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Rainbow Realty Group, Inc. v. Carter

Supreme Court of Indiana

September 13, 2019

Rainbow Realty Group, Inc., et al., Appellants/Cross-Appellees,
v.
Katrina Carter and Quentin Lintner, Appellees/Cross-Appellants.

          Argued: March 7, 2019

          Appeal from the Marion Superior Court, No. 49D14-1505-CC-16629 The Honorable James B. Osborn, Judge.

         On Petition to Transfer from the Indiana Court of Appeals, No. 49A02-1707-CC-1473

          ATTORNEYS FOR APPELLANTS/CROSS-APPELLEES KARL L. MULVANEY NANA QUAY-SMITH BINGHAM GREENEBAUM DOLL LLP INDIANAPOLIS, INDIANA

          ATTORNEYS FOR APPELLEES/CROSS-APPELLANTS JON LARAMORE CHERYL KOCH-MARTINEZ ADAM MUELLER INDIANA LEGAL SERVICES, INC. INDIANAPOLIS, INDIANA JOHN E. BRENGLE INDIANA LEGAL SERVICES, INC. NEW ALBANY, INDIANA

          ATTORNEYS FOR AMICUS CURIAE STATE OF INDIANA CURTIS T. HILL, JR. ATTORNEY GENERAL OF INDIANA THOMAS M. FISHER SOLICITOR GENERAL OF INDIANA INDIANAPOLIS, INDIANA JUSTIN G. HAZLETT SECTION CHIEF, CONSUMER LITIGATION INDIANAPOLIS, INDIANA STEVEN P. FRANK MICHELLE ALYEA AMANDA LEE LARA LANGENECKERT JULIA C. PAYNE DEPUTY ATTORNEYS GENERAL INDIANAPOLIS, INDIANA

          ATTORNEYS FOR AMICI CURIAE CONSOLIDATED CITY OF INDIANAPOLIS AND MARION COUNTY DONALD E. MORGAN OFFICE OF CORPORATION COUNSEL INDIANAPOLIS, INDIANA MAGGIE L. SMITH DARREN A. CRAIG FROST BROWN TODD LLC INDIANAPOLIS, INDIANA

          ATTORNEYS FOR AMICUS CURIAE INDIANA ASSOCIATION FOR COMMUNITY ECONOMIC DEVELOPMENT INC. D/B/A PROSPERITY INDIANA MAGGIE L. SMITH DARREN A. CRAIG FROST BROWN TODD LLC INDIANAPOLIS, INDIANA

          ATTORNEYS FOR AMICUS CURIAE NEIGHBORHOOD CHRISTIAN LEGAL CLINIC MAGGIE L. SMITH DARREN A. CRAIG FROST BROWN TODD LLC INDIANAPOLIS, INDIANA CHASE M. HALLER NEIGHBORHOOD CHRISTIAN LEGAL CLINIC INDIANAPOLIS, INDIANA

          ATTORNEY FOR AMICI CURIAE NOTRE DAME CLINICAL LAW CENTER, AND NATIONAL CONSUMER LAW CENTER JUDITH FOX NOTRE DAME CLINICAL LAW CENTER SOUTH BEND, INDIANA

          ATTORNEY FOR AMICUS CURIAE FAIR HOUSING CENTER OF CENTRAL INDIANA JAMES STRENSKI CANTRELL, STRENSKI & MEHRINGER, LLP INDIANAPOLIS, INDIANA

          OPINION

          Slaughter, Justice.

         We hold that the parties' "rent-to-buy" agreement is not a land-sale contract but a rental agreement subject to Indiana's residential landlord-tenant statutes. Plaintiffs, which own and manage the properties held in inventory, are "landlords" that violated the Statutes by delivering the disputed property in an uninhabitable condition. We affirm the trial court's judgment for the tenants and against Plaintiffs on their claim under the Statutes. On the other counts, we affirm in part, reverse in part, and remand.

         Factual and Procedural Background

         A. Rent-to-buy agreement for uninhabitable house

         Plaintiff Cress Trust owns houses in Marion County. Plaintiff Rainbow Realty Group, Inc., sells, rents, and manages these properties for Cress. The same individual serves both as president of Rainbow and as Cress's corporate trustee. Throughout this Opinion, we refer to "Plaintiffs" to denote these related parties collectively and refer to Cress and Rainbow separately as warranted to identify one party but not the other.

         Plaintiffs offer four options to customers interested in their housing stock:

• straight sale;
• straight rental;
• land contract; or
• rent-to-buy contract.

         A straight sale requires payment of the full purchase price in exchange for legal title. A straight rental offers a house in a habitable condition in exchange for monthly payments. A land contract requires a large down payment followed by monthly payments to finance the sale. And a rent-to-buy is not currently habitable and involves a lesser monthly payment than a straight rental.

          Katrina Carter and Quentin Lintner are a married couple living in Marion County. In response to an ad, the Couple contacted Plaintiffs to learn about housing options. Although Plaintiffs considered the Couple to have a poor credit history and told them their rental stock was not available, Plaintiffs concluded the Couple's $4, 000 monthly income could qualify them for Plaintiffs' rent-to-buy program. The Couple applied and paid a $100 deposit to hold a single-family house on North Oakland Avenue in Indianapolis with a purchase price of $37, 546. In May 2013, after their application was approved, the Couple signed a "Purchase Agreement (Rent to Buy Agreement)". Attachments to the Agreement included a separate declaration, a truth-in-lending disclosure, and a residential real-estate disclosure.

         Under the Agreement, Plaintiffs and the Couple agreed that the House "shall be used as a single-family private residence and for no other purpose whatsoever". The Couple agreed they were acquiring the House "as is", that it was not in livable condition, and that they would need to make it habitable before they could live in it. In addition, the Agreement said the House came with no warranties of condition or habitability, that the Couple would have to make or pay for any repairs themselves, that any improvements to the House would become a permanent part of the property, that payment was due on the first of the month, and that Plaintiffs could "evict" them for not paying on time.

         When the Couple signed the Agreement, the House was missing toilets, plumbing, electrical wiring, and door locks. All the windows were broken. There was no security to prevent break-ins. The basement stairs were in disrepair. The carpets were beyond ...


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