May 29, 2024
Fred Meisberger, an 80-year-old veteran, was evicted from his Greater Cincinnati home of 27 years after selling his property to a company that offered sale leasebacks.
A sale-leaseback allows the owner of a property to sell it to an investor-landlord, who in turn, leases the property to the owner in what is typically supposed to be a long-term arrangement.
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While this practice can help cash-strapped homeowners struggling with some of the additional costs of owning property, some companies are reportedly taking advantage of consumers by purchasing their homes for cheap and charging tenants for shorter terms or exorbitant rental rates.
"They took almost everything I own," Meisberger told NBC 24, standing outside his former home.
He’s now living behind a laundromat with his daughter, step-son and two dogs in a car he bought for $2,000, using the leftover funds from the home sale. The rest of the money went to credit card bills, attorney fees and back taxes.
“I just exhausted everything I had,” Meisberger said. “Now I’m homeless. I just don’t have no place to go.”
A predatory financial arrangement
Meisberger sold his three-bedroom home in 2022 to an unnamed company that reportedly said it would purchase the property at a competitive price and relieve him of expenses, like property taxes, insurance and upkeep, while allowing Meisberger to continue living there for as long as he wished.
It turns out that the company bought Meisberger’s home for $147,500 — even though Zillow estimated its value at $212,000 — and kept six months worth of rent. Meisberger said after six months, the company started jacking up the rent until he couldn’t afford it anymore.
“It’s really hard,” Meisberger said. “It breaks my heart to think that I got myself in this situation. I don’t know how I did it, but I did it.”
Meisberger and his family aren’t the only people who were impacted by the sale — he had an apartment on his property that he was renting to a couple until they stopped making their monthly payments a year ago. Meisberger allowed them to continue living there since he didn’t want them to be homeless, but now they’re living on the streets, too.
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The sale-leaseback company, which declined an interview with NBC 24, said its operations comply with Ohio law.
But Russel Morgan, a real estate attorney from Morgan Legal Group, says some sale-leaseback companies are creating predatory arrangements by offering six-month terms instead of the standard 15-, 20- or 30-year terms.
"They're targeting the elderly community," Morgan said.
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Exploiting ‘house-rich, cash-poor’ consumers
In December 2023, sale-leaseback company EasyKnock was accused of violating Massachusetts’ consumer protection landlord-tenant laws and exploiting “house-rich, cash-poor” consumers.
The Massachusetts Attorney General’s office said in a news release that its investigation found that EasyKnock “engaged in an unfair and deceptive equity-skimming scheme that involved purchasing the homes of cash-strapped consumers at bargain-basement prices and then renting them back to the consumers, at times for unfair rents.”
According to HousingWire, EasyKnock denied the allegations but entered into a settlement agreement to permanently end its sale-leaseback solution in Massachusetts, pay $200,000 to the state and return “tens of thousands of dollars of improperly held funds” to consumers.
It also agreed to make some changes to its business practices, such as reducing rents for some existing tenants and complying with landlord-tenant laws.
It’s crucial that homeowners do their research, read the fine print and remain cautious when entering a sale-leaseback arrangement, just like they would any other financial agreement. Morgan recommended hiring an attorney to represent you if you are going to do a sale leaseback on your home.
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Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
