A class action lawsuit has been filed against the Grand Rapids-based company, Innovative Apartment Group, for allegedly operating a subleasing “scheme” in Washtenaw County. The lawsuit, lodged on January 12, 2024, in Washtenaw County Circuit Court, claims that the company misled renters by promising assistance with credit repair while engaging in predatory subleasing practices.
According to the complaint from the Washtenaw County prosecutor’s office, Innovative Apartment Group purported to help renters with low credit scores secure housing. Instead, the company allegedly acted as “extractive middlemen,” using “confusing and deceptive organization and tactics.” The lawsuit contends that the group subleased apartments and homes to individuals with low credit but who could afford to make their payments. However, these subleases reportedly included hidden fees and excessive charges.
Many tenants, as cited in the lawsuit, faced monthly payments that were approximately $300 higher than the market rent. Additionally, they were burdened with a “risk fee” that averaged around $1,000. This financial strain was compounded by the company’s failure to remit payments to landlords, leading to eviction notices for tenants who believed they were fulfilling their financial obligations.
Eli Savit, prosecutor for Washtenaw County, expressed concern over the situation, stating, “Every renter in Michigan deserves to be treated fairly. Companies and landlords who take advantage of the housing crisis and unfair tenant screening practices to mislead renters are in violation of Michigan law.”
One notable case involved a single mother from Clinton Township, who allegedly paid around $3,000 above the market rent in additional surcharges and fees. After receiving an eviction notice due to the Innovative Apartment Group’s non-payment to her landlord, she managed to negotiate directly with the landlord, allowing her to remain in her residence.
The Center for Civil Justice and the National Consumer Law Center are representing the tenants in this case. Jennifer Wagner, a senior attorney at the National Consumer Law Center, remarked, “Despite promising to help Michigan families obtain stable housing, Innovative Apartment Group exploits the very families they claim to be helping.” She added that renters often leave these agreements with diminished finances and lower credit scores than they had prior to entering into contracts with the company.
The lawsuit alleges violations of several Michigan laws, including the Michigan Consumer Protection Act, the Credit Services Protection Act, the Regulation of Collection Practices Act, and the Occupational Code. At this time, court records have not indicated when a hearing regarding the case will take place.
As this situation develops, observers are keenly watching how the legal proceedings will unfold and whether they will lead to significant changes in the practices of rental companies within the state.
