HUD Handbook 4350.3 § 8-9
Key Requirements (HUD Occupancy Handbook 4350.3 REV-1 CHG-4)
HUD guidance — not codified law
In Force
Verified 9/24/2026 · Next check 10/1/2026
effective 9/24/2026FederalEviction & Just CauseOperative Text
HUD Handbook 4350.3 § 8-9
In order to terminate tenancy, the tenant must provide the owner with a written 30-day
notice to vacate the unit, as required by the HUD lease.
NOTE: The regulations for RHS Section 515/8 properties permit either the tenant or the
owner to terminate the lease with a 30-day written notice. This provision may be included
in a one-year lease. The provision must be included in any multi-year lease.
8-10 Allowable Use of Security Deposits
If a tenant fails to pay the required rent or if there are tenant damages to the unit, an
owner may use the tenant’s security deposit to pay the outstanding rent and/or damages.
Any remaining funds must be paid to the tenant. An owner must follow the requirements
and guidelines for security deposits and other charges outlined in paragraph 6-18
regarding the refunding and use of the security deposit.
Section 3:
Termination of Tenancy by Owners
8-11 Key Regulations
This paragraph identifies key regulatory citations pertaining to Section 3: Termination of
Tenancy by Owners. The citations and their titles (or topics) are listed below.
A. Termination of Tenancy
1. *24 CFR 5.218 (Penalties for failing to disclose and verify Social Security
and Employer Identification Numbers)*
2. 24 CFR 5.850-5.852, 5.858-5.861, 5.901, 5.903, and 5.905 (Termination of
tenancy in Screening and Eviction for Drug Abuse and Other Criminal
Activity; Final Rule)
3. 24 CFR 247.3, 880.607, 881.601, and 883.701 (Fraud, minor violations,
nonpayment of rent, state or local Landlord and Tenant Act)
4. 24 CFR 247.3, 880.607, 881.601, 883.701, and 884.216 (Substantial lease
violations)
5. 24 CFR 880.607, 881.601, 883.701, and 247.3 (Other good cause)
6. 24 CFR 880.607, 881.601, 883.701, and 884.216 (Lease expiration)
B. Eviction for Drug Abuse and Other Criminal Activity
24 CFR 5.850-5.852, 5.858-5.861, 5.901, 5.903, and 5.905 (Eviction in
Screening and Eviction for Drug Abuse and Other Criminal Activity; Final
Rule)
NOTE: These regulatory requirements do not apply to owners of housing
assisted by the Rural Housing Service under Section 514 or Section 515 of
the Housing Act of 1949.
C. Providing Notice of Termination of Tenancy
1. 24 CFR 247.4 Termination Notice
2. 24 CFR 247.6 Eviction
8-12 Overview
A. The requirements and procedures for terminating tenancy provide owners with a
mechanism to ensure that a tenant is fulfilling his/her obligations under the lease.
These obligations include abiding by the lease and the house rules attached to and
incorporated into the lease, paying rent when due, maintaining the unit, and
permitting other tenants peaceful enjoyment of their units and the common area.
Additionally, the termination of tenancy provides a mechanism to evict tenants who
commit fraud or fail to provide the information required by HUD to establish their
eligibility and/or appropriate rent.
B. The requirements and procedures also seek to ensure that owners provide tenants
with proper notice and the opportunity to respond and treat all tenants in an
equitable and consistent manner when terminating tenancy. Additionally, owners
must be in compliance with applicable federal, state, and local requirements when
pursuing termination of tenancy. Owners must:
1. Adhere to termination criteria consistently and equitably; and
2. Enforce the lease and house rules, and if lease obligations are not fulfilled,
initiate termination proceedings to guarantee the other residents’ health,
safety, and peaceful enjoyment of the property.
C. An owner must not refuse to renew a lease solely because a lease term has
expired. Figure 8-2 summarizes the allowable circumstances when an owner may
terminate tenancy, either during or at the end of the lease term. Each
circumstance will be discussed in detail in the paragraphs to follow.
Figure 8-2: Allowable Circumstances for Terminating Tenancy
Material noncompliance
Substantial lease violations
Fraud
Repeated minor violations
Nonpayment of rent
*Failure to disclose and provide verification of SSN(s)*
*Failure to sign and submit consent forms*
Drug abuse and other criminal activity
Material failure to carry out obligations under a State Landlord and
Tenant Act
Other good cause
8-13 Material Noncompliance with the Lease
A. Key Requirements
Owners may terminate tenancy when a tenant is in material noncompliance with
the lease, including:
1. Failure of the tenant to submit in time all required information on household
income and composition. Examples include:
a. The tenant's failure to:
(1) Submit required evidence of citizenship or eligible
immigration status;
(2) Disclose and verify social security numbers; or
(3) Sign and submit consent forms allowing verification of
information regarding the tenant's income and eligibility.
b. The tenant's knowingly providing incomplete or inaccurate
information.
2. Extended absence or abandonment of the unit as defined in the house
rules for the property, or in state or local law.
a. House rules regarding extended absence or abandonment must be
consistent with the requirements and guidelines for house rules
described in paragraph 6-9. See that chapter for more information.
b. The house rules must be attached to the lease for that unit.
3. Fraud, which is when a tenant knowingly provides inaccurate or incomplete
information.
a. If the owner determines that a tenant acted fraudulently, the owner
may terminate tenancy under the lease. A fraudulent action is
considered material noncompliance with the lease.
b. The owner must handle fraud as a civil violation and may handle
fraud as a criminal violation. When evicting for fraud, the owner
must simultaneously file a civil action against the tenant to recover
the subsidy overpayment. The owner may refer the case to a local,
state, or federal prosecutor who may pursue the case as a criminal
matter.
c. The owner must take care not to confuse tenant error with fraud.
