On November 11, the Fair Housing Center of Central Indiana (FHCCI) announced a record settlement in a lawsuit against a local business owner accused of targeting Latino communities with predatory land contracts for homeownership of properties that were frequently not in a habitable condition and inflated in their sales price. While the owner of the company in question, Casas Baratas Aqui (translated: “Cheap Homes Here”)
The FHCCI press release noted that several individual plaintiffs brought action in federal court in April 2018 alleging that the company violated the Fair Housing Act, Equal Credit Opportunity Act, Civil Rights Acts of 1866 and 1871, Truth in Lending Act, as well as several Indiana state statutes. Specifically, the company was accused of targeting Hispanic/Latino homeseekers, in particular, with a housing product that offered uninhabitable homes at high interest rates and home prices far above their property values. (Photo Source: IndyStar Article linked below, Sarah Stier, IndyStar)
As IndyStar reported, Amy Nelson, the Executive Director of FHCCI, stated that, “This is a ground-breaking resolution that will have a national impact on rent-to-own and land contracts by providing an example of requirements to ensure fairness in these transactions.”
The IndyStar article outlines one specific case where a plaintiff “entered a one-year lease with a monthly rental rate of $1,000. She was given the option to buy the home for $77,900.” The owner of the company, however, bought the house for only $32,000. The borrower also had a down payment of $8,500 and also required the borrower to “pay $69,400 with a 10 percent interest rate, in monthly installments of $746 for a 30-year term.” In addition to the high costs of this house, the plaintiff found that “the plumbing was completely clogged, the sink didn't function, the floor was rotted and the ceiling had started to collapse,” according to the case complaint. Further, the plaintiff was intimidated after, according to the complaint, “being told to be careful [about complaining] since they are 'illegal.'
These plaintiffs will see financial relief as a result of this settlement thanks to the FHCCI’s work. The owners said they would change their business practices based on this and the September 2019 ruling from the Indiana Supreme Court. (Photo Source: Indystar Article Screenshot, article authored by Crystal Hall)
Earlier this fall, the Court ruled in a case that similarly addressed predatory homeownership contracts. Prosperity Indiana joined the state, the city of Indianapolis, Neighborhood Christian Legal Clinic, the Notre Dame Clinical Law Center and National Consumer Law Center, and the Fair Housing Center of Central Indiana as amicus filers in the Rainbow Realty case where, similar to this instance, borrowers were required to pay for all repairs and maintenance as a homeowner would, but if they fell behind in their monthly payments, they would be treated like renters, facing eviction, not foreclosure, and losing all of their equity.
The Supreme Court’s ruling found that the contract in this case was a rental agreement and not a purchase agreement, as they had been told. Justice Geoffrey Slaughter wrote for the panel in stating, “attempted waiver of their obligations as landlords is void."