Use Correct Version of HUD Model Lease to Avoid HUD Trouble

As an owner or manager of a HUD assisted site, you probably know that you must use one of HUD’s model leases for all your assisted residents. But are you certain which model lease applies to your site? Appendix 4 of HUD Handbook 4350.3 contains four different model leases. Which version you use depends on which program your site falls under.

It’s important to use the proper version of the model lease because certain clauses in each lease are tailored to specific programs. For example, the model leases for Section 202 and 811 sites (for elderly and disabled residents) contain pet clauses that aren’t in the model lease for Section 8 family sites. You can run into trouble with HUD and confuse residents about their rights and responsibilities if you use the wrong lease.

We’ll spell out which types of sites must use each of the four versions of HUD’s model lease and how to make changes to the model lease that applies to your site.

Lease for Subsidized Programs (Family Model Lease)

Which sites must use. This model lease applies to the following programs:

• Section 221(d)(3) BMIR sites;
• Section 236 sites;
• Section 8 New Construction sites;
• Section 8 Substantial Rehabilitation sites;
• RHS 515 with Section 8 sites
• Section 8 Loan Management Set-Aside sites;
• Section 8 Property Disposition sites;
• Rental Assistance Payment (RAP); and
• Rent Supplement.

Which lease to use. Use the model lease that appears in Appendix 4-A. It’s called the Model Lease for Subsidized Programs. This lease is sometimes called the family model lease.

When changes permitted. You may make changes to the model lease only for documented state or local laws, or a management practice generally used by management entities of assisted projects. Lease modifications by owners are made using a lease addendum. And before implementing the changes, the owner must obtain written approval from HUD or the contract administrator [HUD Handbook 4350.3, par. 6-4(D)].

But HUD rules limit the types of changes you can make. For instance, HUD won’t approve changes to any of the following:

• Residents’ share of the rent;
• Annual recertifications;
• Reporting interim changes to income or household composition;
• Termination of assistance;
• Resident’s duty to repay excess assistance;
• Ban on discrimination;
• Changing terms of lease;
• Termination of tenancy, except to add additional grounds for eviction; and
• Penalties for submitting false information.

HUD rules also bar you from adding certain illegal modifications, such as one that gives you the right to evict without sending a notice to the resident. Here are the ones listed in the Handbook:

Confession of judgment. The prior consent by the tenant to any lawsuit initiated by the owner in connection with the lease and to a judgment in favor of the landlord.

Distraint for rent or other charges. An agreement by the tenant that the owner is authorized to take property of the tenant and hold it until the tenant performs an obligation the owner has determined the tenant has failed to perform.

Exculpatory clauses. An agreement by the tenant not to hold the owner or its agents liable for any acts or omissions, intentional or negligent, on the part of the owner or the owner’s authorized representatives or agents.

Waiver of legal notice by tenant before actions for eviction or money judgment. An agreement by the tenant that the landlord may institute suit without notifying the tenant that the suit has been filed.

Waiver of legal proceedings. Authorization for the owner to evict the tenant or hold/sell the tenant’s possessions whenever the owner determines a breach or default has occurred, without notice to the tenant or determination by a court of the rights and liabilities of the parties.

Waiver of jury trial. Authorization for the owner’s attorney to appear in court on behalf of the tenant and waive the right to a jury trial.

Waiver of right to appeal judicial proceeding. Authorization for the owner’s attorney to waive the tenant’s rights to: (1) appeal for judicial error in any suit brought against the tenant by the owner or its agent; or (2) file suit to prevent the execution of a judgment.

Tenant chargeable with cost of legal actions regardless of outcome. A provision that the tenant agrees to pay all attorney and other legal costs if the owner brings legal action against the tenant, even if the tenant prevails in the action. Prohibition of this provision does not mean the tenant, as a party to a lawsuit, may not be obligated to pay attorney’s fees or other costs if the tenant loses the suit [HUD Handbook 4350.3, par. 6-5(C)(6)].

