Receiving Section 8 Question

[LifesPeachy]

What is the name of your state (only U.S. law)? DE

Hi,
I have a townhouse in DE that we are renting out. HUD dept said we could charge $1205 max for the rental (which we want $1200) but that doesn't include utilities. They take a portion of that $1200 for utilties so I will most likely end up with $1000 or $1050 after they take out their portion for utiliies. The prospective tenant wants to make up the difference out of her own pocket. Is this illegal in the state of DE? It seems she's been doing that for at least the past 3 years for her previous residences and one of those residences is a large management company.
Thanks for your advice,
Melissa

 

[DeenaCA]

The prospective tenant wants to make up the difference out of her own pocket. Is this illegal in the state of DE?

It's illegal in all of the states. It's fraud, and it's prohibited under the contract ("HAP contract") that you would sign in order to receive the subsidy payments. Here's an excerpt from the contract (see http://www.hud.gov/offices/adm/hudclips/forms/files/52641.pdf) :

"The owner may not charge or accept, from the family or from any other source, any payment of rent for the unit in addition to the rent to owner."

Here's a HUD bulletin from 2008 in which a landlord was fined $33,000 for collecting extra rent on the side:http://www.thefederalregister.com/d.p/2008-07-10-E8-15663. Excerpt:

Improperly requiring tenants to pay rent in excess of what is authorized by the applicable HAP contract represents both an actionable offense under the False Claims Act and deplorable behavior directed towards the very persons whom the HCV program was designed to serve. (Additionally, depending on the intent, such an action may qualify as a criminal offense under 18 U.S.C. 287, 1343, etc.) OIG will not tolerate such conduct, and rather will cooperate with efforts to bring offending landlords to justice and to remedy their wrongs

.

It seems she's been doing that for at least the past 3 years for her previous residences and one of those residences is a large management company.

Did you confirm the illegal side payments with the management company? I'd be very surprised to see professional managers take a risk like this. In most cases the tenant stops paying the additional rent after move-in, leaving the landlord with no recourse.

I recommend that you tell the prospective tenant to look for a property with a lower rent. I'd also call the housing authority and report the tenant's offer, as well as her claim that she has been making side payments to her previous landlords.

 

[LifesPeachy]

Thanks so much for your reply. Now I have to decide if I will rent to that tenant and not accept side payments or just keep looking for non-Section 8 tenants.

 

[FarmerJ]

It is up to you , but know this, the Hap contract and program rules are binding and if the tenant is very poor tenant and HAP orders repairs that you do not want to do until the tenant is gone ( since some annual re inspects are done up to 120 days before the lease is even up ) they will force you to doi the repairs they order and begin abatement if you dont comply. If the tenant is a monster PITA the HAP will not assist you in correcting the lease violation. ( my own experiances are that s8 is more than just a housing program it is a management system that you agree to and if you later do not agree with it too bad for the LL it really is their way or the highway but your at risk only getting to see the highway until after you lose even more money. Now know this not ALL s8 tenants are rotten , there are some who are great, they follow the rules , take good care of the unit so it really is up to you if you want to participate or not.