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Articles Posted in Real Estate

Deceptive Consumer Sales ActIn a recent post, we discussed Rainbow Realty Group Inc., v. Carter, in which the Indiana Supreme Court considered whether a particular “rent-to-buy contract” was a land contract or a rental agreement. The court held that the transaction was a rental agreement, notwithstanding language in the contract that the transaction was a purchase and not a lease. Accordingly, the property was subject to the statutory requirement that a dwelling unit subject to a rental agreement must be in clean, safe, habitable condition. Because the house was clearly uninhabitable, Rainbow Realty violated that requirement.

Next, the Court considered the claim of the Carters that Rainbow Realty’s unsuccessful attempt to disclaim the statutory warranty of a safe, clean, habitable dwelling violated the Indiana Deceptive Consumer Sales Act (or “DCSA”), Ind. Code ch. 24‑5‑0.5. In particular, the Carters relied on Ind. Code § 24‑5‑0.5‑3(a)(8)*, which (at the time the rent-to-buy contract was signed) provided that a supplier’s representation that a “consumer transaction involves or does not involve a warranty, a disclaimer of warranties, or other rights, remedies, or obligations, if the representation is false and if the supplier knows or should reasonably know that the representation is false” is a deceptive act actionable under Ind. Code § 24‑5‑0.5‑4(a), which provides a private cause of action for consumers who are the victims of deceptive acts.  The court held that the tenants had no DCSA claim, for no less than three distinct reasons.

First, a false representation that Subsection 3(b)(8) defines a deceptive act as including a false representation that a transaction does or does not involve a warranty only if the supplier (i.e., Rainbow Realty) knows that its representation is false. In this case, the Supreme Court held that Rainbow Realty did not know its representation was false and, therefore, did not commit a deceptive act. Indeed the Supreme Court pointed to the fact that three members of the Court of Appeals agreed that the transaction was a land contract and, therefore, that Rainbow Realty’s representation of the absence of a warranty of habitability was, in fact, true. In essence, the Supreme Court held that no one could have known whether the representation was false until the court held that it was false.

If you’re as old as I am, you might remember the television commercial in which twin sisters argued about the nature of Certs.  One said, “Certs is a candy mint,” iStock-947147792-300x200and her sister countered, “Certs is a breath mint.”  A booming male voice over said, “Stop. You’re both right. Certs is a candy mint and a breath mint. Certs is two, two, two mints in one.”*

In Rainbow Realty Group, Inc. v. Carter, the Indiana Supreme Court  encountered a real estate transaction in which one litigant said, “It’s a land contract,” and the other countered, “It’s a rental agreement.” Unlike the twins in the Certs commercial, only one was right.

Rainbow was a property manager for a trust that owned multiple houses for sale or rent in Marion County, Indiana. It offered four different types of transactions to its customers.  The first three were fairly standard:

A few weeks ago, we hired a contractor to do some painting at our house.  As many contractors do, he put a sign in our yard while he was there. He didn’t ask us for permission, but if he had we would have given it to him.  A few days later, in fact after the painter and his sign were gone, we received a nastygram from our homeowner’s association informing us that our covenants prohibit any signs in the yard other than a sign advertising the property for sale. I noticed that there is no exception for political signs, and I wondered why we had not received a nastygram a few years ago when we put a candidate’s sign in our yard before an election.

I now know the answer to that, thanks to a recent Face Book post from my friend, Greg Purvis, an attorney at Spangler, Jennings, & Dougherty, P.C.

Greg pointed out that Indiana law, specifically Ind. Code § 32‑21‑13‑4,* prohibits homeowners’ associations from adopting or enforcing rules prohibiting certain types of signs on a homeowner’s property from thirty days before an election until five days after an election. It applies only to signs that meet one or more of the following descriptions:

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