Major real estate firm files for bankruptcy after being sued by six states and Senate probe over 40-

A MAJOR real estate firm has filed for bankruptcy following several lawsuits from six states and a Senate probe over "40-year" contracts.

MV Reality, a controversial real estate firm, filed for Chapter 11 bankruptcy in North and South Carolina Friday morning.

The company came under fire over its "Homeowner Benefit Program," where homeowners are offered fast cash, sometimes thousands of dollars, with no interest or fees.

All the homeowner has to do is sign a contract that says when the person decides to sell their home, it has to be through MV Realty for the next 40 years.

If another realtor is hired during those 40 years, the homeowner will have to pay MV Realty a penalty totaling three percent of the value of the person's home.

If the homeowner dies, the person who inherits their home is also bound to the contract as well.

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The contract was met with major controversy and sparked a lawsuit filed by North Carolina Attorney General Josh Stein, who alleged MV Realty violated the state's laws prohibiting unfair and deceptive practices.

"We allege that MV Realty is preying on vulnerable people to trick them into unfair, long-term agreements," said Stein in a statement at the time.

"My office is taking them to court to put them out of business."

MV Reality began its operations in North Carolina in August 2020 and was able to sign up more than 2,100 state residents to join the benefit program.

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Across the country, the company has been able to sign up more than 32,000 members.

A new law was created in North Carolina that prohibited long-term real estate contracts such as the one the company used.

"North Carolina property owners deserve peace of mind that our laws prevent bad actors from taking advantage of them with unfair, confusing, and misleading sales contracts," said State Representative, Kyle Hall.

MV Realty is also facing lawsuits in Florida, Ohio, Massachusetts, Pennsylvania, and New Jersey.

The company denied any wrongdoing, however, the fallout from the lawsuits was widespread.

Before filing for bankruptcy, MV Realty agreed to stop signing new contracts with homeowners but defended its "innovative business model."

Other companies such as Zillow slammed the company, stating "there is no place for deceptive and harmful practices in real estate."

The home search giant added that it was "determined to put an end to these predatory practices, and … has been actively working with more than a dozen state legislatures to pass laws that would prohibit companies from engaging in deceptive advertising and predatory listing practices."

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