On May 30, 2017, Relman, Dane & Colfax, PLLC filed a class action housing discrimination lawsuit on behalf of four individuals and the Fair Housing Center of Central Indiana against Rainbow Realty Group, Inc., Empire Holding Corporation, and James R. Hotka. The complaint alleges that the 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 lawsuit asserts claims under the federal Fair Housing, Equal Credit Opportunity, and Truth in Lending Acts, as well as state law.
The complaint 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 like the five individual Plaintiffs 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.
Fair Housing Center of Central Indiana v. Rainbow Realty Group, Inc., No. 1:17-cv-1782 (S.D. Ind.).