Figure 8-3 below describes the difference between fraud and tenant
errors. See paragraphs 8-17 and 8-18 for more information.
Figure 8-3: Tenant Errors versus Fraud
Fraud should not be confused with tenant errors, which HUD considers
unintentional program violations. Tenant errors are usually infractions or
oversights that do not involve intentional deceit (e.g., tenant misunderstands
or forgets the rules).
Tenants who were not eligible for assistance because they mistakenly
provided incorrect information must reimburse the owner for the difference
between the rent the tenant should have paid and the actual rent the tenant
was charged. This circumstance constitutes a tenant error and is not a basis
for eviction.
4. Repeated minor violations that:
a. Disrupt the livability of the property;
b. Adversely affect the health or safety of any person, or the right of
any tenant to the peaceful enjoyment of the property;
c. Interfere with the management of the property; or
d. Have an adverse financial effect on the property.
Example – Minor Violations
NOTE: This list is not comprehensive.
Tenant keeps unauthorized occupants.
Tenant fails to pay utilities.
Tenant behaves or acts in a manner that continually
disrupts the right of other residents to enjoy the property.
Tenant damages, destroys, or defaces the unit or
property.
Tenant fails to pay the cost of all repairs caused by
carelessness or neglect on the part of the tenant.
5. Nonpayment of rent due under the lease.
a. The tenant is obligated to pay all amounts due under the lease or
repayment agreement, including any portion thereof.
b. The owner must not terminate tenancy until any grace period
permitted by state law has expired.
NOTE: If the tenant pays all amounts due under the lease within the grace
period, this is not material noncompliance, but rather a minor violation.
Repeated minor violations constitute cause for eviction.
6. *Failure to disclose and provide verification of SSNs.
a. Termination of tenancy.
(1) The owner must terminate tenancy of a tenant and the
tenant’s household if the SSN disclosure and verification
requirements for all household members are not met in the
specified timeframe. This includes those households where
a child under the age of six who did not have a SSN was
added to the household with the understanding that the SSN
would be disclosed and verification provided within 90 days
after admission, or within the 90 day extension period, if
applicable.
(2) There is no proration of assistance for those household
members who are required to obtain a SSN but who fail to
disclose and provide verification of their SSN.
(3) Termination of tenancy does not apply to those households
with individuals who do not contend eligible immigration
status or tenants who were age 62 or older as of January 31,
2010, whose initial determination of eligibility was begun
before January 31, 2010, unless there are other members of
the household who have not disclosed or provided
verification of their SSNs.
b. Deferring termination of tenancy.
The owner may defer termination of tenancy and provide tenants
with an additional 90 days past their next regularly scheduled
recertification of income and family composition to become in
compliance with the SSN disclosure and verification requirements in
Chapter 3, Paragraph 3-9.
(1) The deferral is at the owner’s discretion and must only be
provided if failure to meet the SSN requirements was due to
circumstances outside the control of the tenant and there is
a likelihood that the tenant will be able to disclose and
provide verification of the needed SSN(s) by the deadline
date.
(2) After the 90-day deferral period, if the tenant has not
disclosed and provided verification of the needed SSN(s),
the owner will pursue termination of tenancy.
B. Procedures for Terminating Tenancy and Providing Notice
The following procedures are the minimum standards required by HUD. Most state
and/or local laws are more restrictive than HUD’s minimum requirements;
therefore, an owner should be aware of state and local laws governing
terminations.
1. Basis for termination.
To terminate tenancy, an owner must establish that the basis for the
termination is consistent with:
a. HUD-required lease provisions;
b. Allowable lease provisions set forth in the lease for the unit
occupied by the tenant; and
c. Applicable state and local laws.
2. Termination notice.
a. If the owner proposes to terminate a lease, the owner must give the
tenant written notice of the proposed termination.
b. For tenants with a disability, the notice must be provided in a form
accessible to the tenant (e.g., in Braille or audio form for a tenant
with a vision impairment).
c. When an owner terminates tenancy, written notice must be provided
to the tenant and must:
(1) State the specific date the tenancy will be terminated;
(2) State the reasons for the action with enough detail to enable
the tenant to prepare a defense;
(3) Advise the tenant that remaining in the unit on the
termination date specified in the notice may result in the
owner seeking to enforce the termination in court, at which
time the tenant may present a defense;
(4) Advise the tenant that he/she has 10 days within which to
discuss termination of tenancy with the owner. The 10-day
period begins on the day that the notice is deemed effective
(see subparagraph B.3 below);
(5) Advise that persons with disabilities have the right to request
reasonable accommodations to participate in the hearing
process (see Chapter 2, Subsection 4 for information on
Reasonable Accommodation)
(6) Be served on the tenant as described under subparagraph
B.3.c below.
d. When terminating tenancy for material noncompliance, the time of
service of the termination notice must be in accordance with the
lease and state law.
e. In the case of the tenant’s nonpayment of rent, the notice must
include the dollar amount of the balance due on the rent account
and the date of such computation.
