In Lawsuit, W. Dallas Couple Claims Landlord Violates Their Rights

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DALLAS (CBSDFW.COM) – Joanna Pena and her husband say they pay more than $400 every month to rent a house on Nomas Street in West Dallas,

For years, Pena says, her complaints to fix it up have been ignored. “Is it fair I have to leave my home because they don’t want to fix their house? Is that fair? There’s holes left, there’s rat poop over there, there’s mold.”

Now, Pena and her husband Sergio Rendon have filed a lawsuit against the landlord, HMK Ltd and its owners individually.

In their suit, they call the defendants, “the most prolific slumlords in Dallas County.”

When asked why they have stayed, Pena said, “We shouldn’t have to sacrifice. We pay rent, we shouldn’t have to sacrifice our own home.”

In the lawsuit, they claim HMK violates the Texas Property Code, for requiring tenants “to provide fumigating for insects and/or rodents” and for another reason:

Their attorney, Michael Hindman of Dallas says,”They’re breaking the law. HMK’s lease by design does not put the tenants on notice that they have any rights.”

Property records show HMK owns about 340 houses in this area of West Dallas. Among them, 17 houses here on Nomas Street, 18 on nearby Chicago Street, and 20 on Rutz Street. And the list, keeps going.

Hindman says, “We’ve looked at a variety of these houses, all those problems we describe in the lawsuit are here, there, and everywhere.”

An HMK representative tells me they’ve had less than a dozen code enforcement cases, not resolved by agreement on 400-plus homes in 13 years, or averaging less than one fine per year.

The companysays fines for all code violations is less than $200 per year.

Still, Joanna Pena isn’t satisfied. “To me, it’s unfair what they’ve done to me and my husband. They’ve betrayed my trust.”

CBS 11’s Jack Fink did some checking, and the city of Dallas says it has filed civil cases against HMK to have five of their properties declared an urban nuisance because of their condition.

The city says a court hearing is scheduled for Wednesday morning.

Lawsuit Filed By Couple:

Civil cases filed by the city of Dallas against HMK Ltd.:

HMK, LTD Fact Sheet (supplied by company)

How HMK began:

In 2002, Butch McGregor approaches long time friends and clients, Hanna Khraish and Khraish Khraish, with the opportunity to purchase the Wheeler Portfolio. Butch and Hanna have had a professional history dating back to the early 1980s.

The Wheeler Portfolio consisted of 511 properties the majority of which are 1940s era single family houses in West Dallas. Thomas Wheeler Sr. amassed the properties over the span of his life which ended in 2000. He had reached 103 years of age. Given the general disrepair of the portfolio, HMK estimated that there was no practical oversight of the Wheeler Portfolio during the 20-25 years prior to the death of Thomas Wheeler Sr.

HMK was organized in December 2003. The original partners were Hanna Khraish. Butch McGregor, and Khraish Khraish.

HMK purchased the Wheeler portfolio in December 2003.

Roughly one million dollars was spent paying delinquent taxes and various liens on the Wheeler Portfolio.

The process of rehabilitating the properties began immediately after closing.

In April 2005, after rejecting a buyout offer from Butch McGregor and his new partners (Phil Ramano and Stuart Fitz), Hanna Khraish purchased Butch McGregor’s interest in HMK.

McGregor, Ramano, and Fitz continue on to develop Trinity Groves.

After 13 years of operation:

  • HMK has spent $4.5 million to stabilize and rehabilitate the portfolio.
  • Average rent is $500 per month and ranges fom $280-750. Some original tenants still pay the same rent as they did in 2003.
  • Average annual turnover is less than 15%.
  • Average rental length is over 5 years.
  • 25% of HMK’s tenants have leased their properties for longer than 10 years. HMK’s current tenants have move-in dates that span six decades. HMK’s oldest leases began in the late 1960s, and there are leases from every decade since.
  • 40% of HMK tenants are over 50 years old.
  • 15% are over 66 years old.
  • Tenant breakdown: 69% Hispanic, 29% African American, 2% Caucasian.
  • HMK’s tenant FICO score range is 520-680.
  • HMK’s tenant annual income range is $20,000-$40,000.

Beginning in 2005 with the successful sale of 20 lots in West Dallas, approximately 80 HMK properties have been sold to Habitat for Humanity for redevelopment. The most recent sale was in 2015 and included 28 properties.

