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[ATG] Rainbow Realty and its owner face licensing action for rent-to-buy scheme
Start Date: 11/19/2012 All Day
End Date: 11/19/2012
Entry Description

INDIANAPOLIS – Indiana Attorney General Greg Zoeller’s office filed a complaint against the real estate license of James R. Hotka and his Indianapolis based company Rainbow Realty Group, Inc. for allegedly using a rent-to-buy scheme to skirt the state’s landlord tenant law.

The company advertises “rent-to-buy fix-up homes” with small down payments to those who can’t qualify for traditional home loans. Rainbow Realty Group, a licensed real estate company, and James R. Hotka, a licensed real estate broker, face a formal complaint before the Indiana Real Estate Commission.

According to the complaint, once a customer chooses a property to purchase, the company would “quickly usher the individual through the signing of complex real estate documents.” The materials included a real estate sales disclosure, finalized truth-in-lending disclosure and loan amortization schedule – all of which led customers to believe they were owners of the property rather than renters.

So-called “buyers” were then responsible for all improvements to the properties which could include repairs to make the home habitable. According to the complaint, at least six Indianapolis customers who participated in Rainbow Realty’s homeownership program were later evicted for delinquent payment through small claims court. The respondents acknowledged in court they rented the property rather than sold the property on contract.

“This scheme falsely represented to customers that they were homeowners and not renters,” said Gabrielle Owens, Deputy Director of the Attorney General’s Licensing Enforcement and Homeowner Protection Unit “ As a result, the company benefitted from improvements renters made to the homes and evaded bringing the properties up to code.”

In one case, a customer saw a Rainbow Realty advertisement that stated “OWN A HOME IN 3 DAYS” and decided to purchase a home for $49,581. The individual later made repairs to the property including “rewiring a majority of the upper level, insulating a majority of the upper level, repairing the foundation, repairing the plumbing, installing new flooring on the upper level and replacing the water heater.” Once the individual was late on his monthly payment, the company filed a Notice of Claim for Possession of Real Estate against him in Marion County Small Claims Court and he was later evicted.

According to the complaint, the company required rent-to-buy customers to sign a document which functions as a waiver of landlord tenant law. Under Indiana law, waivers are not permitted and Rainbow Realty would have been required to maintain the property as safe, clean and habitable.

Owens said the Commission will consider the complaint and determine what, if any, disciplinary action will be taken. The next time the Real Estate Commission could consider the complaint would be at its next meeting set for Dec. 5.

The Attorney General’s Office offers some advice to consumers looking to buy a home including contacting legitimate nonprofit organizations and participating in a home buyer education course:

  • Consumers can contact the Indiana Housing and Community Development Authority to obtain information regarding the home buying process and free homebuyer education courses. The group also offers programs that assist Hoosiers with making down payments, getting low interest rate loans and even special programs for families that live in rural areas. For more information visit; and
  • U.S. Department of Housing and Urban Development (HUD)-approved housing counselors can provide advice on buying a home, renting, defaults, foreclosures and credit issues. Find the nearest agency at

The Attorney General’s office has authority to address landlord tenant disputes when a licensed individual is involved which could include real estate sales persons and brokers. In non-licensing related matters, consumers looking to resolve disputes with their landlords can also file a complaint with the Attorney General’s Office. Complaints can be filed by visiting or by calling 1-800-382-5516.  


Contact Information:
Name: Erin Reece
Phone: 317.232.0168
Entry Type:
Press Release
Entry Category:
  • Announcements
  • Category:
  • Government
  • Agency Name
    Attorney General

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