A federal court has given final approval to a settlement agreement between the owners of Indian Creek Mobile Home Park in Garner, N.C., and a class of tenants/home purchasers. The settlement resolves the class action challenge to the “rent-to-own” scheme perpetuated by the owners of the mobile home park. The court action, filed in October 2021 by the North Carolina Justice Center and the National Consumer Law Center against Riverstone Communities, alleged that the installment purchase contracts they provided to mobile home park residents were set up to evade consumer and tenant protections.
The lawsuit, Irma Rodriguez and Ethel Dolores Lawson v. Riverstone Communities, LLC, et al., Civil Action No. 5:21-CV-486-D (E.D.N.C.), challenged Riverstone’s business model, which treated the park residents as “purchasers” when it came to the park owner’s obligation to make repairs to the mobile homes, but as “tenants” when they wished to evict the residents without providing proper notice or other protections afforded by law. The lawsuit also alleged that Riverstone’s contracts violated North Carolina’s “Contracts for Deed” statute by failing to provide adequate information about the homes and by failing to provide residents the mandated 30-day grace period to catch up on missed payments. The lawsuit also alleged that the defendants charged improper fees to the residents.
In October 2023, the court preliminarily approved the settlement agreement. As part of the settlement, Riverstone agreed to pay $1,020,000 and to provide significant non-monetary benefits to class members. Among other things, Riverstone agreed to provide new leases to the residents and begin making necessary repairs to the homes. Riverstone will give residents information about their mobile homes to help them decide whether to purchase the home or remain in the park as a tenant.
On February 2, NC Justice Center senior attorney Kate Woomer-Deters and Stuart Rossman, of the National Consumer Law Center, appeared in court to argue in favor of the settlement. U.S. District Court Judge James C. Dever, III approved the settlement, concluding that it was fair, adequate, and reasonable. Jason Pikler, Carlene McNulty, and Sarah Laws of the NC Justice Center and Charles Delbaum from the National Consumer Law Center also worked on the lawsuit.
“Manufactured housing is an important option for low- and moderate-income families during a housing affordability crisis. For this option to be truly affordable, however, residents must be treated fairly and legally,” said Shennan Kavanagh, director of litigation at the National Consumer Law Center. “This settlement is a significant victory for the homeowners who were deceived. It puts park owners on notice that they have to conform to laws designed to protect mobile home park residents.”
“This is a great victory for our clients,” said Woomer-Deters. “The settlement holds Riverstone accountable for what we believe are serious violations of North Carolina consumer and landlord-tenant laws. A home is a major investment, and consumers deserve accurate and complete information about their home and their contract terms before entering into these types of transactions. We are pleased that the class members will be compensated generously and that they will now receive the information and protections they should have received when they first agreed to buy their homes.”
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