3. Manner of service for Section 236, Section 221(d)(3) BMIR, Rent
Supplement, Section 202/8, Section 202 PAC, Section 202 PRAC, Section
811 PRAC, Section 8 Loan Management Set-Aside, and Section 8 Property
Disposition Set-Aside.
a. The notice must be served by:
(1) Sending a letter by first class mail, properly stamped and
addressed and including a return address, to the tenant at
the unit address; and
(2) Delivering a copy of the notice to any adult person
answering the door at the unit. If no adult answers the door,
the person serving the notice may place it under or through
the door, or affix it to the door.
b. The date on which the notice is deemed received by the tenant is
the later of:
(1) The date the first class letter is mailed; or
(2) The date the notice is properly given.
c. Service of the notice is deemed effective once the notice has been
both mailed and hand delivered.
4. Manner of service for all other Section 8 programs.
The manner of service will be in accordance with the provisions of state
and local laws.
5. Judicial action.
a. An owner must not evict any tenant except by judicial action
pursuant to state and local laws.
b. In any judicial action to evict a tenant, the owner must rely on the
grounds cited in the termination notice served to the tenant.
However, the owner is not precluded from relying on grounds about
which he/she had no knowledge of at the time the notice was sent
to the tenant.
NOTE: For Section 8 New Construction, Substantial Rehabilitation,
and State Agency properties, the owner must rely only on the
grounds cited in the termination notice served to the tenant.
c. The tenant’s failure to object to the notice does not constitute the
tenant’s waiver of his/her rights to contest the owner’s action in a
judicial proceeding.
d. A tenant may rely on state or local laws governing eviction
procedures where such laws provide the tenant procedural rights
that are in addition to those provided by the regulatory agreements,
except where such laws have been preempted under CFR Part 246,
Local Rent Control, or by other action of the United States.
8-14 Drug Abuse and Other Criminal Activity
A. Key Requirements
1. The authority to terminate tenancy of tenants is in accordance with the
HUD model leases and state or local Landlord and Tenant Act(s).
2. Criminal activity. Owners may terminate tenancy for any of the following
types of criminal activity by a covered person (a tenant, household
member, guest, or other person under the tenant’s control):
a. Any criminal activity that threatens the health, safety, or right to
peaceful enjoyment of the premises by other residents (including
property management staff residing on the premises); or
b. Any criminal activity that threatens the health, safety, or right to
peaceful enjoyment of their residences by persons residing in the
immediate vicinity of the premises.
NOTE: Owners may terminate tenancy and evict tenants for criminal
activity by a covered person if they determine that the covered person has
engaged in the criminal activity, regardless of whether the covered person
has been arrested or convicted for such activity and without satisfying a
criminal conviction standard of proof of the activity.
3. Illegal drug use. Owners may evict a family when they determine that a
household member is illegally using a drug or when owners determine that
a pattern of illegal use of a drug interferes with the health, safety, or right to
peaceful enjoyment of the premises by other residents.
4. Alcohol abuse. Owners may terminate tenancy if they determine that a
household member’s abuse or pattern of abuse of alcohol threatens the
health, safety, or right to peaceful enjoyment of the premises by other
residents.
5. *Lifetime sex offender. Owners must terminate the tenancy of a participant
who is subject to a lifetime registration requirement under a State sex
offender registration program who was erroneously admitted (the
household member was subject to a lifetime registration requirement at
admission and was admitted after June 25, 2001) and is receiving housing
assistance.
NOTE: If an O/A erroneously admitted a lifetime sex offender, the O/A
must offer the family the opportunity to remove the ineligible family member
from the household. If the family is unwilling to remove that individual from
the household, the O/A must terminate assistance for the household.*
6. Other circumstances. Owners may terminate tenancy during the term of
the lease if a tenant is:
a. Fleeing to avoid prosecution, or custody or confinement after
conviction for a crime, or attempting to commit a crime that is a
felony under the laws of the place from which the individual flees, or
that, in the case of the State of New Jersey, is a high misdemeanor;
or
b. Violating a condition of probation or parole imposed under federal or
state law.
7. Owners must consistently apply their eviction standards.
8. Eviction actions must be consistent with federal, state, and local civil rights
laws, including the fair housing and equal opportunity laws described in 24
CFR 5.105.
B. Factors to Consider When Terminating Tenancy for Drug Abuse and Other
Criminal Activity
NOTE: Owners should be careful to implement consistently all criminal
background checks and decision-making procedures. Owners are required to
have their procedures included as part of their Tenant Selection Plan (see Chapter
4, Figure 4-2.)
1. As part of their eviction standards, owners may consider all of the
circumstances relevant to a particular eviction case, such as:
a. The seriousness of the offending action;
b. The effect on the community of terminating or not terminating
tenancy;
c. The extent of the tenant’s participation in the offending action;
d. The effect of termination of tenancy on household members not
involved in the offending action;
e. The demand for assisted housing by families who will adhere to
lease responsibilities;
f. The extent to which the tenant has shown personal responsibility
and taken all reasonable steps to prevent or mitigate the offending
action; and
g. The effect of the owner’s action on the integrity of the program.
2. In determining whether to terminate tenancy for illegal use of drugs or
alcohol abuse by a household member who is no longer engaged in such
behavior, an owner may consider and may require evidence of whether the
member:
a. Is participating in or has successfully completed a supervised drug
or alcohol rehabilitation program; or
b. Has otherwise been rehabilitated successfully.
3. A tenant may be required to exclude a household member in order to
continue to reside in the unit when that household member has participated
in, or is responsible for, an action or a failure to act that warrants
termination.
C. Procedures for Accessing Criminal Records
1. An owner may submit a request to a PHA (in the area where the property is
located) to obtain the criminal records *and/or State lifetime sex offender
registration records* of a member of a household for use in applicant
screening, lease enforcement or eviction. Refer to Glossary for definition of
Public Housing Agency (PHA).
