Enhanced Voucher Holders May Remain at End of Lease Term

Facts: In 1982, a resident and her son moved into a project-based Section 8 site. A few years later, they were joined by the resident’s granddaughter. The resident lived in the unit until her death in 2015. And her granddaughter continues to live there, now with her three minor children.

In early 2008, the then-owners of the site decided not to renew their project-based Section 8 contract with the local housing authority upon its expiration on Jan. 17, 2009. Consistent with federal law, on Jan. 9, 2008, the owners notified the tenants of the site that it wouldn’t be renewing the contract. The notification letter explained: “Federal law allows you to elect to continue living at this property provided that the unit, the rent and we, the owner, meet the requirements of the Section 8 tenant-based assistance program. As an owner, we will honor your right as a tenant to remain at the property on this basis as long as it continues to be offered as rental housing, provided that there is no cause for eviction under Federal, State or local law.”

The family opted to remain in their unit, and, as a result, they began receiving enhanced voucher assistance after the site’s project-based contract expired in January 2009. A federal statute provides that enhanced voucher holders “may elect to remain” in their housing developments, even after their landlord has opted out of the federal housing assistance program [42 U.S.C. §1437f(t)(1)(B)].

The following year, the owners sold a parcel of the site to another owner. The parcel included the resident’s apartment. The new owner subsequently signed a Housing Assistance Payment (HAP) contract with the housing authority and executed a one-year, Section 8 model lease with the resident. The parties renewed the lease in 2011 and 2013 for additional two-year terms, the second of which expired on April 30, 2015.

In February 2015, the grandmother died and the housing authority transferred the head of household status to her son. Two weeks later, the owner sent the family a letter stating that he did not intend to renew their lease when it expired at the end of April, citing the grandmother’s death and his desire to renovate the unit as reasons for the nonrenewal.

Upon expiration of the lease, however, the family didn’t vacate the apartment, and on May 1, the owner sent a second letter reiterating that he wouldn’t sign a new lease. In this second letter, the owner again provided the grandmother’s death and his plan to renovate as reasons for nonrenewal. But he also added a third reason: his intent to move his daughter into the apartment. The owner concluded the letter by stating that he would initiate eviction proceedings if the family didn’t move out within five days.

The family responded by filing suit in the district court. They argued that the enhanced voucher provision provided them with an enforceable right to remain in their unit. As a result, the owner couldn’t evict the family without cause, and, according to them, the owner’s stated reasons didn’t constitute good cause.

The owner, on the other hand, contended that he wasn’t bound by the enhanced voucher statute because he had never participated in the project-based program. Alternatively, he argued that the statute didn’t create a right that was enforceable at the end of a lease term. The district court ruled in favor of the owner, and the family appealed.

Ruling: The Third Circuit appeals court reversed the district court’s decision and sent the case back down so that the district court may consider whether the owner had good cause to evict under the circumstances of this case.

Reasoning: The appeals court ruled that the statute’s plain language and history made clear that enhanced voucher holders may not be evicted absent good cause, even at the end of the lease term. The court also noted that HUD has long interpreted the law as requiring landlords to renew the leases of enhanced voucher holders unless there is good cause to terminate the tenancy.

With regard to ordinary tenant-based and project-based vouchers, HUD has, through regulations, determined what constitutes good cause to terminate a tenancy. However, HUD hasn’t issued a good cause regulation that governs enhanced vouchers. Here, the owner provided three different justifications for his nonrenewal of the family’s lease: the grandmother’s death, a plan to renovate the unit, and his desire to move his daughter into the apartment. The lower court didn’t reach the question of whether any of these justifications were legally sufficient, because it held that the owner didn’t need good cause for nonrenewal. As the good cause question may implicate critical, unresolved factual questions, the appeals court sent the case back to the district court so that it may consider in the first instance whether the owner has good cause for nonrenewal under the circumstances of this case.

• Hayes v. Harvey, August 2018