Bought multi-unit with unknown section 8 tenant

7 Replies

Recently bought a multi-unit rental in Minnesota, the price was right and it seemed mismanaged, so there was an opportunity for growth.  Then yesterday in the mail I received a letter from the local housing authority, asking for my bank information and W-9, so they can pay me a section 8 voucher.

My question is, is there anything I can do about this? My primary partner and I have criteria that limits section 8 on our other properties and we do not wish to deal with it.  Are we stuck with the leases we acquired and have to wait until the end of them?

Thanks

@Matthew R. No question you are 100% stuck with this lease until it expires. You have no recourse with the tenants.  Technically you could have recourse with the previous owner, but only if you asked for the leases and they omitted the Section 8 portion of the lease.  If you did not ask or they provided it and you missed it then you have no recourse.  At this point, I don't know how much you should care.   They are there and you cannot evict them without cause.  It sounds on the surface that you should suck it up and finish the lease with them and follow all the laws to end the lease when it terms out.  I do not work with Section 8 myself so I don't know if you have any extra requirements to end the lease but I would make sure to find out if I were you.

Good Luck

~Tim

Originally posted by @Tim Swierczek :

@Matthew R. No question you are 100% stuck with this lease until it expires. You have no recourse with the tenants.  Technically you could have recourse with the previous owner, but only if you asked for the leases and they omitted the Section 8 portion of the lease.  If you did not ask or they provided it and you missed it then you have no recourse.  At this point, I don't know how much you should care.   They are there and you cannot evict them without cause.  It sounds on the surface that you should suck it up and finish the lease with them and follow all the laws to end the lease when it terms out.  I do not work with Section 8 myself so I don't know if you have any extra requirements to end the lease but I would make sure to find out if I were you.

Good Luck

~Tim

 Thanks for the reply Tim!  And yeah, that is what we figured.  Unfortunately, we did not ask.  This is only our third property, so just another thing we can add to the list of things to find out before buying.  Lesson learned.  Thanks again!

I'm not sure about your specific  state, but you may need to wait it out, unless you can relocate them for a fee.

The housing authority may also do annual inspections of the property to ensure you continue to meet the minimum safety and living standards - just look into the guidelines for your state.

Some investors stay away from Section 8 because of the headaches it comes with, while others bank on the monthly income. 

To your success!

Next time you need to ask to current owner to fill out estoppel certificates and have the tenants sign. That would have solved this problem.

@Tim Swierczek is correct.  I would fill out the paperwork so you can collect your rent voucher and I would do it ASAP as they do not pay back pay if applications are not filled out correctly.  I personally would notify the tenant of your leasing criteria and that you will honor their current lease but when it is time for renewal you are converting everyone to your terms which do not allow for Section 8.  They may not be happy about this but it is easier to give them 6 months notice to find a place than have them stuck trying to find a place under a 30 day notice.

@Matthew R.

See if the tenants are on a month to month. I have Section 8 tenants (that I've had great success with) that once they've been there a year they go month to month.....so if they've already been there for a year you should be able to have them leave.......The Housing Authorities sometimes don't tell you this because once they place a tenant they do what they can to look out for the tenants to help them stay......

If they've been there less than a year then find out when the 1 year is up and then 2 months before that year is up send a letter, and email to the housing authority and the tenant that the lease will not be renewed

You also want to tell the housing authority that you are the new owner and you'd like to have a section 8 inspection done on your property........and find out beforehand what happens if your property fails the inspection :-)    Sometimes they say the property does not qualify any more for Section 8 status and they will not support the voucher anymore. It gets tricky at this pint because you can then ask the tenant to leave  ....and the tenant may leave based on that.......but this is a gamble because the tenant may say hey we have a 1 year lease with this property that you still have to honor...whether we are getting the housing choice voucher or not.......at which point you can simply wait and see if they fall short on the full rent (I.E. The full rent due  is $1,000/mo regardless of if they are getting the voucher money or not) . This is a very real possibility because if they don't have that voucher they may not have all of the rent money ready when it's due and if that is what happens then things should revert back to the normal eviction laws of your areas.

As a side note I always believe in kharma so don't kick someone out of a property just because they are  "one of those section 8 people". That would be very bad my friend. Now if they are jerks and you have had some dealings with them and you already know it will be a lost cause then that's different.....just like any other tenant.   

@Matthew R. one other issue to consider.  If you allow them to stay past your lease you would need to accept other Section 8 tenants in that building.  Failure to do so would be or at least could be considered discrimination and cause you a lawsuit on Fair Housing laws.  To be clear this is not because public assistance is protected, but having written criteria is required and if you deviate from it then you are susceptible to discrimination claims.

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