2. Prior to performing or requesting a PHA to conduct a background check, an
owner must do the following:
a. Obtain a signed consent form from the household member or
applicant;
b. Provide the PHA with its selection criteria; and
c. Ensure that all criminal background checks are conducted
consistently for every applicant or resident.
3. Upon request of the owner, the PHA must request the criminal conviction
*or State lifetime sex offender registration* records from the state where the
applicant resides and from other states where the applicant *or members of
the applicant’s household have resided.* Owners and PHAs may rely on
the applicant’s declaration *on their application* regarding their residences
and any other information.
4. If the PHA receives criminal conviction *and/or State lifetime sex offender
registration* records requested by the owner, the PHA must determine
whether criminal action by a household member, as shown by such criminal
conviction records, may be a basis for lease enforcement or eviction. The
PHA’s determination with regard to the screening and admission of
applicants is based upon the criminal conviction record and the owner’s
standards for prohibiting admission. All findings of a criminal background or
sex offender status used to make determinations must be documented. If
the owner’s selection criteria are not clear, the PHA should contact the
owner for clarity. The PHA will make a determination based on the
information provided by the owner. Any decisions based on “reasonable
belief” or other “determination” of the owner should be documented with the
reason for the belief or determination. This documentation should not be
only of specific behavior, but that the behavior would (or does) interfere
with the health, safety, or peaceful enjoyment of other residents.
5. The PHA must notify the owner whether it has received criminal conviction
*or State lifetime sex offender registration* records for the household
member and its determination as to whether such records may be a basis
for lease enforcement or eviction. Except as provided below, a PHA must
not disclose the household member’s criminal conviction *or State lifetime
sex offender registration* records or the content of the records to the
owner. A PHA may only make this disclosure if the following conditions are
satisfied:
a. The PHA determines that the criminal activity by the household
member, as shown by records received from a law enforcement
agency, may be a basis for eviction from a unit; and
b. The owner certifies in writing that the criminal conviction records will
be used only for the purpose and only to the extent necessary to
seek eviction in a judicial proceeding of a tenant, based on the
criminal activity by the household member that is described in the
criminal conviction records.
6. If a PHA receives criminal conviction records from a state or local agency
showing that a household member has been convicted of a crime relevant
to lease enforcement or eviction, the PHA must notify the household of the
proposed action and must provide the subject of the record and the tenant
a copy of the information and an opportunity to dispute the accuracy and
relevance of the information. This opportunity must be provided before
alease enforcement or eviction action is taken on the basis of the
information.
7. The owner may deny admission to an applicant using his/her standard for
admission screening or may evict a tenant in accordance with his/her
standard for termination of tenancy if the criminal background *or State
lifetime sex offender registration* check indicates that the applicant or
tenant provided false information. If the household is to be denied
admission or evicted, the PHA /owner making the determination must:
a. Notify the household of the proposed denial of admission or
termination of tenancy.
b. Provide the subject of the record and the applicant or tenant, with a
copy of the information the action is based upon.
c. Provide the applicant or tenant with an opportunity to dispute the
accuracy and relevance of the information obtained from any law
enforcement agency.
*NOTE: Persons who are subject to a lifetime sex offender registration
requirement who were admitted prior to June 25, 2001, the effective date of
the Screening and Eviction of Drug Abuse and Other Criminal Activity final
rule, must not be evicted unless they commit criminal activity while living in
federally assisted housing or have some other lease violation, in which
case the owner may terminate the tenancy and pursue eviction to the
extent allowed by their lease and state or local law.*
8. A PHA may charge an owner reasonable fees for making a request, on
behalf of the owner, for criminal conviction records. A PHA may require the
owner to reimburse costs incurred by the PHA, including reimbursement of
any fees charged to the PHA by a law enforcement agency, and the PHA’s
own related staff and administrative costs.
9. Owners may use sources other than the PHA to conduct criminal
background checks, *including the State lifetime sex offender registration
checks.* The owner may conduct his/her own background search of
criminal records, or may secure a contractor. When the owner conducts
his/her own criminal background searches or uses sources other than a
PHA, the owner will make the determination, in accordance with the
owner’s standards for admission, if the applicant or tenant meets the
screening criteria.
*NOTE: O/As should verify the information provided by the applicant by
searching the Dru Sjodin National Sex Offender Database. The Dru Sjodin
National Sex Offender Database is an online, searchable database, hosted
by the Department of Justice, which combines the data from individual state
sex offender registries. The website for the database is located at:
http://www.nsopw.gov. A record of this screening, including date
performed, should be retained.*
10. The owner may not pass along the costs of the criminal records checks to
the tenant.
11. Owners and PHAs have the discretion to contract out criminal background
checks, *including State sex offender registration checks,* but will be
responsible for the action and decisions made by their contractor. HUD
does not prescribe the process the PHA uses to determine the source for
obtaining the criminal background information. However, the criminal
records must be requested from the appropriate law enforcement agency,
National Crime Information Center (NCIC), police departments, or other law
enforcement agencies that hold criminal conviction records.
12. Entities that obtain criminal records are not responsible for updating the
criminal history of an applicant or tenant.
