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AG’s Office Reaches Resolution With Real Estate Companies That Orchestrated Lease-To-Own Scam  

BOSTONTwo for-profit real estate companies and their owner will pay $60,000 and no longer operate in Massachusetts to resolve a lawsuit brought by the Attorney General’s Office alleging a “lease-to-own” scam that unfairly and deceptively lured low-income Massachusetts consumers into real estate agreements for distressed homes they couldn’t afford.

The consent judgment, entered in Suffolk Superior Court, alleges that, since 2016, AngleFund, Inc., and DTH-REO, Inc., under the direction of owner David Buttross, purchased multiple distressed, previously foreclosed properties across Massachusetts and leased them to vulnerable consumers under “lease-to-own” or “contract for deed” arrangements. Consumers were given the option to purchase the property outright later but had little chance of being able to afford ownership of the homes. Most of these properties had significant sanitary code violations and some were deemed unfit for habitation and had been condemned by the properties’ respective towns. AngleFund and DTH continued to lease these properties in spite of their conditions.

“These companies created immense financial and emotional hardships for hopeful homebuyers in Massachusetts,” said AG Healey. “We are very pleased to secure relief for the families affected, including providing an opportunity for home ownership, and stop these companies from doing business in Massachusetts again.”

The AG’s Office began its investigation in 2017 after the AG’s Neighborhood Renewal Division identified a condemned property in Avon that had been previously leased to tenants by AngleFund and DTH. The investigation further revealed at least 13 properties owned by the companies in Massachusetts, including homes in Avon, Charlemont, Fitchburg, Lakeville, North Adams, Springfield, Winchendon, and Worcester. According to the AG’s Office, the companies typically sought out prospective buyers with low income or poor credit.

The AG’s Office alleges that, once signed onto to the leasing contracts, the costs for repairs and maintenance shifted from the landlordin this case AngleFund or DTHto the tenant, requiring tenants to retain sole responsibility for pulling any necessary permits needed for maintaining upkeep and restoration of the property. Before leasing the properties, AngleFund and DTH allegedly did not disclose to tenants the severe conditions of the homes, or that some were even considered unfit for habitation.

In Massachusetts, offering a residential property for rent or to “lease-to-own” that is unfit for habitation and failing to disclose to a prospective tenant the existence of any condition that could result in a violation, is prohibited by the AG’s Landlord-Tenant Regulations.

According to the AG’s complaint, AngleFund and DTH also allowed for tenants to convert their “contract for deed” arrangements to mortgages and offered seller-financing to tenants. However, both companies failed to provide the proper disclosures to buyers under state and federal law and failed to perform an analysis of a borrower’s ability to pay, violating the Attorney General’s Mortgage Lender Regulations, federal regulations, as well as other Massachusetts statutes intended to protect consumers.

Under the terms of the AG’s settlement, AngleFund and DTH will be required to pay $60,000 in restitution to the consumers harmed. As a result of a court order obtained by the AG’s Office, AngleFund and DTH will also no longer be allowed to purchase additional properties or originate new mortgages in Massachusetts and have been banned from doing business in the state. Tenants will also be given the option of full ownership of their properties from AngleFund, and the company has agreed to pay any outstanding property taxes or fees in connection with the properties prior to the transferring of the deed.  

This case was handled by Assistant Attorney General Tara Ruttle and Division Chief Amber Villa of the AG’s Neighborhood Renewal Division, and Division Chief Shennan Kavanagh of the AG’s Consumer Protection Division, with the assistance of Investigator Ciara Tran from the AG’s Civil Investigations Division

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