Section 8 landlord may face felony charges

16 Replies

good evening everyone! 

                 I have a question which I was asked and since I'm not a lawyer or have experience this maybe someone on BP has.

                  Tenant been in the property since 2009. She signed a one yr lease at the sum of 1300 after that lease has expired the tenant became a Sec 8 tenant  (I believe during the year lease) then went month to month. Now the trickey part is according to Sec 8, the tenant was allowed 1000.00 for property tenant paid 600 and sec 8 paid the 400. The issue is the property manager was still charging 1300 which it's more than sec 8 approved. Tenant signed a contract with the property manager stating she would pay 1300 now in my opinion that's illegal on both parties. Fast fwd 5 yrs later tenant has moved out. Tenant has late fees dating for over a year and now is pursuing the deposit.  Tenant basically told the owner if they dont refund the deposit they would report to sec 8 that they were paying 1300 vice the 1000 like sec 8 approved.  I believe it's a felony but I'm not a lawyer

It may not be a felony but it is a no no to HUD. You are only supposed to collect the HAP total and no side deals. A landlord could be kicked out of the program for good if HUD has proof to do so and they take it serious. Now I see people accept the $1000 and turn around and "rent the garage" for $200 per month or "rent the appliances" which is legal so long as the garage are appliances are not included amenities on the HAP contract.

Side deals like this story are tough to enforce especially cause you can't call section 8 on them and per your contract with section 8 you are getting paid the contract amount so u can't evict them. 

The security deposit can't be too much so I would advice give it back to avoid a larger long drawn out issue. 

Mark Ainley, Real Estate Agent in IL (#471.003954)

It would seem the tenant was in violation as well as the landlord. The penalty from section 8 is usually cancellation of benefits.  If section 8 becomes aware that she was paying above the amount she was approved for, she might loose her voucher.  Section 8 programs are not the same in every state/county so you might like to contact the correct department covering the property in question. They can provide an accurate answer for their program.

Uncollected late fees for over a year!  Landlord was not staying up on their job.  Also, landlord and tenant are guilty of violating their agreements with the Section 8 program.

At this juncture, the landlord should use the security deposit for what it was intended for.... damages, extra cleaning, unpaid utilities, unpaid fees, unpaid rent.  Caving into blackmail just makes matters worse.  It would be best if the landlord follows landlord-tenant law for the return of the deposit, keeping that which they rightly should and returning the remainder.  This holds the tenant accountable too.

For cleaning up the mess they made by not following the Section 8 rules... call the tenant's bluff.  If they report to Section 8, they are reporting on themselves as well.  There may be some sanctions imposed by Section 8 if they were to find out, but I doubt anyone is going to go to jail for this or be charged with a felony.  However, this is a serious violation on the part of both parties and I am sure the Housing Authority Integrity Officer would investigate.

Here is something I found on line about this, in reference to the Section 8 program:

Some examples of program violations or fraud by a landlord:

  • 1. Collecting additional payments from the family beyond that stated in the Tenancy Addendum to the lease (also called “side payments”).

  • 2. Accepting Housing Assistance payments for a vacant unit.

  • 3. Living in the same rental unit as the program participant.

Some examples of program violations or fraud by a program participant or tenant:

  • 1. Misstatements of facts

  • 2. Omission of facts

  • 3. Making false statements

  • 4. Lying on personal declaration forms

  • 5. Failure to comply with program requirements.

  • 6. Failure to report all income and/or assets.

  • 7. Falsifying document and/or signatures.

  • 8. Failure to report promptly changes in income or household composition.

  • 9. Allowing additional people to live in the home without approval from the Housing Authority and landlord.

  • 10. Subleasing all or part of the rental unit.

  • 11. Paying more rent to the landlord than the amount stated on the Tenancy Addendum to the Lease (also called “side payments”).

  • 12. Charging a live-in aide rent.

  • 13. Committing a serious criminal act.

  • 14. Owning or having a financial interest in the rental unit.

From one of the housing authority sites, more info about Section 8 violations and fraud:

Penalties for Committing Program Violations and Fraud.

1. Penalties range from losing rental assistance to prosecution and imprisonment. Violators may be fined and also be required to repay all overpaid rental assistance.

2. Under the Section 8 program, if a violation is determined, the Housing Authority might stop rental assistance but the landlord may allow the violator to remain in the rental unit. The Housing Authority cannot evict or remove the violating family from the home, only the landlord may evict.

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@Jose Garcia  I imagine, if the violation was reported to Section 8, Section 8 could go after the tenant for overpayments, as the tenant was the one getting the rental assistance.  Seems like the tenant has more to lose.  The landlord could face a penalty as well.  Both would most likely be banned from the program.  As noted by Account Closed "contact the correct department covering the property in question. They can provide an accurate answer for their program."

Approx 5 years ago, I started managing a Section 8 property that the tenant had sublet to someone they didn't even know for more rent then the Housing Authority was paying.  I reported her and they did nothing except remove her from the program

So, what's the best action to take when scenario like this happens: renting to tenants who become Section 8 after signing a lease?

-if they have only limited amount that's approved, and lower than the agreed upon amount on the lease, that means part of the rent is at risk?

-you can't just 'kick' them out, can you?

-can you change the lease? or terminate the lease? I am guess not, at least not because of Section 8?

-side deal is basically 'illegal', on both side? so how do recoup the differences?

