EasyKnock, which offered to buy properties from financially struggling homeowners and then leased the properties back to them, suddenly shut down late last week, leaving many customers with questions about the status of their residential arrangements.
The company, whose sale-leaseback business model attracted scrutiny from regulators over the course of the past 12 months, took down its website and left a message in its place: “After many years of serving consumers, EasyKnock has closed its doors. We are deeply grateful for the trust placed in us to be part of the financial journey of so many. While EasyKnock may no longer be around, arrangements have been made to ensure continued services for our customers.”
Sale-leaseback companies like EasyKnock often advertise that the model allows equity to be taken out of a property without having to take on additional debt or leave the home. Indeed, New York-based EasyKnock, founded in 2016 by venture entrepreneur Jared Kessler, branded itself as a “home equity solutions platform company” that “helps U.S. homeowners unlock their financial freedom through non-loan programs.”
From its inception through February, EasyKnock enjoyed several successful funding rounds and raised tens of millions from several prominent investors, including a capital firm led by former Zillow CEO Spencer Rascoff. But it caught the eye of watchdogs late last year, and in December, Massachusetts Attorney General Andrea Joy Campbell announced a settlement with the company after alleging that it engaged in “unfair and deceptive acts and practices in the process of marketing sale-leaseback products.” The settlement included an assurance of discontinuance in which EasyKnock agreed not to solicit or enter into sale-leaseback transactions in Massachusetts, adjust tenants’ monthly rents, return withheld funds to tenants and revise existing leases to comply with state law.
Similar actions were announced by Connecticut Attorney General William Tong and Michigan Attorney General Dana Nessel in March and May, respectively. The Connecticut filing alleged that EasyKnock targeted financially strained homeowners who didn’t qualify for traditional financing methods due to poor credit or high debt.
Consumer lawsuits also popped up in Pennsylvania, Maryland, Ohio, South Carolina and Texas (though Easyknock celebrated a court victory in September after a judge decided that its sale-leaseback agreement was not, in fact, a “disguised law” under Texas law). Meanwhile, NPR, which first announced EasyKnock’s closing over the weekend, published an investigative piece in June finding that the sale-leasebacks could cost homeowners “tens of thousands of dollars” in equity and that while buybacks were allowed under the agreements, they rarely took place.
No reason was given for the company’s abrupt shutdown. NPR reported that management of properties under EasyKnock leases will be overseen by NESE Property Management; customer inquiries about EasyKnock agreements were directed by EasyKnock’s website to a nesepm.com email address.
