Thursday, December 19, 2013

Trans Home Solutions - Warning - Read This Before You Lease/Purchase



Many companies in St. Louis advertise homes for sale through their lease option programs. A lot of the advertisements for these companies can be found on Craigslist and Backpage. I scan through these advertisements often to see if there are any new scammers trying to take advantage of consumers. I recently came across an advertisement for a company called Trans Home Solutions. As always I immediately checked out their website to see what they are disclosing to potential customers. Interestingly, I found that they advertise to sellers that their fee is completely covered by the buyers/tenants. However, when I looked at the buyer/tenant portion of the website I did not find any information regarding who pay the Trans Home Solutions' fee. In fact, they tell tenant/buyers that the option fee they pay is credited back towards the purchase price if the tenant/buyer purchases the home. This statement is somewhat misleading because most of the time the price of the house reflects the lease option that would have to be credited back. In the following example, I will explain the typical pricing calculation that consumers never see.

The typical calculation works as follows. Assume that there is a $100,000 house. That means that the sellers actually want to sell the house for $100,000. The house is sold with  a $5,000 option fee. The house would be "sold" to the tenant/buyer at $105,000 with a promise that there would be a $5,000 credit towards purchase. Therefore, Sellers sell at $100,000 + $5,000 option fee price increase - $5,000 option fee credit = $100,000. The tenant/buyer would pay $5,000 to buy a $100,000 house, that in reality was always worth $100,000 or less. The $5,000 in this example would go to the Lease/Option company, NOT as a credit towards the purchase price.

What is also dangerous in the above described situation and in real life is that the pricing on these houses is typically predetermined and is not affected by market conditions. That means that in a lot of cases, customers might be lease/purchasing overpriced homes. There are many reasons why lease/optioning an overpriced home is dangerous. A detailed discussion is beyond the scope of this post. It is important to note,though, that if you lease/option an overpriced home, you might not be able to obtain financing on it when it is time to do so and therefore forfeit your option money.

If this situation has happened to you, you might be entitled to compensation. Contact us at 314-529-1252 or fill out the form below and we will contact you. (Typically within the hour).

Wednesday, February 13, 2013

What Can Go Wrong When You Rent-to-Own? Lessons From Another Bad Real Estate Deal in St. Louis (PART ONE)


Previously, this blog has informed of the risks of renting to own (a real estate deal often called a “lease option”) and has linked to news articles about people who brought cases after being victimized by real estate scams in the St. Louis area.   Another Missouri rent-to-own lawsuit is very informative.  The Plaintiff (the person who sued) was Jodi Grillo, and the Defendants were Samuel “Trey” Smith, Treadstone Properties LLC, Joe McCall, Chamberlain Holdings LLC, Brandt Stiles, Tim VanMatre, Michelle Kile, Stivan Group LLC, Stivan Management LLC, and Stivan Realty LLC.  Normally there are not this many Defendants in a consumer protection lawsuit, but in this case it was alleged that there were several people who were involved in a deceptive scheme.

Jodi Grillo filed a lawsuit against Samuel "Trey" Smith, 
Treadstone Properties LLC, and several other individuals and 
companies under the Missouri Merchandising Practices Act 
(MMPA), alleging fraud, deception and unfair treatment in
regards to a rent-to-own ("lease option") deal in St. Louis.
A copy of what is called the “Complaint” in the case is very interesting.  Click here to see a copy.  The Complaint is the first document filed in a consumer protection lawsuit.  It explains how the person bringing the lawsuit was mistreated and/or injured and why the company or person they are suing should have to pay for what they have supposedly done wrong.  The first thing Khatskin Law will do for a client who has been treated unfairly and wants to file a lawsuit is meet with them to learn exactly what happened, in order to draft a Complaint.

The Plaintiff in this case was renting to own in Sunset Hills, MO, and originally filed a lawsuit in St. Louis County.  Several of the Defendants were from O’Fallon, MO.  Eventually the case was transferred to St. Charles County.  In all these places and throughout Missouri, Khatskin Law believes that rent-to-own housing scams are a serious problem.

For an interesting read – and as a warning of what can go wrong and how you can be taken advantage of and mistreated if you purchase a lease option – look at the Complaint (case number 1211-CC01148).

It is important to point out that all the statements contained in the Complaint are merely allegations, and have not been proven.  The Defendants denied most of the allegations in their Answer, and it is believed that the case settled out of court.  Also, certain parts of the Complaint that have to do with jurisdiction, the caption at the top of the first page, and where the attorney signs, have been omitted (where these sections were, it instead says "[OMITTED]").  To read the full, officially filed Complaint, visit the Courthouse.

