Help! Section 8 security deposit question

7 Replies

Hi everyone

I decided to rent a house to a section 8 tenant. Long story short, section 8 misquoted the total rent rate they would pay and the tenant portion. They told me to allow the tenant to move in, I did (bad move!) then the paperwork had the tenant and section 8 payment portions reversed. The tenant said they could not afford the increase of $200/mo and section 8 would not honor the quotes rent amount with the tenant paying the lower amount. Since section 8, me and the tenant could not come to a resolution, we agreed to return the tenants voucher. Tenant was a nightmare so I'm happy this ended without an eviction.

Now here is my question. The tenant moved in and lived in the house for 2 months paying what was supposed to be their portion of the rent. With no section 8 contract, section 8 has not paid their portion of the rent. This means that of the two months I have not even made the equivalent of one months rent. The tenant moved out and is now demanding a return of her security deposit. Unfortunately, even with her deposit, her account is negative about $500. My question is am I allowed to keep the security deposit considering I'm still at a net loss. It seems like I should considering that's the role do the security deposit but with section 8 in the mix I'm not sure what my rights are. Help please!

@Richelle T.

The tenant is responsible for the rent. If Section 8 doesn't pay, the burden in on them. As long as your lease has a provision in it that allows you to put the deposit toward owed rent, you are in the clear.

interested to see how this all works out in the end. please update us

It all depends on how your lease is written but you should be able to apply the deposit to rents.

@Dick Rosen @Max Tanenbaum @Jeremy Pace

Yes, my lease stipulates that any money paid first goes to any fees, then to utilities, and lastly to rent. Therefore if there is a balance it is unpaid rent, not other charges. 

I should have explained my question better - my dilemma was more about how much rent to charge the tenant. Are they liable for the total rent amount, the initial (incorrect) lower rent amount or the higher rent amount that Section 8 would have required the tenant to pay. 

I talked to my lawyer and he said to charge the tenant the rate outlined in Section's paperwork and deduct the difference in the rent she paid from this amount. That amount minus any other fees would be the amount returned to her. 

Updated about 3 years ago

Edit for clarity: I am able to charge the tenant for her portion of the rent, not the total rent amount (tenant + section 8). So all in all, I still would not be made whole for the total rent owed while the tenant was in the house.

@Richelle T.

I'm glad you figure it out!  I thought that was what I said, I'll make sure to be more careful next time.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here