Photo credit: David Coates/Detroit News
Michael G. Kelly owner of Detroit Property Exchange, whose companies own over 500 properties in Detroit, is being taken to court in a class action suit that alleges he uses predatory contracts to ensnare and then evict buyers in a scheme to avoid federal regulations designed to offer some protection to those who sign land contracts.
“The question that this litigation raises,” said Joe McGuire, attorney at Michigan Legal Services, “is can a property like Detroit Property Exchange gets around the regulations that were passed by Congress specifically to address predatory lending.” How does he do this? Simply by renaming the agreement.
Instead of a land contract, where the person has certain rights as purchaser of the property, Kelly uses “rent-to-own” schemes that have even less protection because the person is considered a renter until the property is paid off. Provisions in “rent-to-own” agreements are written so that a person is almost destined to fail, and the property is quickly foreclosed.
On its website, Detroit Property Exchange boosts about its ability to provide “a great and affordable path to homeownership.” It also offers housing to Section 8 voucher holders, stating that they “are familiar with all the Section 8 guidelines and requirements and are committed to providing quality housing.”
Kelly has an eviction rate of 1.49 times for every property.
See article in the Detroit Free Press.
Also see Detroit Eviction Defense’s previous article on Kelly.