HUD Proposes “30-Day Notice” Rule for Nonpayment of Rent

December 10, 2023

The proposed rule would formalize notice changes made during the pandemic.

 

 

The proposed rule would formalize notice changes made during the pandemic.

 

 

HUD recently published a Notice of Proposed Rulemaking in the Federal Register for a rule that would require public housing agencies (PHAs) with tenants in public housing and owners of project-based rental assistance (PBRA) program sites to provide their tenants with written notification at least 30 days prior to filing for an eviction due to nonpayment of rent in court. Under the proposed rule, the 30-day notice would include instructions on how tenants can cure lease violations for nonpayment of rent and information on how to recertify their income and request a minimum rent hardship exemption if applicable to avoid eviction.

According to HUD, this proposed rule would affect an estimated 3.9 million people in 2.2 million households – 1.7 million people in 840,000 households in public housing and 2.2 million people in 1.4 million households in PBRA programs. Public comments on the proposed rule are due by Jan. 30, 2024. Those interested in submitting comments can do so by going to Regulations.gov.

We’ll go over the details of this proposed rule and cover how the notice set precedent.

Applicability

The proposed rule would apply to HUD-subsidized public housing. The rule would also apply to the following Multifamily Housing programs:

  • Section 8 Project Based Rental Assistance (New Construction; State Housing Agency Program; Substantial Rehabilitation; Section 202/8;
  • Rural Housing Services Section 515/8; Loan Management Set-Aside; Property Disposition Set Aside; Rental Assistance Demonstration);
  • Section 202/162 Project Assistance Contract (PAC);
  • Section 202 Project Rental Assistance Contract (PRAC);
  • Section 202 Senior Preservation Rental Assistance Contract (SPRAC); and
  • Section 811 Project Rental Assistance Contract.

Pandemic Precedent

During the COVID-19 pandemic, HUD published an interim rule stating that when there’s a national emergency and federal money is allocated to help tenants facing eviction for nonpayment of rent, the HUD Secretary can:

  • Expand the notice a covered landlord must give before such a tenant must vacate a unit from 14 days to 30 days;
  • Require landlords to provide information to the tenant regarding federal emergency rental relief along with the eviction notice; and
  • Require landlords to provide notice to all tenants in public housing of the availability of emergency rental assistance.

The recent proposed rule would formalize this change in notice requirements made during the pandemic. In HUD’s view, PHAs and owners have already shown that they could provide the required minimum 30-day notification to terminate a lease for nonpayment of rent during the COVID–19 national emergency. Also, HUD has pointed out that the CARES Act 30-day notice-to-vacate requirement for nonpayment of rent is still in effect for all CARES Act covered properties. And some jurisdictions have already imposed their own 30-day eviction notice requirements on housing providers related to nonpayment of rent and other causes.

HUD’s Rationale

HUD believes its mission would be further supported with extended notice requirements. Prior to 2021, HUD noted that it regulated evictions for nonpayment and eviction notices in program-specific ways. In some cases, these provisions were imposed by Congress via statute, while in others, the provisions were imposed by HUD regulations. The benefit of the proposed rule would be to create alignment among HUD programs. Also, eviction has long created housing instability for renter households and is linked to long-term negative consequences, particularly among children.

Tenants in HUD-assisted housing typically pay rent based on their incomes and need adequate time after they experience a drop in income to work with their housing provider to document that change and ensure their rent is properly calculated based on their financial circumstances. According to HUD, providing more time and notice may help the household and their housing provider to work together to pursue a minimum rent hardship exemption and/or rent recalculation to adjust the amount of rent a tenant will owe.

Even where households don’t qualify for such measures, such as when the income reduction doesn’t meet the threshold requirement for an interim reexamination or qualify for a hardship exemption in accordance with the owner’s or PHA’s Administrative Plans or Tenant Selection Plans, a household may still be able to arrange repayment plans that allow tenants to remain housed and make the PHA or owner whole, subject to PHA or owner discretion. Therefore, a 30-day notice requirement would give tenants more time to report income changes before housing providers commence a formal judicial eviction proceeding or more time for tenants and PHAs or owners to negotiate repayment plans.

According to HUD, research confirms that longer notice periods are correlated to a lower eviction filing rate. And given the size of the HUD programs in 2022, it is estimated that between 1,600 and 4,900 nonpayment-related moveouts in Public Housing and PBRA-assisted housing are prevented each year because of the existing 30-day notice requirements of the CARES Act and HUD’s interim final rule.

The proposed rule also fulfills a commitment HUD made in the Biden-Harris administration’s Blueprint for a Renters Bill of Rights. In July 2023, HUD joined the White House to announce three new actions to increase fairness in the rental market and further renter protections in housing. HUD committed to publish this notice of proposed rulemaking; to make an effort to remind PHAs and property owners of their obligations and to share best practices for informing rejected applicants about why they were turned down for housing; and make $10 million available for tenant education and outreach in properties supported by the Section 8 Project-Based Rental Assistance program.

