EasyKnock dinged in Massachusetts sale-leaseback scheme

Proptech firm EasyKnock has entered into a settlement with the commonwealth of Massachusetts over allegations of engaging in an unlawful sale-leaseback scheme. 

EasyKnock, a proptech company that uses AI and data for real estate transactions, participated in an equity-skimming scheme, the Massachusetts Attorney General’s Office said in a press release. 

The company allegedly bought homes from financially strained consumers at low prices and then rented them back for unfair rents, violating tenant protection laws and engaging in deceptive practices.

Under the terms of the settlement, EasyKnock agreed to permanently halt its sale-leaseback business in Massachusetts. 

The company will implement changes to its practices, including the return of improperly held funds to consumers, rent reductions for some tenants, and compliance with landlord-tenant laws. EasyKnock will also make a payment of $200,000 to the commonwealth.

The attorney general’s investigation found that EasyKnock targeted consumers through online advertisements with loan-like language, failing to adequately disclose that their products required consumers to sell their homes to the company. 

The investigation also revealed deceptive tactics, including bait-and-switch maneuvers altering contract terms at the last minute to consumers’ detriment. EasyKnock violated Massachusetts landlord-tenant laws by charging excessive up-front fees and deposits, failing to consistently maintain properties, and illegally imposing repair costs on tenants. The company also charged tenants late fees before 30 days and illegally billed for water.

Proptech companies like EasyKnock, operating under an emerging business model, face increased scrutiny for potentially exploiting consumers. Attorneys general around the country have clamped down on companies engaging in alleged real estate scams.