Broken toilets.
Unanswered maintenance requests.
Rent increases.
Behind the podium, at least a dozen current and previous tenants and concerned citizens spoke to Muncie City Council members about housing issues in Muncie.
Broken Home: Tenants raise concerns about property management company
Despite listening to concerns, Jeff Robinson, city council president, said state law severely limits what local governments can do. In an effort to take some sort of action, the council signed a resolution urging the Indiana General Assembly to help tenants with habitable housing.
SB 148
SB 148 bans “units,” or counties, municipalities or townships, from regulating certain aspects of the relationship between landlords and tenants, among other things. For elements the city and county can’t regulate, those aspects of the tenant-landlord relationship are left in the hands of the state.
According to Section 17, the parts of the relationship Muncie is not able to control include: “the screening process used by a landlord in approving tenants to lease privately owned property, security deposits, lease applications, leasing terms and conditions, disclosures concerning the property, lease or rights and responsibilities of the parties involved in a landlord-tenant relationship, the rights of the parties to a lease, any fees charged by a landlord and any other aspects of the landlord tenant relationship.”
The law also says in Section 6 that counties, municipalities or townships can’t adopt or enforce ordinances or regulations “concerning retaliatory acts by landlords.”
It goes further to say any ordinance or regulation made to violate Section 17 or Section 6 is unenforceable.
Rep. Sue Errington (D- Muncie) said she believes SB 148 was a “retaliatory action by the Republicans in the General Assembly” because Indianapolis city and county council were drafting an ordinance that would deal with rental places that were substandard and uninhabitable.
This is supported by a short excerpt Sen. J.D. Ford (D- Indianapolis) wrote on the Indiana Senate Democrats website discussing the Indianapolis ordinance, SB 148, and arguing it was a direct hit to Marion County voters.
Rep. Ann Vermilion (R- Marion) and Rep. J.D. Prescott (R- Union City), who both voted in favor of SB 148, were contacted by email three times through their press secretary Braden Dunlap. Each time, Dunlap said he would contact or follow-up with both, but The Daily News never heard from either Vermillion or Prescott.
However, it’s not just about what’s in tenant-landlord law in Indiana; it’s also about what isn’t.
Tenants aren’t entitled by law to deduct money from their rent to pay for their own fixing of maintenance issues, said Andrew Thomas, housing resource attorney for Indiana Legal Services.
He said seeking reimbursement for rent is something tenants can arrange with landlords or can be used as a defense to a claim. However, it is not a right given in Indiana law.
This is backed by Housing4Hoosiers on their website, which says there are limited instances where a tenant can repair maintenance and deduct rent, adding that tenants should talk to a lawyer.
There is also no law protecting tenants who are withholding rent while waiting for repairs to be completed, Housing4Hoosiers said via their website.
“If a tenant attempts to withhold rent, they risk eviction for nonpayment,” Thomas said. “While some courts are open to a tenant putting withheld funds in an escrow account while repairs are made, that is not a protection given in the Indiana Code and is not recommended without consulting an attorney first.”
Errington said Indiana is one of five states that don’t allow this.
“There’s not a balance between the rights of tenants and the landlords in state law,” she said. “And I believe we need to make it more equitable.”
Aaron Spiegel, executive director and board president of Greater Indianapolis Multifaith Alliance, said that the biggest misconception tenants have about their rights is, “that they have any.”
There are rights listed, he said, like the right to habitable housing and landlords being responsible for upkeep. Indiana Legal Services said these rights include “safe, clean and livable condition[s],” as well as adherence to health codes.
“But there’s really no enforcement if they don’t do it,” Spiegel said. “So like all these renters' rights that the state lists, the rights exist, but there’s almost no enforcement of those rights.”
Since cities can’t establish a way to enforce penalties for landlords violating Indiana law, a prominent option for tenants is to go to court.
But even in court, Errington said she believes tenants are at a disadvantage because many don’t bring their own attorneys, she said, while property groups almost always do. Tenants are “handicapped by their inability to have a lawyer.”
“Since the state doesn’t allow the city or the counties to have ordinances to put some teeth in that, then people are pretty much up the creek,” she said. “ … Just your ordinary tenant is probably not gonna understand what’s being said, not completely understand and be able to refute what’s being said.”