Wednesday, February 6, 2013

Alleged Real Estate Scams in East St. Louis


This video is Part 2 of a 6-Part Documentary on the many issues plaguing East St. Louis.  As it turns out, one problem the City is facing appears to be real estate investors taking advantage of desperate people who need a place to live.  At 3:36 in the video, News 4 interviews Mahogany Burns, who bought a modest house from a company affiliated with an East St. Louis company known as Sieron & Associates.  

According to Mahogany, she discovered that the house had serious issues.  The basement "smells of old sewage and mold," and the house has numerous other serious issues.  She was required to make a modest down payment, pay $400.00 per month for a year, and pay about $25,000 at the end of a one year period.  Under the agreement she had with the Sieron & Associates-affiliated company, she paid all property taxes, all repairs, and all utilities.  (This is technically different than a lease option scam, but has many of the same elements)  

Additionally, the price she paid for the house was six times what they had paid for it!  What generally happens in this type of real estate "deal" is that the buyer can never come to own the house, even though they have been making repairs to the house and improving the house.  The Sierons' companies are now facing lawsuits on behalf of several East St. Louis-area residents who feel they were taken advantage of.

Remember to do your due diligence on a company BEFORE renting, buying or (especially!) renting to own, signing a lease option or contract for deed for a house.  Check to see if the company or person you are dealing with has had consumer protection lawsuits against them, complaints filed with the better business bureau or MO (or IL) Attorney General, and even see if a google search turns up anything questionable about them.  

As always, if you feel you have been a victim of an unfair real estate deal, contact a St. Louis Consumer Law Lawyer right away.

Saturday, January 12, 2013

Faulty Roof Repair By Contractor

Contractors that perform work on your home typically offer a limited warranty on their work. What happens if you find out that the work was done badly, but only after the warranty period has expired? If a contractor tells you that they no longer have to fix their faulty repairs, contact me.

Besides the warranty period that your contractor told you that you had, you might have more time. First, your contractor might have failed in his contractual obligation to fix your roof. And, therefore, might be liable for a breach of contract claim. The statute of limitations period for contract actions in Missouri is five years, and the cause does not start accruing until the damage caused by the breach can be ascertained.

Second, your contractor might have fixed the roof in a negligent manner. And, therefore, might be liable to you for negligence.  Additionally, the builder may have violated Missouri's Consumer Protection Act, called the Missouri Merchandising Practices Act.  It is imperative to speak with a St. Louis consumer rights lawyer as soon as possible after you discover the faulty work.

Wednesday, January 9, 2013

Introduction to Lease Option ("Rent-to-Own") Scams

Lease option scams are a serious problem in St. Louis,
O'Fallon, St. Charles, and elsewhere in Missouri.
What is a Lease Option? Typically, a lease option is a transaction or a series of transactions where someone "rents-to-own" a property, usually a house.  The renter signs an agreement to rent the house, but also purchases a right to buy the house at some time in the future, at a specified price (which is often inflated so much that the tenant/buyer will never actually be able to get a mortgage on the house).  Many lease option deals also contain a provision stating that a portion (often half) of each monthly rent payment will accumulate and will be given as a credit (often called "rent credit") towards the price of the house if and when the tenant/buyer purchases it.  There are many ways of referring to these deals include, lease with option to purchase, option to purchase, lease purchase, etc.

How do Lease Options work? While there are many variations on a lease option transaction, this is an example of a typical one: 

1) A potential homebuyer/renter ("Renter") is looking for a house.

2) Renter finds a house advertised on craigslist as a "lease option" (or "rent-to-own") property and meets with the person advertising the property ("Seller").  

3) The Seller explains that the Renter can rent the property for a year and afterwards will be able to purchase it. The Seller further explains that the Renter will have to pay a certain amount of rent every month, and that they also have to pay an up front fee of anywhere between $2,000 and $15,000. The up front fee is often referred to as a "deposit," but in reality is simply an "option fee."

4) The Renter is then required to sign a lot of complicated paperwork including a rental agreement, an "option contract" and likely a purchase contract. Typically, the paperwork the renter signs has been prepared by the Seller and heavily favors the Seller. The Renter rarely, if ever, has an opportunity to have the paperwork reviewed by a St. Louis consumer protection or real estate attorney who knows about lease options.

5) The paperwork typically specifies a price the Renter will have to dish out for the house if he or she chooses to purchase it later. The future price is typically much higher than the actual current market price of the property.