Proposed Rule

HUD is proposing to amend its regulations to require that tenants in properties with project-based rental assistance and tenants in public housing be provided with written notification at least 30 days prior to lease termination resulting from nonpayment of rent (the 30-day notice). For PBRA and public housing, HUD would be setting a minimum requirement, so owners and PHAs may provide a longer notice period if they wish to. In other words, the 30-day notification requirement from the HUD’s interim final rule would be generally applicable and would no longer be based on the existence of a national emergency and the availability of emergency rental assistance funds.

Instructions to cure. The proposed rule requires the notice to include instructions on how tenants can cure lease violations for nonpayment of rent. These instructions would allow tenants to clearly understand how to avoid the commencement of a formal judicial eviction proceeding for nonpayment of rent. Instructions would include the alleged amount of rent owed by the tenant, any other arrearages allowed by the HUD program, and the date by which the tenant must pay the rent and arrearages to avoid the filing of an eviction action in state court against the tenant's household. The proposed rule would also require that the 30-day notice include information on how tenants can recertify their income and how tenants can request a minimum rent hardship exemption, if applicable.

HUD also recommends the best practice of entering into a rental repayment agreement as an alternative to a lump-sum payment for past-due amounts. PHAs are also encouraged to include information about how to switch from flat rent to income-based rent.

Accessibility. The 30-day notice must be provided in accessible formats to ensure effective communication for individuals with disabilities, and in a form to allow meaningful access for persons who are limited English proficient (LEP). PHAs and owners must comply with the nondiscrimination requirements contained in Title VI of the Civil Rights Act of 1964 and Section 504 of the Rehabilitation Act of 1973, along with HUD's regulations implementing those laws.

Additionally, HUD suggests the 30-day notice advise individuals of their right to request reasonable accommodations, include information on how individuals with disabilities can request reasonable accommodation, and include a point of contact for reasonable accommodation requests. There are instances in which a tenant may be entitled to a reasonable accommodation in cases of nonpayment of rent.

For example, if a housing provider usually requires rent be paid on the 1st of the month, but a tenant receives disability-related government assistance later in the month, the housing provider may be required to accept a tenant's request to pay rent on this later date as a reasonable accommodation.

Timing. Prior to filing a formal judicial eviction, PHAs and owners must ensure that at least 30 days pass following the service of the 30-day notice to a tenant or household. Some states, localities, and territories may have additional timing requirements for serving notices on tenants for nonpayment of rent. The timing for the service of nonpayment of rent notices required under state or local law may run at the same time as the timing requirements of this 30-day notice, unless state or local law requires that such notice be consecutive. HUD notes the requirements under this rule don’t preempt any state or local law that provides greater or equal protection for tenants.

Lease amendment. This rule would require that PHAs and owners amend all current and future leases to properly incorporate the 30-day notice requirement for nonpayment of rent. PHAs and owners would also need to provide tenants with notification of changes to the lease. HUD regulations require that an owner, when modifying a lease, serve appropriate notice to tenants at least 30 days prior to the last date on which a tenant has the right to terminate tenancy. This provision applies to PBRA projects. HUD regulations also require a PHA to provide at least 30 days’ notice to tenants of proposed changes to the lease, and an opportunity for tenants to present written comments.

Providing other information during national emergency. The proposed rule incorporates the interim final rule’s requirement that, in the event of a presidentially declared national emergency, PHAs and owners would also need to provide tenants with other specified information, as required by the Secretary, to prevent eviction for nonpayment of rent.

This proposed rule would give HUD flexibility in the case of any presidentially declared national emergency to require additional information in the 30-day notice. Unlike the interim final rule, there is no requirement in this proposed rule that PHAs and owners must include notification of available emergency rental assistance funds. Rather, the proposed rule would provide the flexibility to the HUD Secretary to require this information, or other information, depending on the circumstances of a given national emergency.

What to Expect

If the rule is finalized, HUD plans to issue sample 30-day-notice language that PHAs and owners may use. PHAs and owners would also be permitted to draft their own notices if those notices included the required contents laid out in the final version of the rule.

For leases, HUD understands that it will take time for PHAs and owners to incorporate the 30-day notice requirement into leases and to provide notification that the leases will be modified. Accordingly, HUD proposes to provide PHAs with an additional 18 months after this rule becomes effective to comply with the requirement that the lease contain a provision or addendum incorporating the 30-day notice requirement. Since HUD will issue model leases for PBRA programs, this rule would provide PBRA owners with 14 months from the date that HUD publishes a final model lease that complies with the rule to comply with the requirement to update the lease. HUD plans to issue model leases within a year of the effective date of this rule.

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