In March, Jennifer O’Neal McLaughlin and her husband moved into a four-bedroom, red brick home in Flower Mound, a Denton County suburb.
They planned to buy the house with financing from its previous owner – property management company Kamy Investments, which asked for big up-front fees from the McLaughlins, in part because of problems with their credit. But they had the cash to do it, since they’d just sold their family farm.
The day after moving in, the problems started. First it was a leak that gushed water from the second story into the foyer. Then a plumber with questionable qualifications only made the problem worse. Then the McLaughlins discovered that neither the oven nor the first-story toilet worked correctly.
A recent investigation by the Denton Record-Chronicle shows that the McLaughlins’ story is not unique. Amber Gaudet, housing reporter for the Chronicle, spoke to the Texas Standard about her reporting on a local landlord.
This transcript has been edited lightly for clarity:
Texas Standard: You spoke with a number of tenants about issues they’d had with this particular property management company. Each of these tenants had their own stories, of course. But what were some of the common themes that you heard from their experiences?
Amber Gaudet: What many of them told is that they responded to an ad for an owner-financed home. You know, their families were interested in home ownership, but because of poor credit or other reasons, they weren’t in a position to secure a traditional home loan. So they ended up putting down large deposits for these properties, upwards of $10,000, which they were told was to secure the option to purchase. But what they ended up signing was a standard three-year lease.
And then they discovered quickly after signing that, you know, the homes had some kind of major structural issues. In one of the worst cases, a family put down $20,000 for a home and discovered during an inspection that the roof was basically collapsing; the floors were rotten from water damage; it had mold. And they had, you know, three young children, including an infant, at the time.
Several of these homes had already been cited for code violations, is that right?
Yes. So in Denton, where the company is based, code enforcement recorded more than 100 violations across 27 properties since 2019. But most of those were for external violations because inspections on rentals aren’t required here in the city of Denton. So a lot of the homes actually haven’t been inspected by the city. But in cases where they were inspected, maybe because of a report by a tenant, they did find significant violations.
One home that comes to mind that we talk about in the story, code officials cited faulty electrical wiring, broken air conditioning unit, electrical and plumbing work being done without permits. And then in a nearby city, Justin, that does require rentals to be inspected and permitted, you know, an inspection of a property a couple of months ago owned by the company had failed for damage and exposed wiring, rotten siding, all kinds of issues. So in cases where inspections are done, major violations are being found. But it seems to be that in most cities in North Texas, these rentals just aren’t being inspected as a rule before tenants sign leases.
I want to get back to the property manager for particular properties that you are focused on by this management company. What did they have to say about the allegations?
The company that we received so many complaints about is Kamy Investments. They’re based here in Denton, and the property manager is Khosrow Sadeghian, and he handles most of the rental contracts for that company. So the landlord told us, in fact, you know, he’s a good landlord and that essentially because the company gives chances to people with poor credit or prior evictions, that some of those tenants just turn out to be bad apples and that they are out to make the company look bad when they get evicted.
He denies a lot of the allegations. He points to tenants as the problem. For instance, a few tenants told us that they stopped paying rent as a way to try to force the company to make repairs. But unfortunately, in Texas, you have to be current on your rent for the landlord to be obligated to make repairs. So in many cases, that would backfire, and the company would file for eviction. And the landlord also says that as far as large deposits go, those are required depending on how bad a tenant’s history is, and that he’s not promising them any ownership rights or owner finance agreement, even if they’re putting more than $10,000 down.
But wasn’t that what the initial advertisement said?
That’s what many of the tenants say they responded to, is an ad for owner finance.
What about legal action here? Has there been any taken against this landlord or the company?
There have been a lot of lawsuits over the years. Some have been successful, but others have been either thrown out for technicalities or the tenants just haven’t come out on top because they don’t have the evidence they need. You know, maybe they didn’t call the city to get an inspection or perhaps just didn’t know what their rights were as a tenant. So from what we can tell, it’s been a very mixed bag.
But there have been some significant wins for tenants over the years, and some of the cases are still going through the legal process. But what former tenants tell us is the major frustration for them seems to be that the company is still in operation. So even the legal victories that have been won, they feel haven’t been as impactful as they want. They really want to see the property management company shut down.