Except for court and hoping their complaints will reach someone who cares, Spiegel said there is “not much” tenants can do. Since there are no ordinances in Indiana to establish penalties, he said the thing preventing a landlord from abusing their power in Indiana is a “good conscience.”
Muncie continues to operate in a process consisting of complaints being submitted to the city, investigated and monitored until issues are resolved.
A Fine and a Follow-Up
Melinda Coffey, zoning/structural inspector for the City of Muncie Building Commissioner's Office, said when a complaint is received by phone or online, the office sets up an inspection of the property the complaint was about.
The Building Commissioner’s Office takes pictures and can file an unsafe order against the property, notifying the owner.
In the case of MiddleTown Property Group complaints, only the owners of the rental, not the property management company, face the Unsafe Housing Board Authority and have the potential of being fined.
Unsafe Building Housing Authority Board meetings are open to the public at City Hall and are held monthly.
In the meeting, the owner explains where they are at regarding the necessary fixes and timeline of when the problems will get fixed, which makes them compliant, Coffey said via email. If the owner doesn’t show up, they receive a civil penalty against the property between $50 and $5,000. There can also be a fine of $100 if the owner fails to call in for an inspection.
The fines are put on the taxes of the owner. More hearings are scheduled with the Unsafe Building Housing Authority Board until the owners become compliant.
If they don’t comply, owners can be placed on the noncompliance list or demolish list. This can include tearing down a structure or cleaning the property of debris or vehicles.
“This process takes a while,” Coffey said via email. “We have several cases each month and even more properties like this. Demoing a property is a lengthy process. Our office works with other departments and can only demo what we have budgeted for. We try to compile a list of the worst cases first and so on.”
Coffey also said via email she was unable to look up how many unsafe orders were filed against MiddleTown Property Group because the orders are with the property owner.
Muncie Building Commissioner Steve Selvey said his main relationship is with the owner, although he said he is independent, not necessarily wanting to know who the owner of the rental is while he is doing his work.
MiddleTown Property Group was a “very large, fast-growing entity,” Selvey said, and “you would expect more issues with that.” Although he said he wished some things were handled more quickly with the company, he also said young people have piled on complaints that aren’t as pressing.
Selvey stressed the difference between what he referred to as maintenance issues and issues he deals with in his line of work. He said he is more interested in things that go against Indiana code and threaten life safety, although he does encourage people to reach out to his office if they have any sort of complaints.
One thing Selvey said he doesn’t do in his line of work is negotiate contracts, adding tenants wouldn’t want him to do that work since he’s not a lawyer.
“The lease is typically 22 pages long. It is provided by the person that owns the house or is hired upon the owner’s behalf to manage the house. It is not prepared for the student’s benefit. Read it,” he said. “When they’re that long, you will be waiving some rights and you will be upset. They will not change it for you.”
He also cautioned people to not utilize virtual tours.
“Go to the apartment, turn the water on, see if the hot water runs,” he said. “Turn the thermostat and see if the furnace kicks on, see if the air conditioner kicks on. Don’t just do it virtually. Look at it, does it smell?”
He also had other tips for people in regards to housing: he said to make sure fire alarms work and verify there are two methods of exit if a person is in a basement rental. He also mentioned there should be no more than two space heaters in a rental because they are dangerous and use up a lot of electricity.
Selvey also said people need permits for certain work, on furnaces for example, and the permit reassures tenants things will be done correctly.
“If the guy mowing the yard is the same guy installing a new furnace, you should be scared,” he said.
Brothers Dane and Derek Wilson, owners of MiddleTown Property Group, said via email new employees go through background checks and have a 30-day tryout period where skills are assessed. They are trained closely by field supervisors, and the Wilson brothers said via email that additional training and certification are required for specialty skills.
“The industry is short on qualified maintenance people,” the Wilson brothers said via email. “Labor shortages are common across the country. MiddleTown Property Group is working with Ivy Tech to help train and hire techs from their school.”
In response to people who may challenge why property management companies aren’t held responsible like the owners are, Coffey said not every management company causes issues. However, for the ones that do, she agrees with those challenging the process.
