Update on State of North Carolina v. MV Realty

QUESTION: During a meeting with a homeowner who wanted me to list her house, she told me that in exchange for a small payment from MV Realty, she had agreed to sign a Homeowner Benefit Agreement (“HBA”) with that firm. She gave me a copy of the HBA to review. It includes a “Memorandum of Homeowner Benefit Agreement” that MV Realty recorded with the Register of Deeds. I know that the Attorney General’s office filed a lawsuit against MV Realty seeking to invalidate some of MV Realty’s business practices. Have there been any recent developments in that lawsuit that affect whether the homeowner I am talking to is still bound by the HBA she signed?

ANSWER: Yes. Due to a recent North Carolina Supreme Court decision, you should recommend the seller seek legal counsel to see if the HBA can now be canceled.

By way of background, the Attorney General’s lawsuit against MV Realty was filed in March 2023. The AG filed a motion in that lawsuit seeking to enjoin MV Realty from recovering any fee or penalty relating to an HBA signed by a North Carolina homeowner.

On August 30, 2023, Mark Davis, a judge with the North Carolina Business Court, entered an order and opinion granting the AG’s motion for preliminary injunction. We wrote about that development here.

On September 18, 2023, Judge Davis set out the specific terms of the injunctive relief he was granting. His order specified that MV Realty could not: (a) record memoranda relating to the HBAs it had obtained; (b) assert that it holds a valid lien on the home of any NC homeowner; (c) attempt to recover any fee or penalty set forth in an HBA signed by a NC homeowner; or (d) maintain any legal action to enforce an early termination fee or lien arising from such an HBA. Significantly, the order also required MV Realty to record terminations of all memoranda it had filed on the properties of NC homeowners.

MV Realty appealed Judge Davis’s September 18 order to the Supreme Court of North Carolina. In February of this year, MV Realty filed a motion seeking to stop the effect of the September 18 order while the Supreme Court considered its appeal. NC REALTORS® and the NC Real Estate Commission each filed a friend-of-the-court brief asking that the Supreme Court affirm the Business Court’s September 18 order and uphold that court’s preliminary injunction.

On August 23, 2024, in a significant victory for homeowners and REALTORS®, the Supreme Court entered an order dissolving MV Realty’s motion and dismissing MV Realty’s entire appeal. The effect of this ruling was to leave the September 18 order in place. As a result of this development, MV Realty is now required to record terminations of its memoranda. In addition, MV Realty cannot attempt to recover any fee or penalty set forth in any HBA signed by an NC homeowner.

Release Date: 09/12/2024