The city of Chicago has filed suit against a group of residential landlords, accusing them of allegedly misleading tenants into signing on to allegedly fraudulent rent-to-own lease arrangements.
A new civil lawsuit was filed in Cook County Circuit Court on August 2 by the city of Chicago against a group of defedants, including: Vision Property Management LLC, FTE Networks Inc., US Home Rentals LLC, Alexander Szkaradek, Alan Investments III LLC, Kaja Holdings 2 LLC, Kaja Holdings LLC, Mo Seven LLC, PA Seven LLC, RVFM 11 Series LLC, RVFM 13 Series LLC, RVFM 4 LLC, and ACM Vision V LLC
The lawsuit accuses the defendants of multiple violations of Chicago's municipal codes including alleged property mismanagement and fraud concerning the group's allegedly fraudulent rent-to-own venture.
In 2019, then-Chicago Mayor Lori Lightfoot announced a $750 million strategy to revitalize the commercial cores of 10 underserved community areas on the city;s South and West sides. According to Chicago.gov, the initiative known as INVEST South/West has reportedly allocated more than $70 million in public resources into local commercial corridors and mobilized more than $300 million in private and philanthropic commitments.
Through the INVEST Initiative, the investment group bought foreclosed homes, offering them to prospective homeowners on a rent-to-own basis. According to the complaint, the group is alleged to have offered these homes despite making no improvements to the dwellings, allegedly with many or most having significant structural issues such as electrical and plumbing. Homes were offered on an "as-is" basis.
Initially, landlords offered “Agreements for Deed,” under which the consumer would receive legal title to the property after 20 or 30 years of making principal and interest payments. The complaint asserts that on or around 2013, to address growing state regulation of Agreements for Deed, a new agreement called a “Lease with Option to Purchase” was created which placed the burden of remediating unsafe conditions on their leased properties, paying taxes, insurance, and utilities on the consumer, treating them as if they were homeowners by requiring tenants to take on all the responsibilities of being homeowners while receiving none of the benefits, such as building equity.
In addition, consumers who did not comply with making improvements or missing payments were subject to an abbreviated eviction process, bypassing the foreclosure process homeowners could benefit from.
According to the complaint, the landlords sued by the city allegedly failed to make good on the promise of a seller financed contract at the end of the lease term, by offering tenants Agreements for Deed but instead allegedly evicting the tenants through an abbreviated eviction process.
At the same time, the complaint asserts the landlords allegedly misled tenants into paying them amounts owed for property taxes, but then failed to remit the property tax payment to Cook County.
The City of Chicago is asking the court to order the landlords to pay fines of $10,000 for each alleged violation, as well as pay unspecified damages to affected tenants. The city is further seeking a court order requiring the landlords to allow tenants to choose reinstate their lease, if they wish.
The city is represented by attorneys from its Department of Law.