City seeks to stop Rashaed sales to tenants
Landlord accused of strong-arming buyers
Elijah Mohammad Rashaed is trying to sell six of his Milwaukee properties that are effectively in receivership to tenants in deals that would be financed by the notorious landlord, newly filed court records show.
The bids are being opposed by both the city and by the company that was appointed by a judge to run Rashaed’s troubled real estate empire.
Rashaed has been trying to sell properties to tenants for months and has been accused of attempting to strong-arm tenants into deals they may not understand and cannot afford.
The city expects to oppose the sales, said Kail Decker, assistant city attorney. Decker said the deals would allow Rashaed to effectively collect rent and that the sale prices on some of the deals appear to be predatory.
“Tenants are very confused by the process,” Decker said. The deals would allow Rashaed to “still collect rent and have no responsibility to maintain the property. The (new) owners would be responsible for all the repairs.”
The sale price for the six north side properties are not known. Court records show the mortgage amounts range from $47,500 to $67,800.
The amounts being financed by Rashaed entities exceed the assessed values in five of the six deals. In two of the cases, the amount being financed is nearly double the assessed value, city records show.
Rashaed is also asking for court permission to sell two other properties to tenants — though those would be financed by others — and several other properties that would be sold to companies.
Decker and others see the sales as Rashaed’s latest attempt to keep his hands in — and collect revenue from — his massive central city real estate operation. Following a yearlong court fight, a Milwaukee County Circuit Court judge last month stripped Rashaed of control of his more than 160 rental properties.
Judge Glenn Yamahiro cited Rashaed’s “long history of mismanagement of residential properties” when he named Peter Ogden, president of Ogden & Co., as the property manager and gave him the same powers as a receiver.
During his career, Rashaed’s properties racked up thousands of building code violations and hundreds of thousands of dollars of back taxes and unpaid fines.
As the virtual receiver, Ogden is managing the properties, collecting the rent and repairing code violations. It is estimated that Rashaed’s operation, which includes more than 50 limited liability companies, has generated revenue of more than $100,000 a month.
Both Ogden and Rashaed can sell the properties, though the city can object to the sales and the court must approve the deals.
Ogden will also oppose the Rashaed-financed sales to tenants, said Joseph Newbold, attorney for the property manager. He declined to provide details of the opposition.
Decker said some tenants have told Ogden officials that the purchase plans had been pitched to them as rent-to-buy deals. David Halbrooks, Rashaed’s attorney, said that allegation is incorrect.
A Rashaed tenant in March told the Journal Sentinel that the slumlord had tried to pressure her into buying the home she was renting, telling her the deal was a “blessing from God.” The woman said she did not understand the deal and could not afford it.
Halbrooks said he doesn’t understand why the city is objecting — the city attorney wants Rashaed out of the business in Milwaukee and this is a way for him to get out, Halbrooks argued.
Rashaed would not control the properties after the sale is complete, Halbrooks said. “If you get a mortgage from BMO Harris, does BMO Harris control your property?” Halbrooks said. “The answer is no.”
Besides, Halbrooks said, the financing deals ban Rashaed or his entities from regaining title to the property by foreclosing on the mortgage.
Rashaed and his LLCs “contend that the strategy of disallowing the seller from re-acquiring the properties is a good faith effort to comply with the court’s order,” Halbrooks wrote in a motion asking Yamahiro to approve the sales.
Decker countered that even without a foreclosure, Rashaed could still obtain a court judgment against a borrower and ultimately get title to the property through the collection process.
“The result is the same” as a foreclosure action, Decker said. “Under no circumstances do we want him to have control or regain control” of the properties, Decker said.
Decker and Halbrooks both acknowledged that proposed sales would allow a tenant to buy a property in a Rashaed-financed deal, flip it to a third party and then Rashaed could be able to buy that property.
Though the city sought a ban preventing Rashaed from ever being a Milwaukee landlord, the Yamahiro order did not go that far. Rashaed has repeatedly said he wants out of the business in Milwaukee
“There is nothing that says Rashaed cannot buy a property, buy back these properties or buy new properties,” Halbrooks said, adding his client has no plan to do so.
For practical purposes, Decker said, Rashaed knows his reputation and that problems he’s had with Department of Neighborhood Services building inspectors would make it virtually impossible for him to ever be a Milwaukee landlord again.
“He knows he would automatically become the number one target of DNS,” Decker said.