by Sharelle Burt
May 20, 2024
The lawsuit filed by Minnesota Attorney General Keith Ellison alleges that Chadwick Banken violated state and federal laws, including state laws prohibiting religious discrimination.
Minnesota Attorney General Keith Ellison has filed a lawsuit against a real estate brokerage firm for conducting deed real estate transactions targeting a popular Muslim community.
In a lawsuit filed May 14 in Hennepin County District Court, Ellison's office alleges that Chadwick Banken and his six limited liability corporations comply with state and federal laws, including state laws prohibiting religious discrimination. He claimed that there was a violation. He is accused of using this transaction method to sell homes at higher prices than their appraised value and then offering worse terms to Muslim buyers. Authorities have described the practice as “predatory and deceptive,” and Ellison said Banken is not alone in trading by deed.
But this lawsuit aims to send a message to others. “He's not alone, but he's one of the worst people I've ever seen,” Ellison said. “If you can't pay it back, people lose their homes and they don't have any money. I can't think of anything more financially devastating for a family than that.”
An investigation into the transaction was launched in 2022 following an increase in deed home sales, particularly in the Somali community. Buyers may avoid interest payments or profits due to religious principles, and investors may present the deal as an “interest-free” opportunity to purchase a home. But the victims said they did not understand exactly what happened and signed the contract knowing they would not be able to repay the loan.
The complaint alleges that Banken uses inflated home prices, higher-than-usual down payments, and six-figure balloon payments at the end of short-term contracts to force buyers into default.
Banken could eventually take ownership of the property.
Abdinour Yigal, a truck driver, purchased the home in suburban Lakeville from the defendant in 2022. He is listed in the complaint as “Purchaser 2.” After paying nearly $170,000, Igal had to move out in the winter of 2023. This arrangement meant he had to sleep in his truck for several months after having to send his wife and children back to Kenya, Africa. Igal was excited about his legal action and said he “can't even believe how I feel.”
Banken allegedly sold hundreds of homes in deed transactions to victims like Yigal over the past six years. The lawsuit names one of Banken's LLCs, Slow Flip LLC, as one of the companies where buyers submit large down payments and agree to high monthly installments that lead to default.
An email from Banken's business to real estate agents describes the ideal buyer as someone with a “low credit score” or someone who “recently went through bankruptcy/foreclosure.” He is also accused of requiring buyers to enter into contracts using the company's name to create a false impression in court that commercial tenants were being evicted. Banken's contract does not state the actual price of the home or the balloon payment amount, violating the requirements of the Truth in Lending Act.
The Attorney General is encouraging buyers to talk to buyers if they feel they have entered into a deed sale agreement, as there may be an opportunity for compensation in the future.
Minnesota is known as a hotspot for deed transactions. Despite the high risks, county governments across the state recorded 47,524 land deals between 2005 and 2022, the fourth-highest number in the nation. pew trust. Three of his four deed contracts were for residential purchases, and the rest listed agricultural or commercial properties.
The investigation led both Republican and Democratic lawmakers to introduce the Preserving Homeownership Pathways Act of 2024 in February, which would require states to enact laws providing additional protections for homebuyers with the goal of minimizing predatory seller behavior.
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