When Stephanie and Maribeth Kalinich’s mother died in 2017, they lost not only a beloved family member but one-third of their household income. The sisters, both on disability, started to fall behind on bills. Their credit scores began to drop, and they feared they would lose the home in Arnold they had bought with their mom two years earlier.

By April 2018, the sisters owed $3,805.09 in delinquent property taxes for the previous year, and water and sewer charges, and they faced the possibility of their debt going to a tax sale, county records show. They then made a decision that would prove to be life-altering, reflecting what can happen when property owners, often elderly and on fixed incomes, face tax bills they cannot afford and seek rescue from a third party.

In a desperate attempt to stay in their home, the sisters sold the house they had purchased to a friend with a real estate background, Jay Treadway, for $200,000 — less than half of what they had paid for it, county records show.

The Kaliniches said they didn’t receive cash or a promissory note for the amount due, but they did sign a mortgage agreement by which Treadway would make monthly payments of $1,450 to them over 15 years and a lease agreeing to pay him $2,000 a month while they remained in the home.

Then, in June 2023, Stephanie received a text message from Treadway stating that that month’s mortgage payment would be his last to them, citing their nonpayment of rent. This year, he moved to evict them.

The sisters claim that Treadway only paid $85,550 toward the purchase of their home. A document that the Kaliniches shared with The Baltimore Banner includes their and Treadway’s signatures on an addendum to the contract of sale agreeing that “any difference between the rent owed and the rent received for the residence at 1495 Grandview Road, Arnold, MD 21012 will be applied to the principal owed on the mortgage note.” The sisters maintain they did not sign the addendum.

The case landed in the courts, with the sisters filing a lawsuit against Treadway, his wife Samantha and two parties involved in the transaction, Maryland First Title Co. and attorney Gregory Reynolds. The Kaliniches claimed that the defendants’ actions amounted to a foreclosure rescue scheme, violating state laws intended to protect homeowners in foreclosure and consumers.

The sisters said they had to withdraw the lawsuit because their lawyers were unable to continue with the case, and that they are looking for pro bono lawyers to refile the suit. But at a District Court hearing in July in a separate suit brought by Treadway, they agreed to move out of their home of six years by the end of September.

Now the sisters are looking for someplace to live while preparing to leave a home outside Annapolis now valued by Zillow at $616,000.

“We sold the house because we thought we were going to lose it in a tax sale,” Maribeth, 67, said in an interview.

Jay Treadway declined to comment following an eviction hearing on July 2 for the sisters. He also did not return a phone call seeking comment, and Samantha Treadway could not be reached.

Asked about the sisters’ claims, Jay Treadway’s attorney, Jakob Metz, wrote in an email, “I am not at liberty to discuss this matter at this time.”

Maryland First Title referred questions to Reynolds, who said, “The title company did nothing wrong on the transaction and only conducted the transaction as the parties instructed them to do.” He said he believes the Kaliniches’ true grievance is with Treadway. “The court agreed Greg Reynolds and Maryland First Title did nothing irregular or illegal,” Reynolds said.

Real estate professionals and consumer advocates say the case appears to be a cautionary tale about family members who desperately wanted to stay in their home but made an ill-advised move that will likely force them to move out.

Prentiss Cox, a law professor at the University of Minnesota Law School, said that a situation in which someone buys a home for far less than its current value is “an obvious red flag for an unfair transaction.”

‘We were trying to avoid the tax sale’

Stephanie and Maribeth, along with their mother, Mathilde Kalinich, purchased the Arnold home in 2015 for $415,000 after selling one that had been owned by their late uncle. It was totally paid off, so they felt secure.

At the time of the sale, Stephanie said, the sisters were receiving $2,300 in disability income. They currently receive a combined total of $2,900 monthly in Social Security, and they have no pensions or savings, Stephanie said.

When the siblings received a “notice of advertisement and tax sale” in April 2018, Stephanie went to her bank, M&T, about a reverse mortgage. But she says she was told that she probably wouldn’t qualify based on her credit and income.

“I didn’t pursue it any further, because that kind of discouraged me,” said Stephanie.

