Home equity investment provider Unison is the target of a potential class action lawsuit in Colorado that could void its existing contract agreements in the state.

In legal documents filed in Colorado federal district court this week, plaintiffs Katharine and Charles Kane sued the San Francisco-based HEI firm after discovering the amount they would owe upon early termination of their contract.  

In 2018, the Kanes took out an approximately $88,000 advance with Unison, which represented a 70% stake in their home. In early 2025, they found out the number had turned into an estimated total ranging between $178,000 and $279,000 if they chose to end their contract early.  

As in other lawsuits filed against Unison and peer companies in recent years, the plaintiffs claimed they were misled by marketing tactics, which promoted the provider as a "partner" and avoided describing HEIs as a form of debt. 

"Unsuspecting homeowners who enter into Unison agreements have no way of knowing the realities of the product or its economic implications. This is because by labeling its product an "option contract,' Unison bypasses the laws governing consumer credit and mortgage products," the lawsuit stated. 

The legal filing claims Unison's agreements violate Colorado's consumer credit code and consumer protection act as well as mortgage lending requirements. 

Plaintiffs seek to represent a class of customers in Colorado, which number in the hundreds since Unison first began originating products in the state in 2018.

In addition to seeking class action status and monetary relief, the Kanes requested the court declare existing Unison contracts in Colorado void. They also seek to prevent the company from enforcing or selling the products in their current form within the state. 

A history of HEI litigation

No response to an inquiry sent to Unison was received prior to publication, but the Colorado case is the latest consumer lawsuit to hit the company and the growing home equity investment segment in recent years. 

Home equity investments, sometimes called shared-appreciation agreements, allow consumers to take out a percentage of accrued value in their properties through a signed contract with their provider. The agreements come with no requirement of regularly repayment or interest due until the end of their term or early termination. Once the contract ends, a full lump sum becomes due along with a previously agreed-upon rate of appreciation. 

Just as in all other existing litigation, the classification of HEI agreements lies central to plaintiffs' arguments in the newest case. By offering contracts and not loans, businesses selling the products are not mandated to adhere to the same consumer protection and disclosure requirements that mortgage lenders do as spelled out in the Truth in Lending Act.

Attorneys and consumer advocates, though, insist that the contracts are akin to mortgage loans and should be classified as such, with the providers held to the same standards.  

"Unison's product is a loan. It does create debt, and the homeowner will almost certainly be required to repay every penny they receive, plus interest in the form of a significant lump-sum balloon payment at the conclusion of the term." the Kanes' lawyers said. 

The current classification of HEIs and lack of clearly defined rules opens the door to what consumer protection groups call "deceptive" marketing campaigns that can cause confusion by failing to adequately explain how the products work, they claim. Homeowners in past lawsuits commonly reported they did not fully understand the terms of their contracts.

Details and obligations are spread across hundreds of documents within the contracts, the Kanes' lawyers noted. 

The latest case represents another unwelcome legal development for Unison and its HEI counterparts this year in their efforts to differentiate themselves from mortgage lenders . 

In February, the National Association of Consumer Advocates, alongside AARP, sued Unison, seeking to prohibit it from operating in the District of Columbia. It follows a lawsuit filed by a DC resident, who made allegations similar to the Kanes' against the company. 

Late last year, Unison also agreed to settle a longstanding dispute in Washington State after an appeals court panel sided with plaintiffs in labeling its HEI as a reverse mortgage.

Other companies currently facing legal challenges either from homeowners or state regulators include Hometap and Unlock Technologies, with plaintiffs in those cases similarly calling out the  companies for providing unregulated "loans." 

In response, HEI businesses have asked to work with regulators and are seeking to carve out rules specific to their industry rather than home lenders. The Coalition for Home Equity Partnership, which was formed in 2024, is actively working with states to provide what it expects to be roadmap for future guidelines.