Bryan Cohen Nov. 21, 2012, 4:57pm

INDIANAPOLIS (Legal Newsline) - Indiana Attorney General Greg Zoeller announced a lawsuit on Monday against an Indianapolis real estate company and its owner for allegedly running a rent-to-buy scheme meant to avoid Indiana's landlord tenant law.

Rainbow Realty Group Inc. and James R. Hotka, the company's owner, advertised rent-to-buy fix-up homes with small down payments for traditional home loans. When a customer picked a property to buy, the company would quickly take consumers through complex real estate documents that led them to believe that they were owners of the property rather than renters, which was allegedly not the case.

The buyers were responsible for all improvements to the properties, including repairs to make the home habitable. At least six consumers who participated in the home ownership program were allegedly later evicted for delinquent payment in small claims court. The defendants acknowledged in court that they rented the properties instead of selling the properties on contract.

The defendants allegedly falsely advertised the rent-to-buy scheme by claiming consumers could own a home in three days and required customers to sign a document that waived landlord tenant law. Waivers are not permitted under state law and Rainbow Realty should have been responsible for maintaining the properties as clean, safe and habitable.

Rainbow Realty Group, a licensed real estate company, and Hotka, a licensed real estate broker, will face a formal complaint before the Indiana Real State Commission. The commission may consider the complaint at its next meeting on December 5.

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