Controversial sale-leaseback proptech EasyKnock shutters
The company had been mired in lawsuits from customers in Texas and Michigan and had also received scrutiny from different state attorneys general.
Key points:
- EasyKnock abruptly closed last week, leaving a short message on its website to announce the move.
- Lawsuits against the New York-based company had been piling up in Texas, where over two dozen people had sued the company.
- However, EasyKnock did recently score a legal win in one of the cases and was awarded $153,000 in past-due rent and legal fees.
The sale-leaseback company EasyKnock abruptly shuttered last week, the company announced on its website after being mired in high-profile legal battles with customers and a growing number of investigations or actions taken by government regulators.
The New York-based company's website has been replaced by a short statement announcing the closing is all that remains of the public-facing proptech.
"After many years of serving consumers, EasyKnock has closed its doors. We are deeply grateful for the trust placed in us to be part of the financial journey of so many. While EasyKnock may no longer be around, arrangements have been made to ensure continued services for our customers," the statement says.
Lawsuits had piled up
NPR, which first reported on the company's closure, had also published an investigation over the summer highlighting lawsuits from "more than two dozen people" against EasyKnock for alleged deceptive business practices related to its sale-leaseback program where the company provides homeowners a cash payout and then rents the property back to the previous owner.
However, most homeowners were unable to purchase their property back from EasyKnock, the report found, while several homeowners who participated in sale-leaseback deals with the company said that they lost out on anticipated equity gains because homes sold for less than what EasyKnock purchased them for.
But in October, EasyKnock scored a legal win in an arbitration ruling that awarded the company $153,000 in a case brought by Dallas homeowners who alleged the company attempted to defraud them out of their home via a "disguised loan." The court sided with EasyKnock, which claimed that the Texas couple owed $147,723.98 in past due rent as well as $6,106.00 in legal fees.
Increasing pressure from states
Still, EasyKnock's business model remained controversial and had drawn scrutiny from a number of states. Last December, EasyKnock entered into a $200,000 settlement with the Massachusetts Attorney General and agreed to discontinue its sale-leaseback program in the state. In May, the Michigan Attorney General announced an investigation into the company for deceptive business practices, and the next month, a handful of Michigan residents filed a lawsuit against EasyKnock.
Earlier in the year, EasyKnock had announced that it had secured $28 million in new funding. However, the embattled company has formally ceased doing new business as of last week.