Open door policy with City of Dallas Code Enforcement Department.

HMK’s office is walking distance from the majority of the houses it owns and manages, and is open 6 days a week.

In a recent survey of 150 HMK tenants, over 80% expressed interest in purchasing the unit they are currently renting.

HMK was a an original partner and crucial participant in the assemblage of properties that now comprise the redevelopment of west Dallas, including the commercial tracts, Trinity Groves and the residential redevelopment.

In 2003, HMK Ltd. purchased the Wheeler portfolio of houses, with more than $1million of outstanding taxes, liens, fines, with a occupancy of 50%. After 13 years, and the expenditure of over $4,000,000.00 in repairs and improvements, at cost, for labor and materials, and the Khraish family’s blood, sweat and tears, the properties are 96% occupied with a stable rent roll that exceeds all comparison.

HMK has paid over $3,00,000.00 is real property taxes to the city, county and Parkland et al. By comparison, after paying off all the old liens and fines, and taking responsibility for the 400+ homes and lots, HMK has incurred a total of less than $2,000 in code compliance fines in 13 years, or less than one unresolved violation per year.

Over 80% of the tenants in the properties inspected by the City of Dallas (72 homes) have signed up and would like to buy the house they live in, if given the chance. Many of the tenants would not be able to find housing in this city at the prices they pay. Our leases are all month to month, and anyone is free to leave on 30 days notice. We have several tenants who where tenants 13 years ago when we bought the portfolio. We have not raised their rents since our purchase, and have never had reason to be inside their homes.

We see our tenants at least monthly, when they come into the office to pay. 95% of the tenants certified that all requested repairs had been make and 100% that there were no repairs requested that constituted health, safety issues. We have strict policies against criminal activity on our properties, and monthly visit confirms who is living in a house, that its the person we rented it to, and not sham tenant, fronting for unlawful activity.

HMK has had less than a dozen code enforcement cases that were not resolved by agreement on 400+ homes in 13 years, or averaging less than 1 fine per year. The adjudicated fines for allcode violations on 400+ home is less than $200 per year. By contrast, in the 13 years of ownership, HMK has spent more than $2,000,000.00 in labor and $2,000,000.00 in materials repairing the homes. The fines that have been incurred are largely for things like garbage dumped on an empty lot by third parties that the city found before we did.

HMK has strict policy and rules against any unlawful activity, and has vigorously enforced these rules. HMK staff meets face to face with each tenant at least once every month to verify that the rules are complied with, and any maintenance issues are addressed.

HMK owner Hanna Khraish and his staff personally maintain the properties. Mr. Khraish is hands on, and personally performs, supervises and verifies any repair issue. Any issue raised by a tenant are addressed by the maintenance staff of more than a dozen workers, who maintain and make ready the homes under the direct day to day supervision of Hanna Khraish,, 5 days a week, 52 weeks per year, every working day of the last 13 years. There is no more “hands on” landlord in the city of Dallas.

These repairs are documented in a 1000 page detailed report covering all properties and provided to the city, which has been periodically updated.

HMK has been the #1 provider of properties to Habitat for Humanities in DFW for the last 10 years. Out of the 400+ properties, more than 80 (20%) have been sold and/or demolished and rebuilt as Habitat for Humanities homes with new home owners, first time homeowners and families. Another 10% is in the title company pending closing.

HMK has been an essential party, providing properties for redevelopment for Habitat for Humanities, and the resulting benefits of over 80 families owning their first home.

Another 20% of the HMK properties (90 more) are under contract, and slated for demolition, and/or sale and reconstruction for new home ownership. That brings the total to 40% or more than 160 new homes and families owning their first home. This has been done without displacing one tenant.

HMK signed Mayor Rawling’ so call “pledge card” as written, deleting only the provision that purported to assign the landlords inspection rights to the city to allow for unconstitutional warrantless searches of tenants homes. Otherwise, HMK committed to the objectives requested by the City.

Of the 72 out of 400+ randomly selected properties which were inspected, NO CRIMINAL CONDUCT was observed or reported. Out of 400+ properties x 13 years x 12 months, or more than 65,000 property/months of ownership, there are less than a handful of “calls for service” less than 1/2 of 1% at the HMK properties owned. Historically, anytime a home became a problem, it was demolished.

(©2016 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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