However, if HUD provides lease changes or adds new clauses of its own through issuance of notices or Handbook revisions as a lease addendum, you don’t have to get HUD’s approval to use them. But notice requirements still apply. You must wait until the lease term ends before adding these clauses, and you must give households 60 days’ notice of the change or addition before the lease ends [HUD Handbook 4350.3, par. 6-12(D)(1)].

Lease for Section 202/8 or Section 202/PAC

Which sites must use. This model lease applies to:

• Section 202/8 sites for the elderly or disabled; and
• Section 202 PAC sites for nonelderly disabled households.

Which lease to use. Use the model lease that appears in Appendix 4-B. It’s called the Model Lease for Section 202/8 or Section 202/PAC.

When changes permitted. HUD makes clear that you can’t change this lease except to:

• Add or change clauses to comply with a documented state or local law such as recycling clauses or local rent stabilization riders. But if any model lease clause conflicts with a state or local required clause, you must use the version that’s most beneficial to the household [HUD Handbook 4350.3, par. 6-4(E)]; and
• Add a lease addendum that permits you to enter the unit without any advance notice to the household when you have “reasonable cause to believe an emergency exists or that the health and safety of a household member is endangered” [Handbook 4350.3, par. 6-5(D)(2)].

Lease for Section 202 PRACs

Which sites must use. This model lease applies to Section 202 Supportive Housing for the Elderly sites (which are financed with capital advances instead of loans and use Project Rental Assistance Contracts (PRACs) instead of Section 8 HAP contracts).

Which lease to use. Use the model lease that appears in Appendix 4-C. It’s called the Model Lease for Section 202 PRACs.

When changes permitted. As with the lease for other Section 202 sites, you may not change this lease except for the same two reasons detailed above. And, as with the other Section 202 lease, ask your local HUD office whether you need its approval to make changes.

Lease for Section 811 PRACs

Which sites must use. This lease applies to Section 811 Supportive Housing for Persons with Disabilities sites (which are also financed with capital advances and use PRACs).

Which lease to use. Use the model lease that appears in Appendix 4-D. It’s called the Model Lease for Section 811 PRACs.

When changes permitted. You may not make changes except for the two reasons detailed above for Section 202/8 or Section 202 PAC sites. Once again, ask your local HUD office whether you need its approval to make changes.

Additional Considerations for Section 8 Sites

In certain cases, HUD requires you to make changes to its model lease to comply with additional rules. Here are several modifications you may have to make to your existing HUD leases.

Pet Provision for Section 8 sites for elderly and disabled. Lease provisions for pets are found only in the Model Leases for Section 202/8, Section 202 PACs, Section 202 PRACs, and Section 811 PRACs. However, certain properties 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 in these sites. Modifying the Model Lease for Subsidized Programs to include the pet provisions from the Model Lease for Section 202/8 and Section 202 PACs must be made as a lease addendum approved by HUD or the contract administrator [HUD Handbook 4350.3, par. 6-5(C)(4)].

Police/Security Officer Provision. HUD lets sites lease Section 8 units to police or security officers who are over the income limits. 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/her for residency in the property under the plan [HUD Handbook 4350.3, pars. 6-5(C)(5)].

RHS 515/8 Provision. If your site is financed by the Rural Housing Service (RHS) and subsidized under Section 8, you can use either the RHS lease or the HUD family model lease. RHS encourages you to use the HUD family model lease. If you use the family model lease, you must add the language contained in Exhibit 6-2 of Handbook 4350.3.

Section 8 State Agency Provision. If your site is financed by your state agency and subsidized with Section 8, HUD says to use the lease developed by your state agency. But you must add language contained in Exhibit 6-1 of Handbook 4350.3 to the state agency lease.

VAWA Addendum. The Violence Against Women and Justice Department Reauthorization Act of 2005 (VAWA) Lease Addendum, form HUD-91067, must be attached to the applicable model lease for all tenants receiving Section 8 assistance. The addendum must be signed by all tenants required to sign the lease. 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)].