Monday, September 15, 2008

Lease-to-own housing plan leaves renters cold

Michelle Smith and Andrew Bryan had already signed away their life savings in a Tim Hortons parking lot when they learned they were being evicted from the very home they thought they had been buying for the past two years.

"We had put money down," said Smith, a 34-year-old self-employed cleaner who had entered into a lease-to-own agreement with Solution Homes, a company that says it's "dedicated to helping people find the home of their dreams."

"We gave them everything we had. Then we got the notice," she said of the eviction papers that showed up in the mailbox, sent by the real owners of the Scarborough home.
Three months later, Smith, her husband Bryan and their 11-year-old son were out of house and home.

"We were shocked. How could this have happened?"
Here's how: Solution Homes never owned the property it had been selling to Smith and Bryan – another couple did.

A Star investigation found that Solution Homes, for the past two years, leased homes from desperate sellers and, pretending to be the owner, entered into a lease-to-own contract with people like Smith and Bryan, who can afford a deposit but cannot really afford the house.

Solution Homes collected more than $50,000 from Smith and Bryan in rent and deposits toward the purchase of the home, but forwarded only about two-thirds of the money to the actual homeowners. None of the deposits went to the actual owners and, after 18 months, Solution Homes continued to accept rent, but stopped paying the real homeowners.

The result: Solution Homes makes between $5,000 and $20,000 per deal. Everyone else loses out.

"We went to the police and what they said to us is this may be a civil matter," said Smith, who was evicted from her home July 31.

Discouraged, she began posting warnings on the Internet about Solution Homes, advising others to stay away. Suddenly she realized she wasn't alone. At least three other renters in the GTA approached Smith with similar stories.

Both Toronto and Durham Region police have been contacted by Solution Homes' clients, but police with both forces say the company is not currently under investigation. Meanwhile, the company's director, Olumuyiwa Fadare, who goes by the name David, says the complainants have no one to blame but themselves.

"Everything I'm doing is legal," Fadare said when approached by the Star while collecting a lease payment in the Tim Hortons parking lot on the corner of Commercial Rd. and Victoria Park Ave.
"It's not my fault if they can't get a mortgage," he said, adding none of his clients, including Smith and Bryan, seemed serious about purchasing the home they had been leasing-to-own.

Smith and Bryan had been renting homes for years. They wanted to buy, but as self-employed cleaners, they couldn't.

"It just wasn't happening. It's hard going into banks and getting a mortgage when you're self-employed in our line of work. We didn't have any options," she says.

Then she saw a flyer posted on a lamppost in the city's east end that read: "Don't qualify for a mortgage? Lease-to-own your own home."

She called the number listed on the flyer and got connected with Solution Homes.

A month later, she signed more than $7,000, all the money she and her husband could muster, to Solution Homes as a deposit for a three-bedroom semi-detached on Flatfield Terrace in Scarborough and entered into an "Agreement for the sale of real estate" with Fadare, who represented himself on the contract as the seller of the home.

Property records show that home belongs to Theresa and Annik Pierre and never belonged to Fadare or Solution Homes.

"We actually thought David owned the property. He had signed himself as the seller. We didn't actually know that (Theresa Pierre) owned the property until she started coming over to get the mail," said Smith.

Every month for a year and a half, Smith and Bryan paid Fadare $1,495 as part of their lease-to-own agreement: $1,200 of that was for rent, while $200 was supposed to be added to their $7,000 deposit and go toward their purchase of the house. The other $95 was to go to Solution Homes.

"Things seemed to be going fine. We were working toward getting a mortgage. Making our monthly deposits," said Smith.

Then they got a notice from Jeffrey Shek, a lawyer representing the actual homeowners, Annik and Theresa Pierre.

Smith's monthly payments hadn't been reaching the homeowners and they were running the risk of being evicted.

"That's when things started to go bad," said Smith, who looked back at the receipts she'd been given by Fadare and noticed there was no indication who was receiving the money she'd been handing over.

