Minnesota Sues Home Seller for Alleged Predatory Practices

The Minnesota attorney general’s office has filed a lawsuit against a home seller for what it calls ‘predatory and deceptive’ real estate practices. The lawsuit alleges that Chadwick Banken and his six limited liability corporations violated state and federal laws by overcharging East African Muslim buyers through contract-for-deed transactions.

Attorney General Keith Ellison highlighted the gravity of the issue, saying, ‘When people can’t pay back, they’re out of their house, and they’re out of their money.’ The lawsuit, which follows a 2022 investigation by ProPublica and Sahan Journal, particularly targets Banken’s alleged exploitation of the contract-for-deed market in Minnesota’s Somali community.

Many buyers in the East African Muslim community are targeted because they avoid interest payments due to religious beliefs. Yet, they find themselves in problematic contracts they don’t fully understand. The lawsuit claims Banken inflated prices, required high down payments, and used balloon payments to push buyers into default while retaining ownership.

“I can’t even believe how I’m feeling,” said Abdinoor Igal, a buyer who had to walk away from his home after substantial payments.

State legislation aiming to rewrite contract-for-deed laws seeks to address these practices by offering new protections and ways to recover from such deals. Banken, reportedly having sold hundreds of homes using contracts-for-deed in recent years, is under scrutiny for his business practices.

The lawsuit details tactics used by Banken, including targeting individuals with low credit scores and misrepresenting them as commercial tenants in court. Contracts allegedly included undisclosed costs and balloon payments, violating federal lending laws. Muslim buyers faced higher costs across all payment aspects.

Attorney General Ellison urges affected buyers to contact his office, suggesting future restitution may be possible. Abdinoor Igal and others in similar situations continue to feel the impact, working to rebuild their lives.