Thursday, June 13, 2024

Curbio faces lawsuits, complaints from agents amid rapid growth

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Few companies have had the kind of run Curbio is enjoying.

Founded by Rick Rudman in 2017, the company has raised $118 million via three funding rounds.

It has racked up multiple accolades, including a victory at a “Pitch Battle” hosted by the National Association of Realtors’ for-profit investment subsidiary, Second Century Ventures.

And it’s now doing pre-sale home renovations in 55 different markets. NAR even partnered with the company last month.

But all of those wins have also come against the backdrop of apparent growing pains for the company that have included strained relationships with some Realtors and past clients, as well as dozens of lawsuits.

Brian Schwalb

In November, Washington, D.C. Attorney General Brian Schwalb filed suit against Curbio, dismissing its practices as a “scheme of deception, intimidation and fraud.”

Curbio denied nearly all of Schwalb’s allegations and told Inman its record of serving over 4,000 customers shows why it has grown so rapidly.

“We strongly disagree with the assertions made by the D.C. attorney general’s office, and we have filed our response denying all allegations,” Curbio said in a statement. “Not only are the assertions without merit, but they also paint a false narrative of Curbio and the valuable services we provide to get homes fixed up and ready to sell while allowing customers to wait until the home sells to pay Curbio. We’ve completed thousands of projects with a strong track record of reliable and successful outcomes for real estate agents and their clients.”

But interviews with more than a dozen Realtors, past clients, industry experts, a former Curbio employee and records from litigation between Curbio and its clients show more cases from across the country that track with the allegations in the D.C. lawsuit: costs rose mid-project; some sellers deemed the company contractors’ work sub-par; liens were placed on properties; clients got tied up in disputes and ultimately blamed the agent who introduced them to Curbio.

“I have let them know that I will not be working with them ever again,” Philadelphia-based real estate agent Liora Israel told Inman, adding that her client in the Philadelphia suburb of Melrose Park was sued by Curbio in January.

Delays, liens and lost equity

Online reviews, plus interviews with agents, provide hundreds of examples of Realtors who said they helped their clients obtain a higher sales price by working with Curbio, which was founded in 2017 and is based in Maryland. 

“The service that they provide is awesome for clients that have a lot of equity in their home but they cannot afford to make the upgrades in order for their home to sell for at least market or higher,” Tennessee agent Lori Tackett told Inman. “My particular client would have sold as-is and would not have received as much money as she did.”

The company’s model of setting the scope and price of a renovation then coordinating subcontractors has won Curbio multiple accolades. To boot, Curbio told Inman that it is “completely aligned with agents” and focuses on “speed, quality and efficiency.”

But not everyone is happy with the experience. 

Schwalb — the attorney general in Washington D.C. — alleged in his complaint that Curbio’s contracts left homeowners vulnerable to cost overruns, delays and liens placed against the property amid disputes. He also accused the company of filing liens against properties before both sides agreed work was complete. Schwalb wrote that “on dozens of occasions since 2018, contemporaneous to a homeowner signing the Curbio contract — but before a single dollar’s worth of work had been completed — Curbio recorded a deed of trust for the full contract amount against the homeowner’s property.”

“Curbio utilizes a collection of low-cost subcontractors to deliver an over-priced, low-quality product — after locking consumers into a one-sided contract from which there is no escape,” Schwalb continued in his complaint.

Schwalb’s suit, filed in the Superior Court of the District of Columbia, ultimately claims Curbio violated the Consumer Protection Procedures Act and the Abuse, Neglect, and Financial Exploitation of Vulnerable Adults and the Elderly Act. Schwalb wants a judge to order Curbio to stop breaking those laws, award undisclosed amounts of restitution and damages, and void liens against properties in Washington, D.C., among other things. 

Homeowners in markets across the country reported similar issues to those raised in Schwalb’s suit.

In a lawsuit filed against the company on Feb. 29, attorneys for a homeowner who worked with Curbio said the woman’s experience was “eerily similar” to those alleged by Schwalb. The complaint alleges costs rose and that work was delayed and damaged the home.

