Owner Can't Terminate Resident's Lease without Good Cause

Facts: In April 2011, a resident signed a lease for a subsidized unit under the Loan Management Set-Aside (LMSA) program. Under the LMSA program, the resident’s initial lease term, and any renewal term, must be for at least one year.

On July 10, 2014, the owner notified the resident that her lease was being terminated. The owner alleged that a guest of the resident engaged in criminal activity. The owner filed an eviction lawsuit and later voluntarily dismissed the case against the resident prior to the trial date.

Subsequently, on Nov. 11, 2014, the owner notified the resident that she was a month-to-month tenant, her lease term had ended, and her tenancy was being terminated effective Jan. 1, 2015. The resident believed that she remained eligible to receive rental assistance through the site’s subsidized housing program, and denied that she violated the terms or conditions of her lease. She asserted that she’s unable to afford decent and safe housing without the rental assistance that the subsidized housing program provides.

The resident asked the court to declare that the owner couldn’t terminate her lease without cause simply because the lease term had ended. And she asked the court to order the owner to not terminate her lease without cause.

Ruling: A South Carolina district court granted the resident’s request.

Reasoning: Pursuant to 42 U.S.C. § 1437f(d)(1)(B)(i), a LMSA lease must be the shorter of a one-year term or the term of the contract between the building owner and HUD: “During the term of the lease, the owner shall not terminate the tenancy except for serious repeated violation of the terms and conditions of the lease, for violation of applicable Federal, State, or local law, or for other good cause” [42 U.S.C. § 1437f(d)(1)(B)(ii)].

Here, the resident’s initial lease term was one year, but the owner renewed her lease on a month-to-month basis. There’s no indication that the site’s contract with HUD was set to conclude such that a new lease term shorter than one year would be permissible under the statute. Additionally, in the most recent termination letter, the owner didn’t indicate good cause or allege any violations of law or the terms of the lease such that the owner would be permitted to terminate the resident’s lease.

Therefore, the court found that the owner was prohibited from terminating, seeking to terminate, or refusing to renew the rental assistance or tenancy of a resident of a project-based Section 8 program at the conclusion of the term of her lease absent good cause. Further, the court found that the owner when renewing a lease, must provide residents with a lease term of one year or the remaining term of any contract with HUD, whichever is less.

• Wade v. Paces Run Apartments, August 2016