13. Criminal records obtained by the PHA are to be maintained confidentially,
not misused or improperly disseminated; and destroyed upon completion of
the originally intended use. When destroying records of criminal
background in accordance with 24 CFR 5.903(g), the PHA should make a
notation in the tenant file that includes the date the records are destroyed
and a statement that the records were destroyed for purposes of
confidentiality. *Owners must retain documentation in the tenant file
showing the date, type and results of the criminal background check and/or
State lifetime sex offender registration check performed by the PHA.*
14. Criminal records obtained by the owner are to be maintained confidentially,
not misused or improperly disseminated, and destroyed three years after
tenancy is terminated. Criminal records, *including State lifetime sex
offender registration checks,* received for applicants who never move-in
are to be retained with the application for three years.
15. Entities must handle any information from other records in accordance with
applicable state and federal privacy laws and with the provisions of the
consent forms signed by the applicant.
16. Penalties for improper release of information. Conviction for a
misdemeanor and imposition of a fine of not more than $5,000 is the
potential penalty for any owner who knowingly and willfully requests or
obtains under false pretenses any information concerning a tenant under
the authority of this rule or who discloses any such information in any
manner to any individual not entitled under any law to receive the
information.
D. Procedures for Terminating Tenancy and Providing Notice
See paragraph 8-13 B for information on the basis for termination, the termination
notice, the manner of service, and judicial action.
8-15 Material Failure to Carry Out Obligations under a State or Local Landlord and
Tenant Act
A. Key Requirements
State and local laws impose obligations on a landlord and tenant and provide that
violations of the tenant’s obligations constitute grounds for eviction.
Example – Material Failure to Carry Out Obligations under a
State or Local Landlord and Tenant Act
Examples of a tenant’s failure to fulfill his/her obligation under a State or
Local Landlord and Tenant Act include but are not limited to:
Overcrowding a unit in violation of the local housing code; and
Damaging, destroying, or defacing a unit to such extent that the
unit no longer is in compliance with the housing code.
B. Procedures for Terminating Tenancy and Providing Notice
1. See paragraph 8-13 B for information on the basis for termination, the
termination notice, the manner of service, and judicial action.
2. When terminating tenancy for material failure to carry out an obligation
under a State and Local Landlord and Tenant Act, the time of service of the
termination notice must be in accordance with the lease and state law.
8-16 Other Good Cause
A. Key Requirements
1. Other good cause is defined by state and local laws, not by HUD. In
addition, issues regarding the existence of other good cause may be
resolved by the owner and tenant in court through an action for eviction of
the tenant.
2. The conduct of a tenant may be deemed good cause, provided the owner
has given the tenant prior written notice and stated the conduct would
constitute a basis for termination of occupancy in the future. Such notice to
the tenant must be served in the same manner as a notice of termination of
tenancy. (See paragraph 8-13 B.)
Example – Other Good Cause
For all Section 8 New Construction, Substantial Rehabilitation, and State
Agency properties, the regulations list the refusal of the tenant to accept
an approved modified lease form as “Other Good Cause.”
B. Procedures for Terminating Tenancy and Providing Notice
1. See paragraph 8-13 B for information on the basis for termination, the
termination notice, the manner of service, and judicial action.
2. If the owner is terminating tenancy for other good cause, the notice must be
effective at the end of the lease term, but in no case earlier than 30 days
after receipt of the notice by the tenant. This notice period may run
concurrently with any comparable notice period required by state or local
law.
3. A termination notice for other good cause must provide that the proposed
termination will be effective at the end of the lease term, but in no case
earlier than 30 days after receipt of the notice by the tenant.
8-17 *Key Regulations
24 CFR 5.233 Mandated Use of HUD’s Enterprise Income Verification (EIV) System *
8-18 Procedures for Addressing Discrepancies and Errors
A. Overview
To promote income and rent integrity, owners must investigate and research
discrepancies and possible errors.
*Owners must use HUD’s EIV system as a tool to identify possible discrepancies in
income reported by the tenant as well as identifying tenants who may be deceased
or receiving assistance at more than one location or under more than one HUD
rental assistance program.*
B. Program Violations
When owners identify an error involving a tenant, they should first determine if the
error constitutes a program violation.
A program violation occurs when the tenant by action or inaction breaches a lease,
regulation, or other program requirement. Tenant errors occur because tenants
misunderstand or forget rules. Tenant errors are thought of as unintentional
program violations.
C. Investigating and Discovering the Facts
1. If an owner suspects that a tenant has inaccurately supplied or
misrepresented information that affects the tenant’s rent or eligibility, the
owner must investigate and document the tenant’s statements and any
conflicting information the owner has received. To research questionable
information, the owner may:
a. Confront the tenant with the tenant’s information and any conflicting
information;
b. Obtain additional information from other persons or agencies; and
c. Take other actions to verify either the tenant’s information or the
conflicting information.
*NOTE: Owners may not suspend, terminate, reduce or make a final
denial of any benefits of a tenant until they have taken appropriate steps to
independently verify the tenant’s information or the conflicting information.*
2. If an intentional misstatement or withholding of information cannot be
substantiated through documentation, the owner must treat the case as an
unintentional program violation.
D. Notifying and Meeting with the Tenant
1. After gathering the documentation, the owner must notify the tenant in
writing of the error and identify what information is believed to be incorrect.
2. The tenant must have an opportunity, within 10 days, to meet with the
owner and discuss the allegations.
a. The owner must also inform the tenant that failure to do so may
result in the tenant’s termination of tenancy.
b. The meeting with the owner must be with a designated
representative who has not been involved in any manner with the
review of the allegedly false information.
c. The owner must provide a written final decision, based solely on the
facts presented and discussed at the meeting to the tenant within 10
days of the date of the meeting. The decision must also state the
basis for the determination.
