A mess in court could force 13 Detroit families from their homes
Published: June 30, 2014
Last week, a number of Detroit residents entered a small office in Pontiac to protest what they say was an inappropriate sale listing of homes they occupy. The office on North Perry Street houses the day-to-day operations of Midas Development Corp., a Singapore-based real estate firm that’s buying and selling Detroit properties.
There’s a simple explanation for why those Detroiters were demonstrating against the actions of the Asian firm: Midas was marketing homes — homes they live in — that it technically didn’t own. An hour later, Midas representatives had agreed to remove the listings within 24 hours.
But exactly how the residents ended up there isn’t so easy; it’s a tangled web that pits everyday Detroit residents against one Oakland County developer.
What’s certain is this: The fate of 13 families living near Detroit’s Eastern Market depends on the outcome of a lawsuit in Wayne County Circuit Court that could decide if they’re contractually linked to the deeds of their homes, or if the suburban developer can legally evict them.
“I just want my home,” says Ann Talley, one of the residents. “I just want to be able to come home at night and be at peace knowing that I have my home and that nobody’s going to come and take it from me.”
The case will likely depend on the judge’s determination if the language of the contracts those residents signed legally holds up. If anything, it shows that no one apparently knows who holds, or is entitled to, the titles of the homes. The families’ lawsuit, which was filed months after eviction notices were served, says the “plaintiffs were told they would become owners of the home, not tenants in a housing project.”
Developer Peter Barclae and his counsel argue otherwise.
Court records show what appears to have led Barclae’s tenants to sue him was a collapse in the funding his project depended on, with almost half of the federal money he anticipated never materializing due to program requirements not being met by the city of Detroit.
Barclae previously attempted to evict the residents several times, contending they were renters not entitled to purchase the home. In their complaint, the families say they were never led to believe otherwise; no matter what financial concerns plagued Barclae, they were entitled to those homes.
HOUSING DEVELOPMENT FIZZLES IN COURT
Barclae, of West Bloomfield Township, established Gratiot McDougall Homes LLC in 2006. The proposed housing development was to be built with some federal aid under the U.S. Department of Housing and Urban Development’s HOME Investment Partnership Program.
According to HUD, the HOME program “provides formula grants to states and localities that communities use — often in partnership with local nonprofit groups — to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people.”
The funds can be awarded as a grant, direct loan, or loan agreement, HUD says. Barclae sought additional financing for the project through Charter One Bank, and developed the homes for roughly $180,000 each, according to his attorney, Allen Dyer. (Using those numbers, the total investment to construct the homes was roughly $3.6 million.)
Barclae guaranteed about 58 percent of the loan from Charter One, the HUD HOME program would cover the rest, according to Dyer.
Things were looking up for the developer, as in 2006, Gratiot McDougall was awarded a $319,000 tax credit by the Michigan Economic Development Corporation. The city of Detroit was set to administer $1.4 million in HOME funds for the project under the terms of a December 2006 agreement with Barclae, “to construct 18 single-family homes for purposes of resale to qualified Home Buyers.”
For prospective first-time buyers, it seemed like a ripe opportunity: The homes were marketed in April of 2008, highlighting that some tenants may be eligible for upwards of $60,000 in down-payment assistance. It was cast as a homeownership program, a point re-emphasized in a 2008 letter to one tenant.
“This housing program is a homeownership program,” Barclae wrote in the letter dated July 15 of that year. “If you do not provide requested documents in order to obtain your mortgage on a timely basis or any actions on your part that adversely affect your credit score are grounds for terminating the lease.”
The funding from HUD hinged on Barclae’s tenants eventually obtaining a mortgage, Dyer says. That’s because “the mortgages the tenants were supposed to get were to pay off the Charter One loan with the tenants ultimately becoming the owners of each property,” he says in an email to Metro Times. Five of the properties were eventually closed on.
Barclae broke ground in the fall of 2008, and the homes were ready to be occupied the following year.
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