Most licensed real estate professionals behave ethically and adhere to the law and the requirements of their profession. When that’s not the case, they can face civil and even criminal consequences.
Earlier this year, Ohio Attorney General Dave Yost announced a lawsuit against a Miami Valley real estate business with clients throughout the state and beyond. Ohio was actually the fourth state to sue the business.
Contracts tied customers into 40-year agreement
According to the Ohio lawsuit, the founder and a former broker got clients to sign a 40-year “Homeowner Benefits Agreement” as a “loan alternative” that allowed them to obtain quick and easy financing. However, the agreement required those who signed to use one of the business’s agents whenever they sold their home.
If they used another agency, they would be required to pay a “cancellation” fee of 3% of the home’s value at the time. The business even placed liens on the homes to further hold homeowners (and their heirs) to the agreement.
The suit contends that the agreement was written in intentionally confusing language and left out important details that are required in real estate contracts under Ohio law. AG Yost said, “Deliberately tricking people to make money off their homeownership is a shameful business model. If it’s truly a good deal, all the details will be clearly explained in writing.”
Owner not licensed in Ohio
The lawsuit, which was filed on behalf of the Ohio Department of Commerce’s Division of Real Estate and Professional Licensing, also stated that the owner, who resides in Florida, isn’t licensed to operate in Ohio. It sought to prevent the company from doing any further business in the state.
Shortly after the suit was filed, a spokesperson for the business announced that it had “voluntarily temporarily suspended entering into new customer contracts.” The company contends that its “Homeowner Benefit Program fully complies with the law.” It claims that it simply provides a “cash incentive” to choose it over other real estate businesses.
Those who have been harmed by signing one of these contracts can file a complaint with the Ohio Division of Real Estate and Professional Licensing. It’s also wise to seek legal guidance. In fact, fraudulent schemes like this one are just one reason why it’s beneficial to have such guidance as you go through any real estate transaction – and certainly if you’re signing any contract that you don’t fully understand.