The sisters thought of Treadway, whom they had gotten to know at a local restaurant in the late ‘90s, according to the suit. Stephanie had been working as a journalist at the time, and said she would go there to unwind, grab a bite and chat with friends.

Stephanie tearfully explained her situation to Treadway. She said he previously had told her that he knew investors who could help with her property if things ever went south.

“We didn’t want to sell the house,” Stephanie said. “We were trying to avoid the tax sale.”

At a tax sale, a city or county tries to recoup unpaid taxes by auctioning off liens to investors, who can charge homeowners steep interest and eventually foreclose on their homes if debts remain unpaid. Baltimore City has been removing owner-occupied homes from tax sales amid concerns they were forcing out longtime residents on fixed incomes.

“We had no clue what a [tax sale] meant,” Stephanie said. “We didn’t realize that a tax sale didn’t mean the house would be sold, but the lien on the house would be sold.”

The complaint alleges that Treadway “did nothing to disabuse” the sisters of their mistaken belief that they could not obtain a traditional reverse mortgage, which it claims are often available to consumers with poor credit.

Treadway, whose Zillow page identifies him as “a professional Realtor with over 20 years experience,” suggested what he called a “private reverse mortgage” that he would “personally finance,” according to the sisters’ suit.

The suit said the offer sounded similar to a popular financial product, a reverse mortgage, that allows homeowners over age 62 to convert the equity from their home into a mortgage.

A reverse mortgage is a home loan that you don’t have to repay as long as you live in your home, according to the Washington State Department of Financial Institutions’ website. “The loan and interest are repaid only when you sell your home, permanently move away, or die.” The homeowner continues to own the home.

In their lawsuit, filed in December 2023, the sisters allege that Treadway deceived them into transferring the property into his name so he could engage in a series of transactions that “stripped all equity from the property before evicting the Kaliniches from their home.”

Treadway told the sisters “that the fair market value of their home was not worth more than $200,000 now that a tax sale foreclosure was pending,” according to the suit.

Zillow valued the house at $448,500 in May 2018, the suit says.

The siblings said they felt like they had no other choice, and believing they were dealing with a trustworthy longtime friend, agreed to the sale.

“By the time we were getting close to the tax sale, which we didn’t understand what that meant, obviously, I just was desperate and thought that he could help. But boy, was I wrong,” Stephanie said.

In June 2018, when they met up with Treadway to sign all the paperwork, he presented them with a leasing agreement, according to the suit.

Renting the home had never been discussed previously, they claim. They say they were under the impression that Treadway would accept whatever rental assistance they could secure, though the suit alleges only that he tried to convince them to get public assistance, “which would be paid to Treadway as rent.”

The sisters didn’t think Treadway might be able to evict them, according to the lawsuit.

Although the sisters didn’t obtain a promissory note to repay the note, Treadway agreed to pay the sisters $1,450 per month for 15 years, the suit states. According to the mortgage agreement, the monthly payment included a fixed rate of 3.75%, meaning the buyer would have owed them a total of $261,000 if paid over the full 15 years.

The Contract of Sale has a handwritten addendum stating the mortgage would not be recorded for a period of two years and that the sisters had been advised of the legal ramifications.

“I’ve never done this before,” Maribeth, a former graphic designer, said. “We had no idea what they were even talking about.”

The suit alleges that six months after settlement, Treadway transferred ownership of the property from himself as sole owner to himself and his wife Samantha, then took out a $330,000 loan secured by a deed of trust on the property the following June. The sisters said they were told at settlement that Treadway would make necessary repairs to the septic system and other home improvements, according to the suit, but that “no proceeds from the loan were used to make any improvements to the property.”

The suit claims “there is no rent-back provision in a legitimate reverse mortgage.”

“The net effect of the sales transaction was that the Kaliniches would owe Treadway five-hundred and fifty dollars ($550) more per month than he was ‘paying’ to them under this supposed ‘private reverse mortgage,’” the suit alleges.

The sisters say they withdrew the lawsuit on April 22 because their lawyer, an attorney at Community Legal Services of Prince George’s County, moved on to another firm. Another lawyer, who was working pro bono, couldn’t continue on the case because her firm didn’t have the staff or expertise for such a matter, the sisters said. Neither attorney could be reached for comment by The Banner.

