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This class action housing discrimination lawsuit challenges an Indianapolis company's predatory and discriminatory rent-to-own housing program. Relman Colfax represents the plaintiff class, which includes over 3,000 current and former Rainbow customers who entered into rent-to-own contracts since 2009, five individual named plaintiffs, and the Fair Housing Center of Central Indiana.

The lawsuit, filed on May 30, 2017, alleges that Defendants use the promise of homeownership to lure people into toxic “rent-to-own” contracts for rundown houses, reviving predatory land contract practices that denied fair homeownership opportunities to residents of minority neighborhoods during much of the twentieth century. The suit alleges that the Defendants perpetrate their scheme using close to 1,000 dilapidated houses in Marion County, Indiana (which includes Indianapolis). According to the Complaint, the homes are in such poor condition that one Defendant has admitted they are not livable. The prices and interest rates charged by the Defendants are allegedly exorbitant, and their rent-to-own contracts are set up so that buyers have all the disadvantages of owning a home but none of the advantages. 

Plaintiffs allege that the Defendants are engaged in illegal “reverse redlining” because they target this scheme at residents of minority neighborhoods. That is where the Defendants’ houses are disproportionately located, and where two of Defendants’ storefront offices are located.

On March 27, 2020, U.S. District Judge Robert L. Miller, Jr. certified the case as a class action lawsuit. The court certified a class to determine whether defendants have violated the Fair Housing Act, the Equal Credit Opportunity Act, the Truth-in-Lending Act, and the Indiana Home Loan Practices Act, and to address damages for alleged Truth-in-Lending Act violations. Other aspects of damages will be determined in subsequent proceedings. The court also certified a key component of another state law claim. 

The Relman Colfax case team is assisted by local counsel at Cate, Terry & Gookins.

Case Caption

Fair Housing Center of Central Indiana v. Rainbow Realty Group, Inc., No. 1:17-cv-1782 (S.D. Ind.)

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