvania, LLC and Amanda J. Zachman, Individually and as managing member of MV Realty PBC, LLC. (FJD of PA December term, 2022, No. 001288) alleging multiple violations of Pennsylvania law under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1, et seq. (the “AG’s Complaint”); and
WHEREAS, according to allegations in the AG’s Complaint, the Pennsylvania affiliate of MV Realty (“MV Realty PA”) entered into unfair real estate service agreements with 1,530 Pennsylvania homeowners, including over 500 Philadelphia homeowners; and
WHEREAS, according to the allegations in the AG’s Complaint and a Notice of Disciplinary Action filed by the Pennsylvania Department of State Bureau of Professional and Occupational Affairs against MV Realty PA (“Action”), the agreements between MV Realty PA and Pennsylvania homeowners were 40-year agreements to enter into exclusive listing agreements that violated existing Pennsylvania law that restricts exclusive listing agreements to one-year terms and were secured by a mortgage; and further the Action alleged that the agreements omitted numerous additional protections for consumers listing their homes for sale; and
WHEREAS, according to the allegations in the AG’s Complaint, the agreements required the homeowner to pay commission to MV Realty PA for any transfer of the home, including a sale, foreclosure, or even a transfer to heirs; and
WHEREAS, according to an analysis by Reinvestment Fund, an estimated 69% of MV Realty PA’s mortgages recorded in Philadelphia were on Black-owned homes despite Black Philadelphians making up only 37% of all homeowners in Philadelphia;1 and
WHEREAS, the Philadelphia City Council Committee on Housing, Neighborhood Development, and the Homeless held a hearing on December 14, 2022 and heard testimony from affected homeowners who reported that these terms were not fully disclosed, they were rushed through the contract signing, and were unaware that mortgages had been recorded against their homes;2 and
WHEREAS, according to allegations in the AG’s Complaint and in the Action, homeowners in Pennsylvania have suffered harm after entering into such unfair real estate service agreements, including the inability to use equity in a home to meet the homeowner’s financial needs and the inability to sell a home and preclusion from legal protections available in the mortgage foreclosure process; and
WHEREAS, legislation is needed to provide consumer protections prohibiting agreements that fail to provide consumer protections required by Pennsylvania law; and
WHEREAS, several other jurisdictions, including Florida where MV Realty was originally established, have adopted legislation to prohibit unfair real estate service agreements; and
WHEREAS, the American Land Title Association has promulgated a model law titled Prohibition of Unfair Real Estate Service Agreements for adoption by states to prohibit unfair real estate service agreements; and
WHEREAS, the Pennsylvania Land Title Association and the Pennsylvania Association of Realtors have adapted the model law for consideration by the Pennsylvania General Assembly; and
WHEREAS, the proposed Act provides consumer protections against unfair real estate service agreements by making such agreements unenforceable, forbidding certain provisions, and establishing requirements for such agreements; and
WHEREAS, the Act further provides remedies for homeowners under the Pennsylvania Unfair Practices and Consumer Protection Act and enables homeowners to bring a civil action for relief, including seeking preliminary or other equitable or declaratory relief, an order that the homeowner is not obligated to make payments under the agreement, and actual damages, including costs and attorneys’ fees; and
THEREFORE, BE IT RESOLVED, that the Philadelphia Bar Association supports legislation, such as the Act, that would provide consumer protections for homeowners against unfair real estate service agreements and remedies for homeowners who have executed such agreements; and
IT IS FURTHER RESOLVED, that the Board of Governors authorizes the Chancellor or the Chancellor’s designee to communicate the content of this resolution to state and local public officials, other bar associations, and the public at large, and to take such other action as may be appropriate.
PHILADELPHIA BAR ASSOCIATION
BOARD OF GOVERNORS
ADOPTED: April 25, 2024
1 “Scheme Targets Homeowners,” Reinvestment Fund 2022 Annual Report, available at: https://www.reinvestment.com/insights/scheme-targets-homeowners/
2Authorizing the City Council Committee on Housing, Neighborhood Development, and the Homeless to hold public hearings examining MV Realty of Pennsylvania LLC and their Homeowner Benefits Agreement and the impact these agreements may have on Philadelphia homeowners, Resolution #220819: Hearing before the Philadelphia City Council Committee on Housing, Neighborhood Development, and the Homeless (December 14, 2022) (testimony available at https://www.youtube.com/watch?v=mE0coSngrEQ).