3. For tenants with a disability, the notice must be in a form accessible to the
tenant, and the meeting must be held in a location accessible to the tenant.
E. Determining the Outcome of the Investigation
1. If the tenant meets with the owner to discuss the error, and the owner is
convinced the tenant’s submissions were correct, the owner should
document the file accordingly and close the investigation.
2. If, after meeting with the tenant, the owner determines that the provision of
inaccurate information was an unintentional program violation, the owner
should correct the tenant’s rent, if applicable, and provide the tenant with
notice of the change in rent. If the tenant is unable to repay the full amount,
the owner and tenant should enter into a repayment agreement. *(See
Paragraph 8-23 for information on repayment agreements.)*
a. If, after the income adjustment, the tenant no longer qualifies for
assistance, the tenant may remain in the property subject to making
repayments and paying market rent.
b. The owner may terminate tenancy if the tenant refuses to pay the
new monthly rent or refuses to repay the previously overpaid
subsidy pursuant to the repayment agreement.
c. If necessary, civil action may be filed to recover the funds.
Example – Unintentional Program Violation
A two-income household receives rental assistance payments. One
individual works full time, which was fully disclosed during the last
recertification. The other has a part-time job, but the work is on an as-
needed basis. Because the income earnings were uncertain, small in
amount, and infrequent, the tenant misunderstood the requirement to
report income and did not report the uncertain income earnings.
3. If the owner determines the tenant knowingly provided inaccurate or
incomplete information, and this can be substantiated through
documentation, the owner needs to pursue the incident as fraud following
the guidance in paragraph 8-18.
8-19 Procedures for Addressing Fraud
A. Overview
Some investigations may lead to the discovery of efforts by tenants or other parties
to mislead the owner and, possibly, to commit fraudulent acts that result in the
receipt of benefits or rent subsidies for which the tenant is not eligible. If after
following the procedures in paragraph 8-17 for investigating and researching
questionable information, the owner may determine that the tenant has knowingly
provided inaccurate or incomplete information and will pursue the incident as fraud.
B. Criminal Violation (Fraud)
A criminal violation would be fraud, which is considered deceit or trickery
deliberately practiced in order to gain some advantage dishonestly. Fraud is an
intentional deception; it cannot be committed accidentally.
NOTE: A common error is to misuse or overuse the term “fraud” when a violation
is suspected. A violation is not always fraudulent. It is important that owners first
review and assess the circumstances before labeling a violation as fraud.
C. Documenting Fraud
In order to establish fraud, the tenant file must contain documentation showing the
following:
1. The tenant was made aware of program requirements and prohibitions (i.e.,
all appropriate signatures are on the intake documents); and
2. The tenant intentionally misstated or withheld some material information.
The strongest proof of fraud is an admission by the tenant. Fraudulent
intent can also be demonstrated by documenting that:
a. The act was done repeatedly (i.e., not a one-time or accidental
occurrence), or there was prior determination of fraudulent intent or
conviction (e.g., signing false HUD-50059s);
b. False names or social security numbers were used;
c. The tenant falsified, forged, or altered documents;
d. The tenant omitted material facts that were known to the tenant
(e.g., employment of self or other household members); or
e. The tenant made admission to another person of the illegal action or
omission (e.g., boasting that he/she cheated, or telling an employer
or neighbor that an “absent” spouse has moved in with the tenant).
D. Taking Action to Address Fraud
1. When fraud is present, the authorized course of action for owners to take is
termination of tenancy. An owner's authority to pursue eviction in cases of
tenant fraud is grounded in the material noncompliance provision contained
in both the model lease and in the regulations [24 CFR 247.3]. Material
noncompliance includes "knowingly providing incomplete or inaccurate
information.”
2. Fraud can be handled as a civil and/or criminal violation.
a. Fraud can be handled as a civil violation by using it as grounds for a
termination of tenancy. Providing false information is a material
noncompliance with the lease. The owner must seek recovery for
subsidy overpayment by asking the court for judgment against the
tenant.
b. Fraud is handled as a criminal violation when a local or federal
prosecutor decides to prosecute the tenant for violation of a state or
federal law. To convict the tenant, the prosecutor must show the
court that the case contains all the elements of criminal fraud.
3. When a tenant is evicted for material noncompliance for submitting false,
incomplete, or inaccurate information on household income or family
composition required for certification or recertification, an owner must file a
civil action against the tenant to recover improper subsidy payments. An
owner may consider referring the case for prosecution as a criminal
violation, if applicable. Prosecution may be pursued on the local, state, or
federal level.
8-20 *Discrepancies Reported in the EIV System*
A. Requirements Regarding Discrepancies *Reported in the EIV System*
*At the time of recertification, or at other times as stated in the owner’s policies and
procedures, owners must review and resolve any discrepancies reported in the EIV
system that could result in errors in a tenant’s rent and/or HUD assistance
payments. This includes discrepancies in income reported on the EIV Income
Discrepancy Report and discrepancies reported on the EIV Deceased Tenant
Report and Multiple Subsidy Report. (See Chapter 9, Enterprise Income
Verification (EIV), for more information on use of these reports.)
1. EIV Reports.
a. Income Discrepancy Report:
At the time of recertification, owners must review and resolve any
discrepancies in income reported on the EIV Income Discrepancy
Report. Using this report, the owner must identify any unreporting
or underreporting of income by the tenant reported on current or
historical HUD-50059s and transmitted to TRACS.
b. EIV Verification Reports.
