Lease-to-own company pays $150,000 settlement
Jerry Brown (D)
SACRAMENTO, Calif. (Legal Newsline) - A lease-to-own company that claimed a 96 percent success rate in helping renters become owners is the latest target in California Attorney General Jerry Brown's quest to help Californians struggling from the bursting real estate bubble.
Brown announced Friday a settlement with Lease2Own Homes that will repay $150,000 to former customers who lost their entire down payment and were evicted when they defaulted on their rent payments.
"We have obtained restitution for renters who were ripped off by an unscrupulous landlord," Brown said, "who illegally seized down payments that were part of a lease-to-own home scam."
California law says a landlord may only seek eviction and unpaid rent if payments are missed in a lease-to-own plan.
Brown sued Lease2Own Homes in April claiming that employees of the business provided lease and option to purchase agreements to customers they believed were not capable of meeting the monthly payments required to successfully purchase the home, according to a press release issued by the attorney general's office Friday.
The suit further stated that the company ignored its own $70,000 minimum annual income requirement, falsely claimed that consumers would have time to clean up any bad credit before purchasing their home, and that their 96 percent success rate was a complete fabrication.
"Virtually no one was able to purchase a home as they described," Gareth Lacy, Brown's spokesman.
Lacy cited one incidence of an unemployed, divorced mother of four who paid $9,000 down for a home from Lease2OwnHomes. When she missed her $1,650 monthly payment, she was evicted and her deposit was seized.
At least 75 renters in Sacramento and San Joaquin County signed up for the program, according to the Attorney General's office.
Lease2OwnHomes President Quentin Hazell claimed to work exclusively with buyers who were within a year or two of having sufficient credit and resources to buy a home.
Under terms of the settlement, the company must pay $300,000 in civil penalties if it doesn't provide $150,000 in refunds to former customers whose down payments were seized.