Arizona Home Buyers, Could a 40-Year Agreement Be Hiding on YOUR Title?
When buying an Arizona home, most people focus on the price, inspection, financing, and closing costs. However, there is another important part of the transaction that deserves your attention: the title report.
A recent Arizona lawsuit involving MV Realty highlights why.
The Arizona Attorney General filed a lawsuit against MV Realty and related entities over its Homeowner Benefit Program. According to the state's allegations, some homeowners received upfront cash in exchange for long-term agreements involving future real estate listing rights. Memoranda connected to those agreements were then recorded against properties.
The lawsuit remains pending, which means the allegations have not been finally adjudicated in that case. Still, the situation provides an important lesson for Arizona buyers and homeowners: unusual documents on a property's title should never simply be ignored.
What Is the MV Realty Issue in Arizona?
MV Realty promoted a program that provided homeowners with upfront cash in exchange for agreements involving future real estate listing rights. The Arizona Attorney General alleges that these agreements could extend for decades and that memoranda were recorded in county property records.
Why does that matter?
When something is recorded against a property, it can potentially become an issue when the homeowner later wants to:
Sell the property
Refinance the mortgage
Transfer ownership
Complete another transaction involving the property
The Arizona Attorney General's lawsuit alleges that the recorded documents associated with MV Realty could interfere with these future transactions. That does not mean every Arizona homeowner or buyer will encounter one. However, it does demonstrate why reviewing title documents is such an important part of a real estate transaction.
What Does a Title Search Reveal?
When you're purchasing or refinancing a property, the title company conducts a search of public records connected to that property. Common items may include an existing mortgage or other legitimate liens.
Occasionally, though, the search uncovers something unexpected.
That could include an old lien, judgment, ownership issue, recorded agreement, or another document that requires additional investigation. An unusual item does not automatically mean the transaction cannot proceed. However, it may need to be researched, resolved, released, or otherwise addressed before closing.
What If an MV Realty Memorandum Appears?
First, don't panic.
Finding an unusual recorded document should lead to questions, not assumptions.
If an MV Realty memorandum or another unfamiliar item appears on the preliminary title report, buyers and their representatives should work with the appropriate professionals to determine:
What exactly was recorded?
Does the document still affect the property?
Does anything need to be released or cleared?
Could it delay the transaction?
Will the title company insure the property?
Could it affect the buyer's financing?
Getting those answers early can prevent a title issue from becoming a last-minute closing problem.
Could a Title Issue Affect Your Mortgage?
Potentially, a lender needs to know that its interest in the property is properly protected. Therefore, unresolved title problems can create complications during mortgage underwriting.
As Ryan Gilliam explains in the episode, lenders and title companies work together during the transaction to identify existing liens and other recorded matters.
If something unexpected appears, additional work may be necessary before the loan can close. This is another reason buyers should not wait until the final days of a transaction to pay attention to title documents.
Don't Ignore Your Preliminary Title Report
Your preliminary title report is not just another document sitting in your inbox.
Read it.
Your real estate agent should be reviewing title information as part of the transaction, but buyers should pay attention to the documents they receive as well.
If you see a company name, memorandum, lien, agreement, or other item you do not recognize, ask about it. A question asked early is much easier to address than a surprise discovered immediately before closing.
Arizona Has Also Addressed Long-Term Listing Agreements
Arizona has taken legislative action regarding these types of agreements.
Arizona has also addressed these types of agreements through a 2024 law. Arizona law now restricts certain exclusive property engagement agreements involving residential real estate, including agreements that last longer than 12 months, purport to run with the land, bind future owners in prohibited ways, are recorded with a county recorder, or create a lien, encumbrance, or security interest against residential real estate.
These protections are important, but buyers and homeowners should still pay attention to what has already been recorded against a particular property.
A a 2024 Arizona law does not make careful title review unnecessary.
The Bigger Lesson for Arizona Home Buyers
The MV Realty situation highlights a broader real estate lesson that applies even if you never encounter that particular company.
Know what you're buying, including what appears in the property's records.
Most Arizona real estate transactions will never encounter this specific issue. Still, buyers should understand that a title search can uncover matters beyond the mortgage they expected to see.
When something unusual appears, your real estate agent, lender, title company, and, when appropriate, an attorney should communicate early to determine what needs to happen next.
Buying a home involves much more than getting an offer accepted.
Clear title is another important piece of getting that home successfully to closing.
Prefer to Watch Instead?
Watch this episode of Real Estate Tip Tuesday to learn why Arizona property title issues matter, how unusual recorded documents could affect financing or closing, and what buyers should do if something unexpected appears on a title report.
Have Questions About Buying or Selling a Home?
Team EvoAZ can help you navigate the real estate side of your purchase and understand the documents and deadlines that come with an Arizona home transaction.
Katie Halle Lambert | Team EvoAZ
Text ConnectWithKatie to 480-508-9828
Have Questions About Your Mortgage?
Whether you're purchasing your first home, refinancing, or simply have questions about your financing options, Ryan is here to help.
Ryan Gilliam | Your Best Mortgage
Text ConnectWithRyan to 480-508-9828