6)The "option fee," or "deposit" (but remember, it is not really a deposit), is non-refundable if the Renter does not purchase the property at the end of the lease period.

7) Often, the Renter can not purchase the property for one reason or another at the end of the option period and loses the option fee. 

8) Many times the Sellernot the Renter, is responsible for the Renter's inability to complete the transaction. This may be for a number of reasons. In these situations the Lessor SHOULD return the deposit/option fee. OFTEN, THE LESSOR DOES NOT RETURN THE DEPOSIT/OPTION FEE.

9.) Sometimes, the Seller does not use the Renter's monthly rent payments to pay their mortgage on the house, and the bank forecloses on the house, preventing the Renter from purchasing it.  This also occurs in a "wraparound mortgage" situation.  The Renter receives a notice from a bank saying that the bank has assumed the property pursuant to a deed of trust, and directing the Renter to pay all future rent to the Bank.


If you purchased a lease option and were renting-to-own and a situation similar to the one described above happened to you, you should contact a consumer fraud lawyer immediately.  

Disclaimer: Khatskin Law provides the information and material in this blog for informational purposes only.  The information does not constitute legal advice.  The use of this site does not create an attorney-client relationship.  Further communication with our attorneys through the web site and e-mail should not be considered as confidential or privileged.  Please contact any of our attorneys individually if you wish to discuss the contents of this web site in further detail.  The verdict or settlement of your own case will depend upon its own particular facts.  The cases reported in the web site are not meant to cause any unjustified expectations regarding the merits of your own claim.  The choice of a lawyer is an important decision and should not be based solely upon advertisements.

Tuesday, January 8, 2013

Missouri Landlord-Tenant Law: Security Deposits

All too often, St. Louis landlords fail to refund their tenants' security deposits. Missouri law grants tenants and landlords specific rights pertaining to security deposits. If your landlord has wrongfully withheld your security deposit, you may have legal remedies.

Get your security deposit back
When a tenant's lease is terminated, the tenant is entitled to either a full refund of the deposit or an "accounting" specifying the exact amount being withheld and the landlord's justification. The landlord has 30 days from the date the lease ends to refund the deposit or provide an accounting.

Missouri law recognizes only three reasons why a landlord may withhold any portion of a security deposit: (1) to remedy a tenant's default in the payment of rent due to the landlord, pursuant to the rental agreement; (2) to restore the dwelling unit to its condition at the commencement of the tenancy, ordinary wear and tear excepted; or (3) to compensate the landlord for actual damages sustained as a result of the tenant's failure to give adequate notice to terminate the tenancy pursuant to law or the rental agreement, provided that the landlord makes reasonable efforts to minimize their damages.

If the landlord wrongfully withholds the deposit, a tenant can recover up to double the rental deposit as damages.  In addition, wrongfully withholding a deposit may be a violation of the Missouri Merchandising Practices Act, a powerful Missouri consumer protection law that is discussed in this previous blog post.

Unfortunately, some landlords wait for the tenant to move out, inspect the property without the tenant being present, and then send a bill for damage to the rental that does not exist. There are several ways to protect yourself from this situation: (1) clean and repair the unit before you leave, and (2) take plenty of pictures of the unit on both the day you move in and when you move out.

If you have a question and would like feedback from a St. Louis Consumer Protection Attorney, feel free to make a comment to this blog post or contact me.

Monday, December 31, 2012

The Missouri Merchandising Practices Act


One of Missouri's most significant Consumer Protection Laws is called the Missouri Merchandising Practices Act (MMPA)Mo. Rev. Stat. § 407.020, et al. (2010).  The MMPA broadly prohibits any person or business from doing anything "unfair" or "deceptive" to a consumer who buys or leases merchandise (defined expansively to include real estate, goods and services).  

Specifically, the MMPA bans "deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact."  You can read the MMPA in its entirety here: http://www.moga.mo.gov/statutes/chapters/chap407.htm 

The MMPA applies to many situations where someone in Missouri has been taken advantage of, including lease options and other bad real estate deals, and it allows a consumer to recover their actual damages (what you lost as a result of being taken advantage of by the person or business who committed the unfair or deceptive act or practice), punitive damages (money the court makes the defendant pay to you to punish them for intentional and/or especially egregious conduct), and attorney's fees (so that you don't have to pay an attorney up front and get to keep everything the court awards you).  The law also allows a consumer to obtain an "injunction," which prevents the defendant from engaging in the same unfair or deceptive act or practice in the future.

