by Sharelle Burt
May 20, 2024
The suit filed by Minnesota’s Attorney General Keith Ellison claims Chadwick Banken violated state and federal laws, including a state law against religious discrimination.
Minnesota’s Attorney General Keith Ellison filed a lawsuit against a real estate broker that was allegedly targeting a popular Muslim community with contract-for-deed real estate deals.
In the suit filed on May 14 in Hennepin County district court, Ellison’s office claims Chadwick Banken and his six limited liability corporations violated state and federal laws, including a state law against religious discrimination. He is accused of using the transaction type to sell homes at higher prices than valued and issuing worse terms to Muslim buyers. Authorities described the practice as “predatory and deceptive” and Ellison said Banken isn’t the only one issuing contract-for-deed deals.
However, the lawsuit is about sending a message to others. “He’s not the only one, but he’s one of the worst that I’ve seen,” Ellison said. “When people can’t pay back, they’re out of their house, and they’re out of their money. I can’t think of anything more financially devastating to a family than that.”
An investigation into the deals started in 2022 after a rise in contract-for-deed home sales, particularly in the Somali community. Buyers would avoid paying or profiting from interest due to their religious principles, and investors would offer deals as an “interest-free” opportunity to purchase a house. But victims said they signed contracts knowing they didn’t exactly understand, and wouldn’t be able to pay the loans off.
The suit claimed Banken would use inflated home prices, higher-than-normal down payments, and six-figure balloon payments due at the end of short contracts as a way to push buyers into default.
In the end, Banken would be able to gain ownership of the property.
Trucker Abdinoor Igal purchased a home from the defendant in 2022 in the suburban neighborhood of Lakeville. He is listed in the suit as “purchaser 2.” Igal had to leave his home in winter 2023 after making close to $170,000 in payments. The arrangements forced him to have to sleep in his truck for months after he had to send his wife and children back to Kenya in Africa. Excited about the legal action, Igal said, “I can’t even believe how I’m feeling.”
Banken has allegedly sold hundreds of homes in contracts-for-deed deals to victims like Igal over the past six years. The suit lists one of Banken’s LLCs, Slow Flip LLC, as one of the company’s where buyers would submit high down payments and agree to large monthly installments that would lead to default.
In an email from Banken’s business to a real estate agent, the ideal buyers are described as buyers with “low credit scores” or a “recent bankruptcy/foreclosure.” He also is accused of insisting buyers enter contracts using business names, to create a false impression in court that it was commercial tenants being evicted. Contracts under Banken failed to list the true cost of the homes or the balloon payments — a violation of the Truth In Lending Act requirements.
The attorney general is encouraging buyers to reach out to his office if they feel they’re in a contract-for-deed deal, as there may be opportunities for restitution in the future.
Minnesota is known for being a hot spot for contract-for-deed deals. Despite the high risk, county governments in the state recorded 47,524 land contracts in the state, the fourth highest in the country, between 2005 and 2022, according to Pew Trusts. Three in four contracts-for-deed were used to purchase homes, while the rest listed agricultural or commercial properties.
The investigation prompted both Republican and Democratic lawmakers to introduce the Preserving Pathways to Homeownership Act of 2024 in February 2024 that will require states to implement laws providing additional protections for home buyers, with the goal of minimizing exploitative seller behavior.
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