Owners must review and resolve any discrepancies in the
information reported on the following reports to identify tenants who
may be receiving assistance they are not entitled to receive.
(1) Deceased Tenant Report. Tenants reported by SSA as
being deceased, and where HUD is continuing to pay
subsidy.
(2) Multiple Subsidy Report. Tenants who may be receiving
rental assistance at more than one location.
NOTE: The reports in EIV are a tool to alert owners of possible
discrepancies. Not all EIV discrepancies reported are valid discrepancies.
2. Owners may not suspend, terminate, reduce or make a final denial of any
benefits of a tenant until they have taken appropriate steps to
independently verify information relative to any discrepancy reported. For
example, if there is an income discrepancy, the owner must verify:
a. The amount of the wages, unemployment compensation, or SSA
benefits involved;
b. Whether such tenant actually has (or had) access to such wages or
benefits for his or her own use; and
c. The period (or periods) when, or with respect to which the tenant
actually received such wages or benefits.
See Chapter 9, Enterprise Income Verification (EIV) for more information
on the EIV reports.
3. Owners must follow the instructions in Paragraph 8-18.D for notifying and meeting
with the tenant when a valid discrepancy is discovered as a result of the owner’s
review.
a. If the owner determines the tenant is in noncompliance with his/her
lease because he/she knowingly provided incomplete or inaccurate
information, the owner must follow the guidance in Section 3 of this
Chapter for terminating the tenant’s tenancy and Paragraph 8-18
for the requirements on filing a civil action against the tenant to
recover improper subsidy payments.
b. Where fraud is suspected, the owner should report this to the HUD
OIG Office of Investigation in the district that has jurisdiction in the
state the project is located.
B. Nondisclosure of Income Information
The Federal Privacy Act (5 USC 552a, as amended) prohibits the disclosure of an
individual’s information to another person without the written consent of such
individual. As such, the EIV data of an adult household member may not be
shared (or a copy provided or displayed) with another adult household member,
unless the individual has provided written consent to disclose such information.
However, the O/A is not prohibited from discussing with the head of household
(HOH) and showing the HOH how the household’s income and rent were
determined based on the total income reported and verified. See Chapter 9,
Paragraph 9-17, Disclosure of EIV Data.*
C. Opportunity to Contest
The owner *must* promptly notify a tenant in writing of any adverse findings made
on the basis of the information verified. The tenant may contest the findings in the
same manner as applies to other information and findings relating to eligibility
factors under the applicable program. *Denial of assistance or termination of
tenancy* must be carried out in accordance with requirements and procedures
applicable to the individual covered program and will not occur until the expiration
of any notice period provided by the statute or regulations governing the program.
8-21 Reimbursement to HUD for Overpayment of Assistance
A. Tenant’s Obligation to Repay
1. The tenant must reimburse the owner for the difference between the rent
the tenant should have paid and the rent he/she was actually charged, if
the tenant:
a. Fails to provide the owner with interim changes in income or other
factors;
b. Submits incorrect information on any application, certification, or
recertification;
c. *Fails to report income received*, and
d. As a result, is charged a rent less than the amount required by
HUD's rent formulas.
2. The tenant acknowledges his/her obligation to make such reimbursements:
a. In paragraph 18 of the Model Lease for Subsidized Programs;
b. In paragraph 14 of the Model Lease for Section 202/8 or Section
202 PAC; and
c. In paragraph 12 of the Model Leases for Section 202 PRAC and
Section 811 PRAC.
3. If the tenant does not pay in full, an owner should enter into a repayment
*agreement* with the tenant to collect these funds over a specific period of
time.
4. The tenant is not required to reimburse the owner for undercharges caused
solely by the owner's failure to follow HUD's procedures for computing rent
or assistance payments.
5. A tenant must reimburse the owner for the total overpayment back to the
*time overpayment of assistance started, not to exceed the 5-year limitation
that the tenant was receiving assistance discussed in forms HUD-9887 and
HUD-9887-A. This 5-year limitation applies for all overpayments of
assistance and is not limited to errors found using the EIV system.
6. The owner must have the form HUD-50059(s) on file that was in effect
during the period(s) that the overpayment of assistance occurred, along
with any supporting documentation, in order to calculate the amount the
tenant must reimburse to the owner. The form HUD-50059(s) is the
document whereby the tenant(s) certifies to the accuracy of the information
recorded on the form. If the owner does not have this historical information,
they cannot go back to the tenant for any overpayment of assistance.*
B. Owner’s Obligation to Repay
1. The owner is not required to reimburse HUD immediately for overpayments
of assistance where the overpayment was caused by the tenant's
submission of incorrect information. Repayments are required when and
as tenants repay in accordance with an agreed-upon repayment
agreement.
2. *The owner may retain a portion of the repayments they actually collect
from the tenants who have improperly reported their income at the time of
certification or recertification to help defray the cost of pursuing these cases
(this is not limited to cases where the owner has determined fraud).
a. Owners may only retain an amount to cover their actual costs, which
is the lesser of:
(1) Their actual costs, or
(2) 20 percent of the amount received from the tenant.
b. Amounts retained by the owner must be deposited into the project’s
operating account to offset the expenses incurred for these cases.
c. As with all income and expenses of the project, owners must keep
records of the receipt and disbursement of all amounts collected
from the tenant for audit purposes. At a minimum, the owner must
record:
(1) Date and amount(s) received from the tenant;
(2) Expenses incurred;
Examples of types of expenses incurred include staff time for
verifying the unreported income; meeting with tenant;
drafting repayment agreements; generating and sending
monthly invoices to tenant; generating manual voucher
adjustments; collection agency fees, if applicable; and,
meeting state requirements.
