City suing real estate company that leaves buyers with massive bills

The city is going after a company that sold a Detroit woman a home that landed her with a $16,000 unpaid water bill.

Kierra had saved up to buy a home for her family only to find out the house was a wreck. When she was saddled with a massive bill she didn't know about, FOX 2's Problem Solvers stepped in last month to help. Now after seeing our story, the city is going after the company that sold her the house.

"Oh -- it's not by the book," said Gary Brown, head of Detroit water and sewerage.

The city is suing a Detroit real estate company called Detroit Property Exchange that he says is costing the department and its customers a whole lot of money.

RELATED: Detroit mom of four hit with $16,000 water bill for new house

"We think that the law is being broken and he's taking advantage of poor people," he said.

The company is also known as Alma Almont and Midtown Homes Realty. They sold this home on Cruse to Kierra, a single mother of four, for a thousand dollars. It's the same house that had been the subject of a FOX 2 2 story in 2014, when it was abandoned and full of running water.

"They're desperate - they're trying to put a roof over their kids' heads," Brown said. "We want them to have ownership of a home - but we don't want to set them up for a situation in which they're going to fail."

Detroit Property Exchange told us they disclose all water bills and back taxes but Brown says unsuspecting people are being taken advantage of because they are unable to pay and the cost gets passed on to everybody else. This is happening in a city where 40 percent of the customers are already below the poverty line.

"Now they're stuck with a piece of property that they can't afford to fix. They can't afford to pay the past due bill and the water department is in a position where we're taking a loss. Every time we take a loss, we simply pass the cost on to other residential customers," Brown said.

So the water department is going after the owner of these homes, Michael Kelly of Detroit Property Exchange. They allege he owes more than $25,000 dollars in unpaid water bills on several properties.

One of the properties cited in this lawsuit is a vacant home on Morang. The city says the property owes $17,000 to the Detroit Water and Sewage Department.

FOX 2 reached out but Kelly wasn't there. The Detroit Property Exchange said previously it does everything by the book. However, Gary Brown wants to see them in court.

"It's more than just being unethical and being not very civic minded and taking advantage of people, we think it's also illegal," he said.