“These management companies should be liable for some type of responsibility,” Coffey said via email. “It’s not fair to these tenants. They pay hundreds of dollars a month to rent a property that [is] not being maintained properly.”
Selvey disagreed and said property owners are the ones responsible and should be held liable, not property management companies.
The Wilson brothers said via email they are “focused on continuous improvement.”
“Specifically, we are improving our training and implementing better systems that drive quality and accountability. We are making needed adjustments in our maintenance coordination and communication processes,” the Wilson brothers said via email. “Strategically, we are looking at who we partner with and how we partner. MiddleTown Property Group has made the decision not to work with property owners that refuse to make necessary investments in the properties that they own, and we manage. In addition, we are working with the City of Muncie on ways to improve the rental housing options in the community. There are strategic investments to be made from infrastructure to revised policies that we would support and advocate to better the city’s housing stock.”
In a newsletter sent to current tenants, the Wilson brothers and current CEO and president of the company Matthew Abner said they are “improving our maintenance coordination and quality, refining our customer communication and working only with owners who will invest in their properties.”
Selvey said he believes MiddleTown Property Group is trying to improve.
“I do believe that [MiddleTown Property Group] put some different people in place … And I think they’re doing a much better job to be more responsive with things that I require and address … and we are starting to communicate a little better,” Selvey said.
One example of this was when a student called him when a sewer line broke and before he could get out there, MiddleTown acknowledged the problem, although it took a couple days, and offered to place the person in a hotel.
“I think you’re gonna have problems, and it’s how you deal with them that matter[s],” Selvey said.
Network Property Services
Deb Wise didn’t just know MiddleTown Property Group — she was in the room.
She used to be the co-owner of Network Property Services, which Dane and Derek Wilson took over and combined with their original operation, creating MiddleTown Property Group. Network Property Services managed 250 student rentals, as well as commercial properties.
“The key for us was communication and response time,” she said.
Wise said the staff would try to answer tenants in a day and maintenance would try to get things solved in one to three days, depending on the problem.
Even if a building was technically up to code, Wise said she wouldn’t put people in the property unless she felt comfortable with the conditions.
She said she would tell parents, “If I wouldn’t put my kid there, I won’t put your kid there.”
At times, Wise said third-party management could be challenging because the property managers don’t have all the control they’d like, such as if an owner doesn’t put money into the property.
Despite this, she said, “If they didn’t want to hold to my standard, I kicked them to the curb.”
Wise said MiddleTown Property Group grew quickly, and with that growth “comes the aches and pains of it.”
The Wilson brothers confirmed via email that their company has grown quickly.
“We found that the systems and processes that worked for us when we had 300 units did not work the same for us at 3,000,” they said via email.
Wise said if the complaints are true, tenants have the right to complain and reach out to the building commissioner, and she thinks property management companies need to be responsive. She also said no one wants to put others in danger, and MiddleTown Property Group “must be doing something right because they manage a lot of stuff.”
The Wilson brothers gave some perspective into their current partnering practices.
“Strategically, we are looking at who we partner with and how we partner,” the Wilson brothers said via email. “MiddleTown Property Group has made the decision not to work with property owners that refuse to make necessary investments in the properties that they own and we manage.”
There have been some circumstances when owners have terminated their contracts with MiddleTown Property Group. That was the case with Ball State University.
Ball State’s Perspective
Starting in 2018, MiddleTown Property Group managed properties for Ball State. The contracts from 2018 to 2023 established Ball State as the owner and MiddleTown Property Group as the asset manager.
In 2018, Ball State had 21 properties managed, but that number in later years increased to 24, according to the contract for 2019-20 which extended to 2021.
From March 31, 2021, to June 30, 2022, Ball State paid $340,000 to MiddleTown Property Group for the management of university properties.
Cardinal Properties Inc., a subsection of the Ball State University Foundation, owned some of the properties MiddleTown Property Group managed.
Ball State issued a statement saying they wrote a cease-and-desist letter to MiddleTown Property Group, prohibiting them from using Ball State’s name in their company name, formerly known as BSU Rentals, and Ball State terminated its contract with the property management company.
