The city of Detroit is suing three major real estate investors the city calls “slumlords,” accusing them of an “invest and neglect” business model that leaves homes in deplorable conditions, and puts the health and safety of tenants at risk.
The city identifies the “notorious speculators and slumlords” as West Bloomfield father-and-son team of Steve and Stephen Hagerman; Michael Kelly of Grosse Pointe Woods; and Salameh Jaser of Dearborn. Together, the city says the men own more than 1,000 blighted properties throughout the city, and have amassed thousands of tickets from city building inspectors. They purchased many of their properties through Wayne County’s annual tax foreclosure auction.
“The city has taken these actions to address the number of speculators who have bought up large portfolios of real estate in Detroit without any intention of occupying or improving the properties they hold,” the city said in a statement. “To support the carrying costs of their speculating business, these slumlords rent the properties in deplorable conditions, without obeying the laws on renting, especially those concerning lead clearance, putting children at risk of lead poisoning. In many instances, these slum landlords create sham land contracts in an attempt to avoid the regulations on rental property. The lawsuit is designed to put an end to that practice.”
The lawsuits ask the court to declare the “invest and neglect” business model a public nuisance; compel the owners to maintain their properties; and “prohibit them from directly or indirectly purchasing or controlling additional properties until they come into compliance.”
The lawsuits represent a stepping up of city efforts to combat landlords who don’t comply with a city ordinance governing rental properties. Detroit strengthened its rental ordinance in 2017 to address some decrepit housing conditions across the city, with increased requirements for compliance, including lead abatement. However, many landlords haven’t complied.
Detroit Mayor Mike Duggan and Chief Public Health Inspector Denise Fair also issued a joint Declaration of Public Nuisance directed at “invest and neglect” speculators, which the city says takes effect immediately.
“The City of Detroit has a crisis; thousands of children living in the City suffer elevated blood lead levels as a result of living in properties with lead hazards,” the declaration begins. “Federal, state and local laws require property owners to take precautions to protect against childhood lead exposure. Many landlords do not comply with these laws, and the failure to abate lead hazards has created this crisis.”