The Risk of the Incomplete Lease

January 29, 2020

Leases that don't have the required attachments will raise red flags for auditors.

Leases that don't have the required attachments will raise red flags for auditors.

The lease is a legally binding contract between the site owner and the tenant. As an owner or manager of a HUD-assisted site, you most likely are aware of the four model leases prescribed by HUD. The type of lease an owner uses depends on the program being administered. The two most widely used leases are the Family Model Lease and the Model Lease for Section 202/8 or Section 202 PACs. The model leases identify the program requirements that owners and tenants must adhere to while participating in the program.

HUD requires you to attach certain documents and addendums to the model lease that’s applicable to your site. We’ll go over these attachments and addendums in detail.

Required Attachments

The four model leases can be found in Appendix 4 of HUD Handbook 4350.3. The model leases identify the program requirements that owners and tenants must follow while participating in the programs. Although many of these requirements are the same in each of the four leases, several of the lease provisions vary from lease to lease. For example, changes in the tenant rent are listed in all four model leases. But the specific requirements and language are different among the four leases.

Here are the required attachments to the model lease:

HUD-50059/HUD-50059A. These forms certify that the tenant’s eligibility, rent, and assistance payments have been computed in accordance with HUD’s regulations and administrative procedures and that all required verifications were obtained. The forms are titled, “Owner’s Certification of Compliance with HUD’s Tenant Eligibility and Rent Procedures.” The 50059 shows tenants the income used to calculate the rent and the amount of rental assistance, if any, that HUD pays.

Move-in inspection report. This report must be signed by both the owner and tenant. According to HUD, the move-in inspection is an opportunity to familiarize the tenant with the site and the unit, as well as to document its current condition. By performing move-in inspections, owners and tenants are assured that the unit is in livable condition and is free of damages.

When the tenant vacates the unit, you can compare the list of damages on the move-out form with the move-in form to determine if the damage is reasonable wear or tear or excessive damage caused by the tenant’s abuse or negligence.

Don’t confuse the move-in and move-out inspection forms with annual unit inspections performed by owners and physical inspections performed by HUD and/or HUD contractors. Owners perform unit inspections on at least an annual basis to determine whether the appliances and equipment in the unit are functioning properly and to assess whether a component needs to be repaired or replaced. This is also an opportunity to determine any damage to the unit caused by the tenant’s abuse or negligence and, if there is any, make the necessary repairs and bill the tenant for the cost of the repairs.

House rules (if developed). Owners aren’t required to develop house rules, but if house rules are in place, an entire copy of the rules must be attached to the lease and maintained in the tenant’s file.

HUD cautions owners to be careful not to develop restrictive rules that limit the freedom of tenants. If owners develop house rules for a site, these rules must be

  • Consistent with HUD requirements for operating HUD-subsidized sites;
  • Reasonable; and
  • Not infringe on tenants’ civil rights [HUD Handbook 4350.3, par. 6-9(A)(2)].

For examples, see "Reasonable vs. Unreasonable House Rules," below.

Lead-based paint disclosure form (if applicable). Exhibit 6-3 of HUD Handbook 4350.3 contains a copy of the disclosure form. Owners of all applicable properties must give tenants basic information on lead-based paint and its hazards, and they must maintain an accurate record of this communication. Applicable sites are ones that were built before Jan. 1, 1978, unless the site was found to be lead-based paint free by a lead-based paint inspector certified under the federal certification program. In addition, housing that’s specifically designated for the elderly or persons with disabilities is exempt, unless a child under age 6 resides or is expected to reside in the unit.

The disclosure form is designed to document receipt of the Lead Hazard Information Pamphlet and to disclose the presence of known lead-based paint/hazards, disclose information on lead-based paint/hazards, and include contract language of a Lead Warning Statement and an acknowledgment section to be signed by the tenant, the owner, and any agent.

Pet rules (if applicable). Owners of a site developed for the elderly and persons with disabilities must have lease language that specifies that residents have a right to a pet [HUD Handbook 4350.3, par. 6-10(D)]. In addition, if a site has established pet rules, they must be attached to the lease. All households at these sites must be given a copy of the pet rules regardless of whether or not they have a pet.

