A national property management group engaged in illegal “rent-to-own” schemes against residents in predominantly Black communities on the South Side, the city of Chicago alleges in a lawsuit filed Wednesday.
The city filed a lawsuit against the now-defunct Vision Property Management LLC, its successor FTE Networks Inc. and affiliates over “deceptive and unfair practices in the course of selling and leasing properties to predominantly low-income Chicagoans,” according to a Thursday news release from Mayor Brandon Johnson’s office. The complaint, filed in the Circuit Court of Cook County, alleges the company’s actions violate Chicago’s consumer protection laws.
The city’s suit states that starting in 2004, the Columbia, South Carolina-based company and its affiliates purchased homes in bulk for cheap prices in Chicago and other cities, encouraging individuals with low incomes or credit challenges to sign rent-to-own agreements for rundown properties. The city claims these contracts were illegal, as the contracts “obscured the financial terms of the purchase, failed to disclose the true condition of the properties, and shifted repair and maintenance responsibilities to the buyers while treating them as tenants,” according to the news release.
The suit also alleges the company and its affiliates charged customers for the property taxes on their homes but never paid Cook County, causing some residents to lose their homes during tax sales.
The Law Department, which represents the city in the suit, said the company may have owned more than 90 Chicago properties. The department estimates about 60 properties are still owned by the company in Chicago, with about 30 still occupied.
Frederick Mack, 49, said he entered into a contract with one of the company’s affiliates in 2014 for a house in the Grand Crossing neighborhood. When he and his wife moved in, he said he was surprised to find that he had to install new plumbing and new drywall throughout the house. And, he said, the company never paid the property tax bills when he was living there.
“I sent hundreds of emails stating that ‘I need these taxes paid,’” Mack said in an interview. “And they kept telling stories saying, ‘We are working on it. It’s gonna be paid,’ and they never did pay the taxes.”
The unpaid 2020 property taxes on his house were auctioned off at a tax sale in November 2022, according to records with the Cook County treasurer’s office.
Mack moved out of the house about three years ago, and he said he hopes the lawsuit brings justice and compensation for those affected.
In another instance outlined in the complaint, a resident entered into a $25,000, 20-year contract with an interest rate of about 9.7% with Vision Property Management for a house lacking toilets, sinks, radiators and windows, the lawsuit alleges. The contract stated that the resident could be evicted if they missed their $370 monthly rent payment by more than 30 days, even though the contract was written as an “Agreement for Deed” to the property, disqualifying the resident from being subject to eviction since they would be the owner of the property, the suit alleges.
The complaint alleges the company and its affiliates have evicted “dozens” of Chicago families.
Chicago’s suit against Vision Property Management is one more in a list of legal complaints filed against the company by cities, states and private individuals. The allegations described are similar to “contract buying,” which has a long history in Chicago and involves landlords luring Black homeowners who were shut out of homeownership opportunities because of racial discrimination into unfair contracts for homes. In the 1950s and 1960s, between 75% and 95% of homes sold to Black families in Chicago were contract sales, robbing between $3.2 billion and $4 billion in wealth from Chicago’s Black community, according to a 2019 report from Duke University cited in the lawsuit.
“Chicagoans trying desperately to achieve the American Dream of homeownership should never, ever be subject to predatory behavior from unscrupulous firms like these,” the mayor said in Thursday’s news release. “Under my administration, we will not tolerate our Black and brown communities to be further exploited. Those who try to take advantage of our city’s workers and working families will be held to account.”
FTE Networks bought Vision Property Management in 2019 and has been settling lawsuits in multiple states alleging violations of consumer protection laws over its rent-to-own business model, according to an FTE Networks regulatory filing.
“This is yet another case that FTE Networks and US Home Rentals has inherited as the result of the actions employed by its predecessor, Vision Property Management,” the company said in a statement Thursday. “The alleged practices referenced in this complaint notably occurred prior to FTE’s acquisition of Vision’s portfolio, and are inconsistent with FTE’s deep commitment to operating a home rental business that is trusted to provide safe and affordable housing nationwide.”
Alex Szkaradek, former CEO of Vision Property Management, told the Tribune via text that he sold his assets to FTE Networks in December 2019 and has “zero ownership in all real estate assets” and “no vested ownership.” He did not immediately respond to further inquiries.
The city subpoenaed Vision Property Management for documents pertaining to its Chicago properties in March 2021; the company did not respond, according to the complaint. The complaint states that in May 2022, FTE Networks began providing requested documents to the city, and the city and FTE Networks engaged in “preliminary settlement discussions but were unable to reach resolution.”
Residents who want to discuss their experiences with Vision Property Management or its affiliates may do so by emailing consumerprotection@cityofchicago.org, according to the Thursday news release.
The first hearing for the case is Nov. 30.