Notice to vacate

The leasing agreement dated June 4, 2018, set the rent at $2,000 a month for 12 months, after which it would convert to month to month and be terminated with 30 days’ notice. The document lists the landlord as A Plus Property Management, a company owned by Treadway that has not been recognized as a business entity by the Maryland Secretary of State’s office since 2009.

The sisters say they looked around for rental assistance for months and didn’t find anything. In the meantime, they say, Treadway didn’t insist on receiving rent payments. The sisters said they paid for utilities and renters’ insurance.

Three years ago, Treadway wrote in an email to Maribeth Kalinich: “As things stand the mortgage note (your extra income) is complete in less than four years. At that time I own the house outright and will be leasing it at market value, of approximately $2,400 to $2,500 a month. If you want to buy yourself more time you need to take the initiative to find rental assistance, it has always been there.”

Then came a June 2023 text from Treadway that he was discontinuing mortgage payments, citing nonpayment of rent.

”You better apply for that social services funding because in four years, I’ll own the house because I’m subtracting the rent from the mortgage payments I haven’t made yet,” Treadway told her, according to a text message reviewed by The Banner.

A text from Treadway to Maribeth that month that was also reviewed by The Banner states, “I just did an amortization of the house loan. The loan will be paid off in August of this year, so you and Stephanie will have to move or start paying me $3,200 a month in rent. I will be giving you written notice as per the contract.”

In July 2023, Treadway emailed them to say that between the monthly installments he had made and the rent that he hadn’t received, he calculated his financial obligation to be paid in full.

Stephanie didn’t think Treadway could do that and shrugged it off until the following month, when Treadway told them they would have to start paying rent or get out.

Subsequently, he filed a failure-to-pay-rent claim this past April, records show.

“He had taken what we owed in back rent out of the mortgage and paid himself,” Maribeth said.

At a District Court hearing on July 3, the parties reached a settlement by which the sisters could stay in the home until Sept. 30 and Treadway would dismiss his failure-to-pay actions.

Treadway had faced financial difficulties of his own. He filed for bankruptcy in 2014, online bankruptcy court records show. Treadway listed $335,492 in assets and $715,527.48 in liabilities, including IRS tax liens. His personal home in Arnold — separate from the one occupied by the sisters — was the only property listed in the document. Online records also show him living in Corpus Christi, Texas.

On June 4, a tax lien on the Grandview Road property for $5,803.51 was purchased by Greymorr MD LLC, according to Brian Schenck, the county’s tax billing manager. The tax lien has yet to be satisfied.

Nowhere to go

Andrea Bopp Stark, senior attorney at the National Consumer Law Center, said the sisters obviously didn’t receive the benefit they had hoped for.

“It just seems very convoluted to me,” Bopp Stark said.

Bopp Stark said that generally speaking, property owners who are victims of foreclosure rescue schemes often struggle to pay their rent.

Jennifer Donelan, a spokesperson for the Maryland Attorney General’s Office, said her agency advises those with complaints about a current or former landlord to file them with the Consumer Protection Division.

John Kern, a program manager for the SOS Fund, a group that focuses on predatory housing systems in Baltimore City, said property taxes are one of the biggest burdens for those on fixed incomes.

Before falling behind in taxes, homeowners should apply to the Homeowners’ Property Tax Credit Program, which caps the amount of property taxes that a homeowner must pay based on one’s income.

The Kalinich sisters say they are exhausting all options. They say they have no living relatives and no place to go after Sept. 30. They are searching for a home. The pair said they filed a complaint with the FBI, as well as a complaint with the Maryland Association of Realtors. They said they also have two pending complaints with the Maryland Attorney General’s Office.

The siblings say they will possibly have to downsize and give up precious family heirlooms because they can’t afford storage. They are saddened by the idea of parting with childhood knickknacks from their mother.

“We have to try to sell some of the things that are worth money and get rid of the others,” Stephanie said.

Stephanie said the siblings want to stay together but they’re finding that most available apartments are one bedroom. “We are all we have” she said. “Everyone — family, friends — is gone. My sister and I need each other.”

Editor’s note: This story has been updated with additional information about the terms of the contract of sale.