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 used 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 have perpetrated their scheme using close to 1,000 dilapidated houses in Marion County, Indiana (which includes Indianapolis). According to filings in the case, the homes are in such poor condition that one Defendant admitted under oath that they are not livable. The prices and interest rates charged by the Defendants are allegedly exorbitant, and the 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 have engaged in illegal “reverse redlining” by targeting 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.

The case has been certified as a class-action lawsuit to determine whether defendants have violated the Fair Housing Act, the Equal Credit Opportunity Act, and the Truth-in-Lending Act, and to address damages for alleged Truth-in-Lending Act violations. Other alleged violations and aspects of damages will be determined in subsequent proceedings.

The parties are currently briefing summary judgment and trial is scheduled to begin on October 17, 2022.

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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