“Curbio did not wait for … completion of the project before issuing the mechanics lien against her property and telling her that she would be personally liable for over $130,000 for work that Curbio had never performed,” the complaint says.

Other Realtors and clients detailed similar experiences in interviews with Inman.

Taria Lewis

“The theory is nice,” said Taria Lewis, a Realtor in southern California who recounted multiple experiences using Curbio. “If you can have work done and pay from the proceeds of the sale, of course you want to go on that avenue.”

After referring her third client to Curbio to fix up his LA home before selling, the work ended up taking much longer than expected.

“It should have taken a few months,” Lewis said. “It took a year and a half.”

Lewis’ client dropped her from his $2 million listing, she said. Curbio sued the owner, saying he failed to list the home within the five business days after they said the work was complete, and it filed a lien.

Like Lewis, Israel referred a seller client to Curbio in early 2021. The terms sounded straightforward enough, Israel said, but the client ultimately felt she was up-charged by thousands of dollars. Curbio ultimately sued the homeowner, filed a lien, and pushed Israel to lower the price. 

Liora Israel

“It got crazy,” Israel said, adding that, “they kept sending threatening emails saying she needed to drop the price or else they were going to add interest.”

Israel’s client also eventually dropped her as the listing agent.

Curbio said it has updated its policies and, though it previously provided a price range for post-reno homes, it no longer includes a price requirement or reduction clause in contracts.

On average, Curbio has filed a lawsuit against a client nearly once a month for the past five years, often also placing a lien on the property and alleging customers breached contracts by not listing the renovated home for sale after the company deemed the work complete, court records show.

Asked about complaints and lawsuits, Curbio has argued that most of its customers are satisfied.

“We hope you will consider these disputes in the context of thousands of completed projects, most of which were completed to everyone’s satisfaction,” the company said in a statement to Inman. “We’re happy to provide hundreds of these references if you would like.”

The matter of perspective

Whether these legal battles are a warning sign or simply the cost of doing business is perhaps a matter of perspective.

At roughly one lawsuit per month, Curbio may not be abnormally litigious. A Chicago attorney who is an expert in construction and breach of contract law said it’s not uncommon for contractors to have a signed agreement, begin work on a home and then attempt to change the cost or scope of work, leading to a dispute that ends up in court. The attorney said Curbio’s scale compared to its number of lawsuits may not indicate a problem.

“Sixty [lawsuits] in comparison to 4,000 transactions in the same period of time, that’s disproportionate on the favorable side for Curbio,” said the attorney, who declined to be named for fear of disparaging a private company. “It’s not actually that many in comparison to 4,000. Especially in the construction world.”

On the other hand, Inman reached out to competing pre-sale renovation firm Freemodel. The company declined to comment on Curbio specifically but said it has completed 550 jobs in its four markets. Both the company and an Inman review of court filings indicate it hasn’t been sued by or filed suit against past clients.

When asked whether it was concerned about the legal cases involving Curbio, a spokesperson for NAR — which recently inked a partnership with the company — said it had its members’ best interests in mind.

“We evaluate potential partnerships based on their alignment with our strategic goals and the potential benefits they offer to our members,” the spokesperson said in a statement. “Our collaboration with Curbio and all other Realtor Benefits partners is designed with the best interest of our members in mind, aiming to provide them with valuable benefits and services.”

According to the terms of Curbio’s agreement with the association, NAR members will get free access to Curbio’s app to build an estimate of what renovations would cost. They’ll also get a free digital floor plan with every proposal from Curbio if the job is expected to cost at least $10,000.

The high price of doing business

How the various legal proceedings involving Curbio play out remains to be seen. But at least at this stage, it’s clear that Curbio’s fast growth and long reach have won it some friends, and plenty of critics. And sometimes, even the company’s friends end up lukewarm: Elizabeth Colon, an eXp agent in Florida, said she referred a client to Curbio based on the convenience the company offered.

“I have to say the work was good,” Colon said. “Everything was done well. They had a project manager that was very accessible.”

But even the good work wasn’t enough to turn Colon into a repeat customer: The price, she said, was higher than other pre-sale renovation options she can get from subcontractors in her market.

Email Taylor Anderson

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