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Think Twice Before Rejecting an Applicant on Section 8 Housing

By
Services for Real Estate Pros with Rentec Direct Property Management Software Tenant Screening

Besides working for Rentec Direct as the Social Media Director I'm also a landlord and as such I try to pay close attention to the ever changing rental property and landlord/tenant laws. My friend, also a landlord, has a rental property that is currently vacant and she was asking me just yesterday about renting to people on HUD/Section 8 and what the laws are about the requirements to consider Section 8 applicants and getting a rental property "approved" by HUD.  I didn't have all the answers she was looking for but as luck would have it came across an article about The Housing Choice Act which went into effect July 1st, 2014. The Act prohibits landlords from refusing to rent to someone solely based on the fact that they receive federal housing assistance as part of their income. 

Let me back up a minute just to clarify, Section 8 is a federally funded program administered at a local level by housing authorities that are there to help low income families and people find housing. Those who meet the income qualifications are given a voucher that covers a percentage of there monthly rent payment.

A landlord does not have to rent to someone on Section 8 if they do not meet other tenant selection criteria such as criminal background check and credit reports. Section 8 does have a provision that if the tenant causes more than $500 in damage to the property the landlord can file a claim in small claims court against the tenant. There is a mitigation fund setup that will cover up to $5,000 in damage. It is at the judges discretion if the damages are above normal wear and tear and is therefore the landlord or property managers task to prove that the damages exceed what would be considered normal wear and tear. If the judge rules against the tenant then the landlord is reimbursed the funds.

 

What is your take on Section 8 tenants? Having rent payments guaranteed and a damage fund are both compelling reasons to want to eagerly accept voucher recipients.

 

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Dulcey is a member of Rentec Direct who provides Property Management Software, tenant ach payment processing, tenant credit check, and criminal reports for property managers and landlords. The information in this post is just that, informational and should not be used as a substitute for legal consult or advice. 

 

Elite Home Sales Team
Elite Home Sales Team OC - Corona del Mar, CA
A Tenacious and Skilled Real Estate Team

I know many of the landlords that have used HUD section 8 and like it.

Aug 04, 2014 09:53 AM
Dulcey Schuster
Rentec Direct Property Management Software Tenant Screening - Grants Pass, OR
Property Management Software

I think overall that HUD is advantageous for landlords. The rental property has to be in good condition and I've heard landlords complain about that (shame on them) and a few complaints about the extra red tape but mainly just to get setup as a HUD approved home. 

Aug 04, 2014 09:57 AM
Debbie Malone
Londeree's Real Estate & Property Management - Lynchburg, VA
From Lynchburg To The Lake (434) 546-0369

Hi Dulcey, we've had a great working relationship with the Section 8 program in Lynchburg, VA for over 20 years and have only good things to say about it. If a prospective tenant can afford a property, we certainly would consider them as potential tenants.

Aug 04, 2014 05:54 PM
Kathryn .
Rentec Direct - Grants Pass, OR
Rentec Direct

We never had problems with Section 8.  In fact they come by once a year and perform their own inspections.  Which is a win-win in my option.  They keep an eye on the tenants and the property.  Another advantage is Section 8 is guaranteed funds!

Aug 05, 2014 01:55 AM
Janell Kittleson
Rentec Direct - Grants Pass, OR
Rentec Direct

Several years back when I was managing several portfolios, I had a handful of investors/landlords who refused to rent to anyone on Section 8.  It was legal then but it always made me feel weird because it seemed discriminatory.  If the tenant qualifies, based on the established criteria, it should be a no-brainer.  Guaranteed money!

Aug 05, 2014 03:48 AM
Dulcey Schuster
Rentec Direct Property Management Software Tenant Screening - Grants Pass, OR
Property Management Software

Thanks for the comments ladies! I should clarify that this change is for Section 8 in Oregon and is not nationwide.

Aug 05, 2014 05:11 AM
Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer

The voucher program of today is nowhere near as attractive to landlords as the certificate program was 30+ years ago....when the government can stop rental income for a cracked electric switch plate, it is time to re-think your real estate portfolio...very few states actually have "source of income" as a protected-class...landlords in those states know who they are and many are electing to switch their rental housing to non-subsidy rental residents because of the government oversight out of control

Aug 15, 2014 11:40 PM
Dulcey Schuster
Rentec Direct Property Management Software Tenant Screening - Grants Pass, OR
Property Management Software

Interesting Wallace S. Gibson, CPM , I knew that HUD can be very picky for there approval inspections but hadn't heard of a case like what you have mentioned here. In general government run programs can be a bit hairy, nonsensical, and very top heavy.

Aug 16, 2014 02:41 PM