How to Ensure Prompt Payment of Vacancy Claims

Once a household has moved out of an assisted site and the unit is ready for reoccupancy, owners and managers can ask HUD to pay part of the contract rent for the vacant unit until a new eligible household moves in. HUD recognizes that owners have a potential financial risk due to limitations on security deposits and the need to adhere to waiting list requirements. As such, HUD has a special claims process to reimburse owners for their financial loss.

But it’s not always easy to get HUD to pay what it calls “vacancy losses after rent-up.” You must follow HUD's detailed requirements for submitting these claims, including submitting a long list of documents to back up your claim.

If you leave out required documents, your local HUD office or contract administrator will most likely deny your claim or send it back and ask you to resubmit it with the required documents. That wastes time and money that you could be using to operate your site. We'll give you a rundown on what documents to submit with your claim. And we'll also provide a Model Checklist: Special Claims Checklist for Regular Vacancies, that you can use to ensure your submission package is complete.

Vacancy Claim Basics

When an assisted unit becomes vacant, a new household doesn't usually move in right after you've prepared the unit for reoccupancy. It takes time to find an eligible household. Even if you have a waiting list, you may need time to complete the applicant household's eligibility review and certification, and a new household may need time to arrange its move-in.

HUD gives you a break in this situation. According to HUD's Special Claims Processing Guide, you can ask HUD to pay 80 percent of the vacant unit's daily contract rent from the date the unit was available for occupancy until the date a new household moves in—for a period of up to 60 days [HSG-06-01, Sec. 3-3(F)(1)].

Example: A household moves out on Jan. 22. The unit is available for occupancy on Jan. 31. A new household moves in on April 1. The total daily contract rent for the 59 days the unit was vacant and available for occupancy equals $1,054. Assuming you haven’t collected amounts from other sources such as security deposits, you can ask HUD for a vacancy payment of $843 for the period ($1,054 x 80%).

Eligible sites. You can submit a vacancy claim for Section 8, Section 202/8, Section 202 PAC, Section 202 PRAC, and Section 811 PRAC sites. But it's important to note that for vacancies at Section 8 Property Disposition Set-Aside or Section 202 PRAC or Section 811 PRAC sites, the amounts you may bill HUD differs.

A claim for a unit under a Section 202 PRAC or Section 811 PRAC may not exceed 50 percent of the operating rent for up to 60 calendar days for each unit vacancy [HSG-06-01, Sec. 3-3(F)(2)]. And for a claim for a unit under Section 8 Property Disposition Set Aside, the claim may not exceed the housing assistance payment for the number of days between the date the resident vacated and the last day of the month plus 80 percent of contract cost for any days the unit remains vacant in the following month [HSG-06-01, Sec. 3-3(F)(1)(a-b)].

When to submit claim. HUD gives you a limited time to submit your claim. The completed claim form and documentation must be received by the local HUD office or the contract administrator within 180 calendar days from the date the unit is available for occupancy [HSG-06-01, Sec. 3-4(A)].

Claim period. The claim period begins the day the unit is available for occupancy. In other words, vacancy loss claims may not be paid for the days the unit was being prepared for occupancy [HSG-06-01, Sec. 3-4(B)]. For example, if a unit was vacated on Feb. 5, cleaned Feb. 5 through Feb. 8, and available for occupancy on Feb. 9, the claim period would begin on Feb. 9.

The claim period may not exceed 60 calendar days [HSG-06-01, Sec. 3-4(D)]. The claim period ends on the day preceding the day on which the unit is re-rented or 60 calendar days from the date the unit is available for occupancy, whichever is earlier [HSG-06-01, Sec. 3-4(C)].

Other key requirements. Before it will approve a vacancy claim, HUD also requires that you:

• Enter the move-out or unit transfer date of the former resident in TRACS. If the unit was rented within the claim period, the move-in or unit transfer for the new tenant must also be viewable in TRACS [HSG-06-01, Sec. 3-4(E)(1-2)].
• Put the units in “decent, safe, and sanitary condition” and make them “available for occupancy during the vacancy period in which the payments are claimed” [HSG-06-01, Sec. 3-2(A)];
• Take “all feasible actions to fill the vacancy,” including contacting applicants on the waiting list and, if your waiting list isn't closed, advertising the unit's availability as spelled out in your Affirmative Fair Housing Marketing Plan (AFHMP) [HSG-06-01, Sec. 3-2(5)];
• Reject applicants only for good cause. HUD or your contract administrator will review your reasons for rejecting any applicants during the vacancy period to make sure they were acceptable [HSG-06-01, Sec. 3-2(6)];
• Not have caused the vacancy by violating the lease, the HAP contract, or applicable laws [HSG-06-01, Sec. 3-2(7)];
• Not submit vacancy claims on amounts paid by other sources, such as forfeited security deposits or federal relocation payments [HSG-06-01, Sec. 3-2(F)(3)].

