This article was underwritten in part by the Mickey Flacks Journalism Fund for Social Justice, a proud, innovative supporter of local news. To make a contribution go to sbcan.org/journalism_fund.
The realty company HomeOptions will pay more than $403,000 in compensation to 51 homeowners it allegedly misled in a predatory scheme. That’s according to California Attorney General Rob Bonta, who announced the settlement last Friday. Five of the 574 homeowners impacted statewide were from Santa Barbara, according to the county district attorney’s office.
Bonta partnered with Santa Barbara District Attorney John Savrnoch, as well as Napa County District Attorney Allison Haley in investigating HomeOptions starting in the fall of 2022.
“Homeowners are entitled to be safe in their homes and not fall prey to scams intended to extract their home equity,” said Savrnoch in a press release. “This settlement rightly provides full restitution to all victims and prevents HomeOptions and its CEO from engaging in these practices again.”
HomeOptions, which was formed in 2020 by businessman Kevin Li, promised “cash in homeowner’s pockets” — a few hundred to a few thousand dollars — for the right to list the owner’s property if and when they decided to sell. That agreement was set to last 20 years. In a 2022 interview posted on the website Medium, Li said the company was unique in that it “[gave] people money.”
Court documents allege that HomeOptions misrepresented the upfront payment as “free money” while knowing that most homeowners would have to repay that money and much more. It states the company-imposed liens, or legal claims, on properties while misleading customers. Because of these liens, customers could not sell their property or take out a home loan without the defendant’s permission. To remove the lien, customers had to pay a breach fee (6 percent of the home’s value) or early termination fee (3 percent of the home’s value).
The company also allegedly violated several laws, including illegally telemarketing to people on the National Do Not Call registry, and violating the California Real Estate Law by not including required information in marketing materials, such as the company’s license number.
As part of the settlement, HomeOptions will have to remove all liens, void all contracts, and repay homeowners the fees it illegally collected from them. It also faces $170,000 in legal penalties — about $57,000 of which will go to the Santa Barbara District Attorney’s office.
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