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Credit: Anna Fifelski/Crain’s Detroit Business.
This home at 22233 Lyndon St. in Detroit is a rental owned by Real Token, a blockchain-based real estate investment company that has landed in hot water with the city over health and safety violations.
The city of Detroit has filed the largest nuisance abatement lawsuit in its history against a Florida-based blockchain real estate company and its 165 subsidiaries, the city announced Wednesday.
Real Token Inc., or RealT, owns hundreds of rental properties in Detroit, at least 400 of which the city says are persistently in violation of health and safety codes.
RealT allows investors to purchase tokens that represent ownership shares of properties. The fractional ownership model often results in hundreds of investors in each property.
The city alleges that the company neglected its responsibilities to ensure that its blighted properties in Detroit complied with basic safety and health requirements, leading to “widespread code violations and blighted properties, including criminal activity and endangerment of the health and safety of Real Token residents,” according to the lawsuit.
“Even casual observers have to wonder how, in most of those cases, one human being could so systematically inflict such harm on another,” said Conrad Mallett, corporation counsel for the city of Detroit. “The promise made by Real Token to its investors is that they will provide a 6% investment return. That return is made possible by hurting the tenants you — Real Token — have promised to help.”
Outlier Media first reported the firm’s negligence in February. RealT hires local property managers, but those firms have done little to no repair work on hundreds of the approximately 1,000 rental properties it claims to oversee in Detroit, Outlier reported.
The city filed the lawsuit in Wayne County Circuit Court and anticipates a hearing date quickly, said Tamara York Cook, supervising assistant corporation counsel for the city, at a news conference on Wednesday.
Of the hundreds of properties managed by RealT companies, the city has designated three as “priority one,” or public nuisances needing immediate attention. These include reports of broken windows and locks that leave the residences open to squatters; as well as a lack of heat, a lack of running water, leaking gas valves, persistent standing water and more.
Credit: City of Detroit
Real Token Inc., or RealT, owns hundreds of rental properties in Detroit, at least 400 of which are out of compliance, which are shown on this map compiled by city officials.
In an email to Crain’s, a representative for Real Token said the company is committed to addressing “each disgruntled tenant and city citation in turn. This process cannot happen overnight. It takes time. But we are committed to addressing every issue, and finally execute on our original mission.”
The company said it has been committed to the goal of providing safe, affordable housing for its tenants and playing a supporting role in revitalizing Detroit’s neighborhoods.
“Unfortunately, we have been one of many victims in Detroit of several unscrupulous property management companies. These companies were paid hundreds of thousands of dollars to oversee RealToken’s properties, address tenant complaints and make repairs, and maintain each of our properties in accordance with City of Detroit municipal codes,” the statement read.
The company claims that each management company, “in its own way, stole these funds.”
“We know that nobody is going to feel sorry for RealToken and we have taken full responsibility for our mistakes: that is why since December 1st 2024, we have invested in our property management company to directly manage our properties, and instituted comprehensive checks and balances to ensure something like this never happens again,” the statement read.
In February, the city of Detroit sat down with a representative from the company and the company itself regarding the 408 properties that lack certification of compliance, said City Council Member James Tate. During that meeting, the company made promises to the city to redeem the properties, but has not followed through.
“This is not just disrespect, and it is to the highest level, because they feel that they can do this to folks that are in the most vulnerable situation,” Tate said. “We find that they are reaching out to women with children who are desperate to have a place for their children to lay their heads, but they’re not providing them with the proper housing that is necessary, responsible and what they deserve.”
While Real Token’s model of fractionalized investment and cryptocurrency use is not illegal, it aids in the negligence of the properties, as many investors are located out of state and even overseas, Mallett said.
Real Token was founded by brothers Remy Jacobson and Jean-Marc Jacobson in 2019. The two also serve as co-CEOs of the company. The lawsuit calls for the brothers to be held “personally liable for circumstances that their tenants find themselves in.”
The lawsuit also calls for Real Token to “be in touch with all of their tenants … inform them that this lawsuit is occurring, and then order them to fix these properties within 90 days, or give us permission to find a way to get these properties fixed, but then put forward a judgment so that we can recover the dollars that we spend in order to protect these tenants,” Mallett said.
In addition, the city is asking for the $500,000 in tickets that Real Token owes and for each residence to pass a certificate of compliance inspection.
In the meantime, the city says that Real Token tenants should call the city’s Housing Services Department at 866-313-2520 for further information and instructions.
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