(3) Amount(s) retained; and
(4) Voucher date(s) and amount(s) of reimbursement made to
HUD.*
3. The owner must reimburse HUD for all other overpayments of assistance
where such overpayments were due to the owner's error or the owner's
failure to follow HUD's procedures. HUD or the Contract Administrator may
permit the owner to repay such overpayments in one lump sum or over a
period of time through reduction of normal housing assistance requisitions if
immediate repayment in full would jeopardize the financial condition of the
property.
8-22 *Tenant Repayment Options
A. Tenants can repay amounts due:
1. In a lump sum payment; or
2. By entering into a repayment agreement with the owner; or
3. A combination of 1 and 2, above.
For example, a tenant may owe $1,000, make a lump sum payment of
$300 and enter into a repayment agreement for the remaining $700.
B. Tenants who do not agree to repay amounts due in accordance with a above, will
be in noncompliance with their lease agreement and may be subject to termination
of tenancy.
C. Tenants may also be required to repay funds to the owner due to a:
1. Civil action taken by the owner, or
2. Court action as a result of an Office of Inspector General (OIG) audit.
8-23 Repayment Agreements
A. The tenant and owner must both agree on the terms of the repayment agreement.
The tenant may wish to consult with HUD’s Housing Counseling Agency in their
area to assist them in working with the owner to reach agreeable terms for the
repayment agreement. See the Housing Counseling Agency website for a listing
of agencies for each state at: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.
1. Monthly Payment.
The tenant’s monthly payment must be what the tenant can afford to pay
based on the family’s income.
The monthly payment plus the tenant’s total tenant payment (TTP) at the
time the repayment agreement is executed should not exceed 40 percent of
the family’s monthly adjusted income.
Example:
Family’s monthly adjusted income is $1,230.
Family’s monthly TTP is $369 (30% of the family’s
monthly adjusted income.
40% of the family’s monthly adjusted income is
$492.
The monthly payments for the repayment
agreement should not exceed $123 per month
($492 - $369 = $123) ($369 monthly TTP+ $123
repayment = $492, 40% of the family’s monthly
adjusted income.
2. Repayment Time Period.
The time period for repayment by the tenant of the amount owed.
Example: The tenant agrees to repay $1,000 and agrees to
monthly payments of $25.
$1,000/$25 = 40 months (time period).
B. The repayment agreement must:
1. Include the total retroactive rent amount owed, the amount of lump sum
paid at time of execution of the agreement, if applicable, and the monthly
payment amount.
2. Reference the paragraphs in the lease whereby the tenant is in
noncompliance and may be subject to termination of their lease.
3. Contain a clause whereby the terms of the agreement can be renegotiated
if there is a decrease or increase in the family’s income of $200 or more per
month.
4. Include a statement that the monthly retroactive rent repayment amount is
in addition to the family’s monthly rent payment, and is payable to the
owner.
5. Late and missed payments constitute default of the repayment agreement
and may result in termination of assistance and/or tenancy.
6. Be signed and dated by the tenant and the owner.
C. Owners must not apply a tenant’s monthly rent payment towards the repayment
amount owned that would result in an accumulation of late rent payments. The
monthly payment due on the repayment agreement is in addition to the tenant’s
monthly rent payment.*
8-24 Reimbursement to Tenant for Overpayment of Rent
A. *If, at the time of recertification, there is an Income Discrepancy Report in EIV that
reflects a decrease of $2,400 or more in wage, unemployment and/or Social
Security income reported in EIV and the wage, unemployment and/or Social
Security income reported in TRACS for the period of income used for the
discrepancy analysis, the owner must investigate the discrepancy.*
B. If, after investigating the discrepancy, the owner determines that an error was
made in calculating the tenant’s income (e.g., third party verification not obtained,
third party verification received but an error was made in calculating the tenant’s
income) and the income was over-reported, the owner must complete corrections
to the prior certification(s) affected by the income change. Once the corrections
have been made, the owner must determine the difference between the amount of
rent the tenant paid and the rent that the tenant should have paid.
C. *The owner must discuss the discrepancy in income reported with the tenant.*
1. The owner must provide the tenant with written notification, which includes:
a. A notice of the change in rent, effective retroactively to when the
error occurred;
b. The new monthly rent the tenant is required to pay;
c. The amount of the overpayment of rent due to the tenant; and
d. A form for the tenant to execute and return to the owner stating
whether the tenant wishes to:
(1) Receive a full, immediate refund; or
(2) Apply the overpayment to future monthly rent payments.
8-25 *Reimbursement for Errors Discovered During a Monitoring Review
If, during a review of the tenant files, the CA determines that an error was made in the
income calculation based on the income verifications on file that results in an under- or
over-payment of rent by the tenant, unless the overpayment was due to the owner's error
or the owner's failure to follow HUD's procedures, the owner must make the necessary
adjustments to the tenant’s rent for the period the error occurred. The tenant must
reimburse the owner for any underpayment of rent and the owner must reimburse the
tenant for any overpayment of rent.*Source: Legislative text reproduced verbatim
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Related Rules
§ 151.20
TEMPORARY EVICTION CONTROLS AND RENT REDUCTIONS FOR MOBILE HOMES DAMAGED IN THE JANUARY, 1994 EARTHQUAKE
§ 1
Definitions
§ 2
Eviction of tenants prohibited; exceptions