Submit Key Documents with Vacancy Claim

Before HUD will process a vacancy claim, it wants evidence that you have met the requirements for making these claims. The HUD Special Claims Processing Guide spells out the basic documentation you must include when you ask HUD to pay your vacancy claims. But some contract administrators may require additional documents to show you have met HUD's requirements.

Based on HUD's requirements, here's what to include with your submission to prove that the claim is legitimate and that you’ve taken steps to rent the available unit to eligible households. Before submitting your claim, ask your local HUD office or contract administrator for the specifics on how they expect you to document your request.

1. Form HUD-52670-A part 2, “Special Claims Schedule.” This form summarizes the types and amounts of all claims you may be making, if you're making multiple claims at once. But even if you're making just one claim, you must submit this form. A signature is required.
2. Some contract administrators may also require you to submit Form HUD-52670-A part 1, “Schedule of Tenant Assistance Payments Due,” to show that you have returned any assistance payments that HUD paid in advance on the unit after the former household moved out. This is a separate form from Form HUD-52670-A part 2. Ask your contract administrator whether it requires you to submit this form along with Form HUD-52670-A part 2.
3. Form HUD-52671-C, “Special Claims for Regular Vacancies.” This form shows how you calculated the amount you're claiming in vacancy payments. Complete Part A at the top of the form and sign and date the form. If you own or manage a Section 8 Property Disposition Set-Aside site, complete Part B instead. You enter the dates the unit was ready for occupancy, re-rented, and the contract rent on this form. A signature is required.
4. Signed Form HUD-50059. A copy of the signed Form HUD-50059 completed at move-in for the former tenant that shows the amount of the security deposit required.
5. Documents showing attempts to fill vacancy. HUD says it wants evidence of the status of your waiting list for the unit's size and type. If the unit wasn’t filled from the waiting list(s), documentation of marketing efforts must be included, such as copies of advertising or invoices for advertising expenses that substantiate the date marketing occurred in accordance with the AFHMP.
6. Security deposit documentation. You must provide documentation that the appropriate security deposit was collected from the tenant. This can be in the form of a copy of the original lease, a copy of the tenant’s ledger card, or a copy of the receipt(s) for security deposit. In addition, you must provide security deposit records showing the amount of the former household's security deposit and the amount, if any, you refunded.
7. Evidence of when unit became “available for occupancy.” You may bill HUD only for vacant units that were in good condition and available for occupancy. To show that the unit meets this requirement, HUD requires you to submit a log or other maintenance records showing the move-out date, the start and finish date of each unit repair, the date the unit was available for occupancy, and the date the unit was re-rented. You can adapt and use our Model Vacancy Reconditioning Log to document the vacant unit's availability. Depending on what your local HUD office or contract administrator requires, you may also have to submit any or all of the  following documents to show when the unit became available for occupancy:

• Copy of former household's notice to vacate;
• Copies of TRACS printouts from HUD Secure systems to verify move-out and move-in dates;
• Copy of new household's move-in HUD Form 50059;
• Copy of first page and signature page of new household's lease;
• Move-out inspection report;
• Move-in inspection report; and
• Vacant unit maintenance report with copies of bills for repair expenses.

Provide Checklist with Submission Package

To make sure your submission is thorough and organized and to help HUD process your claim faster, submit your claim with a checklist of required documentation that lists the supporting documentation. Your checklist, like our Model Checklist, should do the following:

Give identifying information. Include in the reference line your site's name, Section 8 contract number, and address, and the number of the unit the claim covers.

Explain purpose of request. State that you're requesting payment for “vacancy losses after rent-up” and summarize the important information about your claim, including the move-out date, the date the unit became available for occupancy, the date of move-in (if any), and the total amount of your vacancy claim.

List documents included. Consult your local HUD office or contract administrator to get the specifics on how they expect you to document your request, and adapt your checklist accordingly.

Keep Copy of Submission Package in Files

HUD requires you to keep a copy of the submission package in your files for three years after the date the claim was paid [HSG-06-01, Sec. 1-7(B)].