If you have been taken advantage of by a real estate investor or other business and would like to speak with a Missouri Merchandising Practices Act Attorney, please contact me.  

Disclaimer: Khatskin law provides the information and material in this blog for informational purposes only.  The information does not constitute legal advice.  The use of this site does not create an attorney-client relationship.  Further communication with our attorneys through the web site and e-mail should not be considered as confidential or privileged.  Please contact any of our attorneys individually if you wish to discuss the contents of this web site in further detail.  The verdict or settlement of your own case will depend upon its own particular facts.  The cases reported in the web site are not meant to cause any unjustified expectations regarding the merits of your own claim.  The choice of a lawyer is an important decision and should not be based solely upon advertisements.

Saturday, December 15, 2012

Jack Roddy of JMZ Investments


According to the Better Business Bureau (BBB), Jack Roddy of JMZ Investments and/or Bagwell Group Management has participated in Fraudulent Real Estate Deals. In fact, the BBB has recommended using "extreme caution" when dealing with Mr. Roddy.

According to one report, Mr. Roddy cost one victim close to $15,000 when he stopped making mortgage payments on the house that the victim was leasing and the house went into foreclosure.

Another victim from O'Fallon, Missouri stands to lose almost $11,000 because her home is going into foreclosure. According to the BBB she gave Mr. Roddy an $11,000 downpayment.

Additionally, Mr. Roddy has a lawsuit pending in St. Charles County. The lawsuit is captioned Lindsay Elliot v. Jack L. Roddy. The case number is 0911-CV04655. The lawsuit was filed in 2009 and has not yet been resolved. Since the beginning of the lawsuit, two of Mr. Roddy's attorneys have withdrawn from the case. One attorney cited not being paid as one of the reasons for the withdrawal. The lawsuit is centered around a bad real estate transaction, specifically a fraudulent lease option. Here is a link to a copy of the lawsuit that was filed:

https://docs.google.com/open?id=0B0QB5SQJCaTZZHdVaGdUOHl0dk0.

If you purchased a lease option and were renting-to-own a house and a situation similar to the one described above has happened to you, you should contact an attorney immediately

My name is Edward Khatskin and I am an attorney at Khatskin Law. I offer FREE CONSULTATIONS to victims of Lease Option Scams. Contact me for a free initial evaluation of your case. Help is available. Please email me at edwardklawoffice@gmail.com.  At Khatskin Law, we handle cases on a contingency fee basis or take advantage of what are called "fee shifting" laws which require the defendant to pay YOUR attorney fees. That means that in the majority of cases we are able to represent clients without charging a fee up front. 

Disclaimer: Khatskin law provides the information and material in this blog for informational purposes only.  The information does not constitute legal advice.  The use of this site does not create an attorney-client relationship.  Further communication with our attorneys through the web site and e-mail should not be considered as confidential or privileged.  Please contact any of our attorneys individually if you wish to discuss the contents of this web site in further detail.  The verdict or settlement of your own case will depend upon its own particular facts.  The cases reported in the web site are not meant to cause any unjustified expectations regarding the merits of your own claim.  The choice of a lawyer is an important decision and should not be based solely upon advertisements.

Friday, December 14, 2012

Another Lease Option Scam


Here is a news story about a recent scam involving lease options. Real estate investor Jack Roddy is the alleged culprit.

http://wentzville.fox2now.com/news/news/58923-contact-2-lease-own-scam


If you purchased a lease option and were renting-to-own a house and something similar happened to you, you should contact an attorney immediately

My name is Edward Khatskin and I am an attorney at Khatskin Law. I offer FREE CONSULTATIONS to victims of Lease Option Scams. Contact me for a free initial evaluation of your case. Help is available. Please email me at edwardklawoffice@gmail.com.  At Khatskin Law, we handle cases on a contingency fee basis or take advantage of what are called "fee shifting" laws which require the defendant to pay YOUR attorney fees. That means that in the majority of cases we are able to represent clients without charging a fee up front. 


Disclaimer:  Khatskin Law provides the information and material in this blog for informational purposes only. The information does not constitute legal advice. The use of this site does not create an attorney-client relationship. Further communication with our attorneys through the web site and e-mail should not be considered as confidential or privileged. Please contact any of our attorneys individually if you wish to discuss the contents of this web site in further detail. The verdict or settlement of your own case will depend upon its particular facts. The cases reported in the web site are not meant to cause any unjustified expectations regarding the merits of your own claim. The choice of a lawyer is an important decision and should not be based solely upon advertisements.