The Pierres say they were not aware that Fadare had actually collected a deposit on the house. Nor were they aware he had been charging a monthly premium for the purchase of the house.
"We had advertised the house for rent in the newspaper and (Fadare) answered the ad," said Theresa Pierre. "He offered to get renters for the place, said they'd keep it nice and, eventually, they would be able to buy it.

"We thought he was an agent for these people. We didn't know he had collected all that money."
After Fadare stopped forwarding the rent to the Pierres, their lawyer, Shek, began speaking directly to Smith, advising her to deal directly with the homeowners if they wanted to lease-to-own the house.

The problem was, Fadare had their money.

"Suddenly, he's telling me that the money is non-refundable. We lost the entire deposit. There was no way we could purchase the home," said Smith.

In total, Smith and Bryan have documented proof they paid $12,800 to Solution Homes as a deposit on the house. The Pierres say they never saw a cent of it.

Smith and Bryan's story is the same as that of Kathy Alexander, a 48-year-old single mother and restaurateur from Whitby who paid Fadare $8,000 in the same Scarborough Tim Hortons parking lot before moving into a home owned by Theresa Prince. Prince says she had no idea Fadare had signed an agreement to sell her home and says she never saw nor knew of the $8,000. Alexander, who had been making payments on the house past the date when Fadare stopped forwarding her rent to Prince, is now being evicted.

Michelle Darling, a 41-year-old single mother, and her friend Brenda Bixby paid Fadare a combined $17,500 toward a down payment on a Pickering home owned by Christian Kevin. Kevin says he didn't even know that money had been collected for the sale of the house.
"I never got that money. Nobody gave him the right to collect $17,500," said Kevin.
But according to Fadare, "The owner gives the property to me. The owner signs the paperwork and gives me the right to do this."

Fadare, who acknowledges he is not a registered real estate agent or lawyer, says he's an investor and says he is within his rights to accept the "option deposits" on the homes without notifying the landowners.

He offered to supply that paperwork to the Star on Sept. 2 but has yet to do so, and has not responded to any of the Star's subsequent attempts to reach him.

Fadare declined to comment on where the alleged funds – thousands of dollars in option deposits handed over to him in the form of cash, certified cheques and bank drafts – have gone.

"I need to speak to my lawyer before I can answer that," Fadare said, adding he only ever wanted to help his clients get the homes they wanted and never wanted any of them evicted.
The company was registered as a company in September 2006. It does not have an office. The address on the company registration is an Eglinton Ave. E. apartment (although Fadare insists it is actually operating out of a post office box in Eglinton Square). According to corporate records, Fadare is the company's director, Michelle Frankson its chief administrative officer and Uchechi "Michael" Kanu its chief operating officer.

When reached by telephone, Kanu told the Star he left Solution Homes for "personal reasons" in January 2008 and that the company was dissolved at that time.

Corporate record searches indicate the company is still active.

In the lease-to-own contracts investigated by the Star, renters said they handed over a total of $32,500 as deposits on the homes they wanted to buy.

Kanu says Solution Homes didn't keep track of the money because their clients kept opting to pay in cash. Later he said the company had its bank account closed some time in 2007 because their clients kept bouncing cheques and the account had no money in it.
Kanu and Fadare both declined to say how many contracts Solution Homes has with buyers in the GTA.

The Star could not locate Frankson for comment.
In the meantime, Bryan, Darling, Bixby and Alexander all seem to be asking the same question as Smith: "Where's our money, David?"

Brett Popplewell can be reached at

David Pylyp; I sincerely feel for the people involved here that were duped by the actions of another. In a city where the dream of owning your own home is rapidly disappearing, due to high down payment demands and stringent credit mortgage approvals, some folks with families who only want to have a home to call their own, are susceptible to this type of scam. I cannot stress enough, using professional people when purchasing or selling a home.

Would Buyers Agency have helped these people?

Caveat Emptor - Let the Buyer Beware


bettyb said...

This is why it is so important to use a professional Realtor regarding this situation. Look what can happen! Know what's going on before you sign at a Tim's parking lot. A contract is a contract...

Jason Keller said...

I can see why this would upset a lot of renters. They are definitely getting the short end of the deal. Leasing to own helps people get into homes, which helps the community in the long run.

Aaron |