Acquiring multi-family, 2 units are section 8, what happens next?

Question

Hello,

We have a hypothetical question.

What happens when a new owner takes over a commercial property (5+ units), and two of the units have section 8 vouchers?

How do these leases transfer?

Does the section 8 certification transfer over without any specific processes?

What happens if owner does not engage in section 8 certification classes or essentially is disinterested in the program, but, lease ends in several more months?

What happens if new owner doesn’t accept section 8 payments, because of not getting in the program, and tenant doesn’t pay more than the small amount the section 8 program doesn’t cover?

Thanks for your explanations.

Brandon Sturgill · Answer

@Geoffrey Serdar, @Michael Ealy maybe just provided the worst advice I've seen on the forums in at least 20-minutes...anyway, unless you are a fan of litigation and an ensuing fair housing violation, you need to honor the terms of the lease...if you evict in a retaliatory fashion you're walking into a hornets nest. Irrespective, any eviction is an absolute last resort...it's really foolish to throw that term around so lightly.

If you want paid, you'll engage through the remainder of your tenants leases. If the structure of the lease permits you to move to month-to-month, you'd need to follow your states laws and move to not renew the lease...pretty straightforward.

You should connect with your local metro housing authority to understand the process and guidelines with the voucher folks...they are the only entity that can give you guidance on this.

Is there are a reason you don't want market rents direct deposited every month?...there are a lot of misconceptions with voucher...a bad tenant is a bad tenant....voucher or not.

Tim Swierczek · Answer

@Dan Bryskin That ordinance did not pass.  It was proposed but it never went into effect.

John Woodrich · Answer

Haha, OK big shot :)  You will be the first person I am following on BP so I can learn to become connected to the housing market.  You should see the notification shortly.

John Woodrich · Answer

@Geoffrey Serdar you are acquiring the property subject to the leases in place.  You can't simply bail on the leases because you aren't going to go to a course.  If you even tried to go this route you would likely get sued for damages which would greater than the lost rent or "upside" in not renting to them in the first place.  If you want to pursue "not complying for section 8" I would call the housing authority to ask your question or contact an attorney.

Your best bet is to acquire the property and run out the leases.  I would give them advanced notice of non-renewal (if you chose) to help get them out quicker if that is your goal.

@Brandon Sturgill wins the most over-dramatic post award of the day.  If the tenant doesn't pay rent you can evict them!

Brandon Sturgill · Answer

@Michael Ealy I don't disagree that if a tenant intentionally stops paying rent eviction is an option...but the mentality of move to evict first is damaging to the industry and the tenants we serve as landlords...I've said it 1,000 times that the physical structure of property has nothing to do with this business...its all people and personalities...which makes owning property generally unpredictable. It's not a good practice to teach new property owners to evict at the drop of a hat...There is an obligation to assume the position of a responsible human and work through the steps and processes...this means an attempt at mediation at every level...then alternatives to evict like cash for keys.

Evictions don't help us as landlords because we're forced to turnover units at a cost...when considering deferring the marginal non-payment of a tenant...you're saying you would rather come out of pocket $5,000 to turn over a unit than let $50/month go on non-paid rent...that's just silly...and its not principal its math.

If you have dealt with a 1,000 section 8 folks and your knee jerk is to evict you should tighten up your screening process.

Dan Bryskin · Answer

@Geoffrey Serdar, Call section 8 people, notify them of ownership change so they know there to send checks. As @Brandon Sturgill correctly stated you are bound by the terms of the lease, lease always follows the property. Also if you property is in Minneapolis I hope you are aware of a recent law preventing you from discriminating on the basis of income, i.e you have to accept section 8 (search here for discussions ... ) good luck.

Brandon Sturgill · Answer

@John Woodrich Being a douche bag doesn't accomplish anything. Just a guess, but I'd say you're apathetic response suggests your disconnectedness to local and national issues around housing.

Geoffrey Serdar · Answer

How does it work if a new owner simply chooses not to certify property of section 8 and at the end of a lease, states they are ending the lease?

I am not referring to Minneapolis.

Brandon Sturgill · Answer

@Geoffrey Serdar There is nothing that requires an extended relationship with the local MHA and your voucher tenants. If you acquire a property with any existing lease, voucher or not, you have to honor the terms...you're assuming the continuation of the agreement the prior owner entered into upon acquisition of the new property...you don't have a choice to not participate for the duration of the lease if you want paid. Moreover, there will be additional paperwork required to satisfy the MHA...give them a call and get the requirements from them directly...

Geoffrey Serdar · Answer

@Brandon Sturgill

Brandon, I am under the impression that to accept vouchers one must use their lease, and an owner gives up control.

The new-owner in question does not want to engage with public authority.  What happens if the new owner does not certify property upon ownership transfer?

Acquiring multi-family, 2 units are section 8, what happens next?

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