The Ball State Foundation ended its contract the same time as Ball State, Christopher Palladino, assistant director for capital planning and real estate, said via email.
Greg Fallon, chief digital marketing and communications director, said via email that Ball State terminated its contract with MiddleTown Property Group Aug. 30, 2022.
Fallon added the Office of Student Legal Services offers free resources, and Ball State can provide financial support or temporary emergency housing for students experiencing housing issues.
The complaints for MiddleTown Property Group didn’t just stop on the school and community level; the city of Muncie was also made aware of the tenants’ experiences.
The Mayor’s Perspective
When Muncie Mayor Dan Ridenour first heard about the complaints regarding MiddleTown Property Group, he said it “was very frustrating, very disappointing, and I felt for all of those people who were having challenges.”
Ridenour believes the city does everything within the law they can do when it comes to these issues.
“We will enforce what we can legally enforce,’” he said. “But we’re not going to step beyond what we can legally do. We don’t feel like that’s appropriate, and it’s illegal, so we’re not going to step beyond what the state statutes allow.”
He said this is the reason tenants should research property management companies before renting and about the owner they are renting from. Ridenour said he believes a small percentage of property owners and managers cause the issues. In this case, he said “a lot of problems” were caused.
“We follow what we can do through the statute, and we’re not going to go beyond that. It’s wrong to single someone out because we don’t like it,” he said. “We single someone out because they break the rules that are allowed by state statute.”
This is the same process landlords are offered when tenants do not pay their rent on time, he said.
Ridenour said he has been pressuring lawmakers to change tenant and landlord laws in Indiana by attending regular meetings with mayors throughout Indiana, and he has talked in those meetings about out-of-state owners having properties in Muncie. They do this, according to Ridenour, because Muncie has lower property costs, and he believes this issue is most prevalent in college towns.
The Wilson brothers said via email that 30 percent of their property owners are out of state, and many, they said, are Ball State graduates who moved out of state.
Another issue facing Muncie is a housing shortage, according to Ridenour. He said his administration is working to create more housing for residents.
“Until we have enough housing stock, people are stuck with situations where they’re living in conditions that are not ideal, and ‘not ideal’ is probably being generous,” Ridenour said. “When you get new housing in your community, those who are in situations of housing that are not ideal, they have an opportunity to move somewhere else.”
The Wilson brothers said they were working with the City of Muncie to improve rental housing options.
“There are strategic investments to be made from infrastructure to revised policies that we would support and advocate to better the city’s housing stock,” the Wilson brothers said via email.
Ridenour said some of the housing in Muncie is old, and when out-of-town owners are buying properties where the price is low, sometimes the property needs work. A lot of local people, he said, will put money in the property to build it up, but some won’t, and “that’s part of the challenge.”
Derek Wilson agrees with issues regarding Muncie’s housing.
In an email Derek Wilson sent to Muncie council members and elected officials Sept. 10, 2022, he said, “The reality is, [MiddleTown Property Group is] bringing to focus absolutely ridiculous real estate conditions the City of Muncie has allowed to exist for decades.”
Ridenour, in reaction to this statement, said he can’t speak for prior administrations. But he said his administration has been working to increase the creation of new buildings to help with Muncie’s housing shortage. He said his administration has brought in 160 new units of housing.
“[MiddleTown Property Group are] the ones that need to learn from it, and I believe they have,” he said.
In the email, Derek Wilson discussed the number of units MiddleTown Property Group has, as well as the value of property taxes they and their clients pay, which he said was over $1 million.
“We have constant offers from New York hedge funds, private equity funds and international investors to buy our entire operation and all real estate,” he said in the email. “It is tempting to cash out, but right now we’re committed! However, it’s getting to be an exhausting battle.”
He also said in the email that the company employs more than 100 people.
“We are having discussions with Fishers, Carmel, Indianapolis about moving our headquarters and jobs … No decisions have been made at the moment,” he said in the email.
Ridenour said the reason for a lack of strong public presence regarding MiddleTown Property Group is because he “is not a social media guy to begin with,” and he had to be shown what was going on when tenants were posting their struggles on social media. He did meet with the Wilson brothers to ask what was going on, and he knows some council members also met with the brothers.