Originally posted by @Marcia Maynard:

Uncollected late fees for over a year!  Landlord was not staying up on their job.  Also, landlord and tenant are guilty of violating their agreements with the Section 8 program.

At this juncture, the landlord should use the security deposit for what it was intended for.... damages, extra cleaning, unpaid utilities, unpaid fees, unpaid rent.  Caving into blackmail just makes matters worse.  It would be best if the landlord follows landlord-tenant law for the return of the deposit, keeping that which they rightly should and returning the remainder.  This holds the tenant accountable too.

For cleaning up the mess they made by not following the Section 8 rules... call the tenant's bluff.  If they report to Section 8, they are reporting on themselves as well.  There may be some sanctions imposed by Section 8 if they were to find out, but I doubt anyone is going to go to jail for this or be charged with a felony.  However, this is a serious violation on the part of both parties and I am sure the Housing Authority Integrity Officer would investigate.

I have to say, while I usually agree with Marcia, I vehemently disagree here. While I don't deal with HUD, I deal with human services caseworkers all the time.

HUD is not going to view the landlord and tenant as equally culpable, in part because of the perceived power imbalance. She tells her caseworker, "They forced me to pay extra and now they won't return my deposit!" chances she is going to lose the benefit are essentially zero.

This is a risk management situation.  "Calling her bluff" is a risk.  A high one, for the very low return of collecting some late fees.  Not worth it.  

If a tenant applies for Section 8 and is approved, they must find a unit that meets the criteria set forth by Section 8.  If the unit they are currently renting does not meet that requirement, then they will need to move to a unit that does.

The landlord is under no obligation to lower their rent or change their terms for an existing tenant.  The landlord can choose to allow the tenant out of their current lease, to make it easier for them to move.  Or, the landlord can choose to participate in the Section 8 program.  

If the landlord participates in the Section 8 program, they need to be honest when they fill out the paperwork.  Section 8 will not approve a unit if it is out of the price range allowed for that specific tenant.  So the tenant will need to find another place to live or the landlord will need to lower the rent.

I have many years experience of successfully working with the local housing authority that administers the Section 8 program in our town.  If this situation presented itself to me, I would evaluate if my unit is at fair market value and if so, keep the rent as it is.  If my unit goes for a higher rent than what Section 8 would allow for this particular tenant, I would offer to let the tenant out of the lease.  Of course, we have MTM contracts so the tenant is free to go after giving proper notice.  If I want a tenant "out" I will need to abide by landlord-tenant law for my jurisdiction.

@Richard C.  This would more likely go to the Housing Authority Integrity Officer than be handled by the tenant's case worker.  Both the tenant and the landlord were in violation of the Section 8 terms.  No one forced the tenant to do this and the case worker would likely see through this.  It is more probable that the tenant convinced the landlord to bend the rules so they could stay in the house.  Both the tenant and landlord falsified the documents they signed.  

I wouldn't fall for the tenant's attempt to manipulate the situation any more; it's blackmail and that's not okay with me.  My advice stands to use the security deposit for which it was intended.  It is also probable that more than late fees are at stake here, as I can't imagine the place was left without damages or other amounts owing.

if she can prove the extra payments i would take it to court.  She is probably eligible for free legal council too.  I bet this manager is ripping tenants off without owners knowledge. 

I made a mistake of working a side deal to cover what sec8 wouldn't.   Long story short, I had to credit every dollar overpaid.  It was my first tenant and they taught me many lessons!

Originally posted by @Richard C.:

...

HUD is not going to view the landlord and tenant as equally culpable, in part because of the perceived power imbalance. She tells her caseworker, "They forced me to pay extra and now they won't return my deposit!" chances she is going to lose the benefit are essentially zero.

...

Although for the case given by the OP I would concur that the tenant can say she was forced, in my own experiences in talking with Section 8 tenant prospects it is the tenant always offering a side deal because I explain that I get paid more rent in the open market than what Section 8 will pay. And I refuse because I know side deals are not allowed and are unenforceable.

And if they are lying and cheating in this manner, I sure wouldn't trust them as a tenant. 

Originally posted by @Kurt K.:

if she can prove the extra payments i would take it to court.  She is probably eligible for free legal council too.  I bet this manager is ripping tenants off without owners knowledge. 

I made a mistake of working a side deal to cover what sec8 wouldn't.   Long story short, I had to credit every dollar overpaid.  It was my first tenant and they taught me many lessons!

 See, this is what I am talking about.  The tenant was every bit as much in on the side deal as Kurt, and Kurt still had to credit every penny.

Enforcement types of all sorts tend to go easier on the cooperating/complaining party.  

Thank you all for your inputs! I greatly appreciate it!

I spoke to the landlord today and explained to him about the consequences about not abiding by the rules and he assured me that he wasn't aware of any wrong doing. 

Long story short he would not be giving the tenant her security deposit back. He spoke to someone in sec 8 and they said if the tenant reports the fraudulent activities she would lose her sec 8 privileges and the landlord would be off the sec 8 list

Sec-8 has changed a lot over the years.  In our area I have to accept the amount they determine for the voucher when they move in.  HOWEVER, I can (and do) put in a 60 day notice to change terms at the same time I sign their agreement to increase rent.  (They require 60 days notice for rent increases.) The tenant is responsible for the increase, it is not prorated like the rest of the rent.  I do need to show that my asking price is consistent with units that are open-market. 

The key here is open, contractual communication.  I get the rent I want, but there are no hidden side deals.