Lease provisions for pets are found in the Model Leases for Section 202/8, Section 202 PACs, Section 202 PRACs, and Section 811 PRACs. Certain sites, however, such as Section 8 New Construction and Section 8 State Agency may be available for occupancy only to elderly and/or disabled residents. As a result, the language addressing pets that’s found in the Model Lease for Section 202/8 and Section 202 PACs must be added to the Model Lease for Subsidized Programs for use at these sites. You can modify the Model Lease for Subsidized Programs by attaching the pet provisions from the Model Lease for Section 202/8 and Section 202 PACs as a lease addendum.

Owner’s live-in aide addendum (if applicable). The live-in aide addendum establishes that a live-in aide is not eligible to remain in the unit once the tenant is no longer living in the unit, regardless of the circumstances for the tenant’s departure. The live-in aide addendum may give the owner the right to evict a live-in aide who violates any of the house rules.

Owner’s police or security personnel addendum (if applicable). HUD lets sites lease Section 8 units to police or security officers who are over the income limits to help alleviate crime. If a police or security officer lives at a Section 8 unit at your site, you must add a lease addendum that states that the police officer or security personnel’s right of occupancy is dependent on the continuation of the employment that qualified him or her for residency at the site under the plan [HUD Handbook 4350.3, pars. 6-5(C)(5)].

HUD VAWA Lease Addendum (Section 8 only). The Violence Against Women and Justice Department Reauthorization Act of 2005 Lease Addendum (VAWA HUD-91067) can be found at https://www.hud.gov/sites/documents/91067.doc and is applicable to the Section 8 program only. The lease addendum revises the applicable Section 8 lease to reflect the statutory requirements of VAWA [HUD Handbook 4350.3, par. 6-5(G)(1)]. This lease addendum must be signed by all adult members of the household and attached to the model lease.

Additional Documents to Give Residents at Move-In

Along with the required attachments or addendums given to residents as part of their lease, the following are additional documents to be distributed to residents at move-in.

[] Consent forms. These include HUD-9887/A (Fact Sheet describing the necessary verifications), Form HUD-9887 (to be signed by the Applicant or Tenant), Form HUD-9887-A (to be signed by the applicant or tenant and owner), and relevant verifications (to be signed by the applicant or tenant).

[] EIV & You brochure. This brochure was developed by HUD to inform applicants and tenants about HUD’s EIV system and how they may be affected when owners use the data in the EIV system for verification of employment and income and for reducing errors in HUD’s rental assistance programs. Owners must provide applicants and tenants with a copy of the EIV & You brochure at move-in and annually at recertification. The brochure is available English as well as several other languages. The English version of the brochure can be found at www.hud.gov/sites/documents/DOC_7877.PDF.

[] Resident Rights and Responsibilities brochure. Owners must provide applicants and tenants with a copy of the Resident Rights and Responsibilities brochure at move-in and annually at recertification. This can be found at www.hud.gov/sites/dfiles/Housing/documents/resident_rights_brochure_8.pdf.

[] How Your Rent Is Determined Fact Sheet. These fact sheets describe how rents are determined under the various project-based assistance programs. They summarize HUD polices and regulations concerning resident income certifications.

Reasonable vs. Unreasonable House Rules

Reasonable house rules are not excessive or extreme, and most important, they are fair. Here are some examples of reasonable and unreasonable house rules. These don’t cover all situations, so owners must use their own discretion to determine whether a house rule is reasonable or not.

Reasonable House Rule: Asking all children under the age of 12 to be accompanied by an adult resident when using site facilities.

Unreasonable House Rule: Asking all children under the age of 12 to be accompanied by an adult resident at all times in the building.

Reasonable House Rule: Requesting all visitors sign in when entering the building.             

Unreasonable House Rule: Not allowing a visitor in a tenant’s unit during evening hours.

Reasonable House Rule: Asking tenants to turn sound equipment low after a certain time at night.             

Unreasonable House Rule: Asking tenants to turn the light off after a certain time at night.

Reasonable House Rule: Not allowing smoking in the common areas of the building.

 

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