When The Daily News interviewed Ridenour, he said he has not visited any of the properties tenants have complained about and instead lets the housing department visit those properties. He receives updates from the building commissioner.
On March 21, 2022, Top Star Realty Group LLC was granted a tax abatement for The Markets on Madison “economic revitalization area,” according to Resolution No. 8-22. For the taxpayer information, Derek Wilson was listed as the property manager and the taxpayer, while the Muncie Redevelopment Commission was listed as the designating body.
Michele Owen, director of communications for Muncie, said the tax abatement was granted to Top Star Realty Group LLC, and Ridenour said the city doesn’t ask who companies use for maintenance, who they bank with, etc. The city also does not give referrals. To Owen and Ridenour’s knowledge, they said, the developers had not yet contracted with Middletown Property Group when the tax abatement was voted on.
The Wilson brothers said they never received a tax abatement or financial assistance from the city. Although they worked with Markets on Madison that received the tax abatement, they did not own that or benefit from it financially.
To Ridneour’s knowledge, the city also does not work with MiddleTown Property Group directly. He is unsure whether MiddleTown Property Group owns any of the properties the city works with, and he does not know what was done before he came into office.
MiddleTown Property Group does manage a property Ridenour said he wants to see successful, which is the Southway Plaza, which according to the tax abatement, The Markets on Madison is apart of.
Looking ahead, Ridenour does not believe tenant issues with MiddleTown Property Group will affect Muncie’s future since it’s a private company not affiliated with the city.
“My hope is that [MiddleTown Property Group] will adjust their procedures,” he said. “There is a tendency for, over time, things [to] work out.”
In regards to the commissioner complaint process, Owen said she and the mayor believe this still gives property management companies an incentive to change, despite them not having to go to the Unsafe Housing Board Authority meetings or getting charged.
“If poor management results in a landlord losing tenants or having to pay fines, then that management company is almost sure to be fired (or not renewed when their contract comes up),” Owen said. “Being fired by a single landlord could mean anything from the loss of one property or hundreds, and earning a bad reputation means that opportunities for future business will be limited. In short, property management companies have just as much incentive as any other employee or contractor to do a good job. Even if it’s the employer that will take the first financial hit, the employee is the one who loses their salary and gets a stain on their record.”
The Future
In the 2022 session, Senate Bill 230 was proposed by Sen. Fady Qaddoura (D- Indianapolis), Sen. Greg Walker (R- Columbus) and Sen. Shelli Yoder (D- Bloomington). The bill would require a landlord to repair or replace essential systems no later than 24 hours after being notified by the tenant and would give the ability for a tenant to give rent money to the clerk of the court or an attorney trust fund as ordered by the court.
The bill didn’t pass.
“All of the committees are chaired by the majority of members, and, in Indiana’s case, it’s the Republicans, and [there are] always a couple thousand, maybe more, bills introduced,” Errington said. “… So they pick and choose what they want, and it’s really hard to get a Democrat bill to be heard in committee. If it doesn’t pass out of committee, it is basically dead.”
In the House, the bill would definitely be dead according to Errington, but in the Senate, a legislator can bring the language up to put it in another related bill.
In the 2023 legislative session, Senate Bill 202 was proposed to assign housing concerns to a committee.
The housing concerns were to protect tenants against “negligent out-of-state” landlords and help with habitability and living condition standards for tenants in single and multifamily units, among other things. It also talked about “unsafe building and nuisance laws” for local governments to use for landlords who violate code.
The bill died after being referred to a House committee on Rules and Legislative Procedures, after passing through the Senate.
Not every bill that could affect tenants has died.
Another bill, House Bill 1075, allows the circuit court or superior court to dissolve a corporation in a proceeding by the attorney general if they continue “to exceed or abuse the authority conferred upon the corporation by law,” among other things. If the corporation doesn’t correct a violation within 45 days, the attorney general can commence an action against the corporation.
As for MiddleTown Property Group and tenants, the Wilson brothers said via email that they invite residents with outstanding issues or concerns to contact the Resident Services office at 765-289-7618 option 2 or through email at residentservices@middletownpg.com.
Contact Elissa Maudlin for comments at editor@bsudailynews.com and on Twitter @ejmaudlin.
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