Section 8 Housing Authority Paid Rent to Previous Owner

8 Replies

I purchased a six unit apartment building in June 2017.  The building had one existing section 8 tenant with a second section 8 tenant to begin renting on July 1.  Immediately after closing, I contacted the housing authority and filled out the necessary paperwork to transfer the rent payments to me.  At the beginning of July, both section 8 rent payments showed up in my bank account as expected via ACH transfer.  However, the following two months, the rent for the existing tenant was missing from the deposit; it had somehow been sent to the previous owner by mistake.

A representative with the housing authority claims she cannot send me the rent money until the previous owner refunds it back to the housing authority.  She contacted the previous owner who agreed to pay back the money in three installments, once per month for November, December, and January.   Last month, the money was included with the monthly rent payment that I receive from the housing authority; however, this month, it was not.  I've asked the housing authority rep if there is any way to get the rent money to me without having to wait for the previous owner to pay them back.  She claims there isn't.  The only other option she has offered is to wait until that same owner has another section 8 tenant and maybe reclaim some of the money that way.

I'm new to the rental business and was hoping some of you could help me out.  Is there any other course of action that can be taken with the Section 8 housing authority?  A way to escalate this to someone with more authority?  In my view, the housing authority are the ones who screwed up; they should just send me what is owed and then try and collect from the previous owner on their own time.  Is there any way I can force them to pay up?  If one of my tenants were giving the same excuses as the housing authority, I would have had them evicted already, but obviously that isn't an option.

I would just evict the tenant, saying that their income hasn't come to you.  They will make a stink to Section 8, and hopefully put more pressure on them.   If you filled out the paperwork its not your problem that they sent money to the wrong location, you followed the rules.  To me its just a non-paying renter, the circumstances don't really matter.

I agree with @Russ Draper . Not all Housing Authorities are created equal. That's why there is a continuum of feedback on section 8 on these forums; since they are run by the local HA, your "customer experience" is based on them, not on the Federal HUD.

I say treat this like any other non-paying tenant and serve a pay or quit notice.  Let the tenant spar with the HA over the money.  It shouldn't be your problem.

If enough of their clients can't find housing, they will have to change their policy (and be more landlord friendly) in order to provide the service to the people on the caseload.

Start eviction process.

Housing authority screwed up, and they are not wanting to own the problem they created. Eviction process will force the issue.

Yeah, even though it may not actually be your tenant's fault, this will indeed put the pressure on the HA. That is ridiculous that this prior landlord cashed the check knowing that money wasn't theirs, and then to top it off, spent it immediately and can't even pay it back without a 3 month installment plan! What the heck.

You should have begun the eviction process back in August.

Best policy in this business is to act first and ask questions later. You can at any point in time stop a eviction but when it comes to money you can not reverse time.

Evict.

Thanks for the input everyone.  It seems like the consensus is to evict the tenant.  I really hate punishing someone for something that isn't there fault, but unfortunately the system is set up that way.

@Dallas Martin , I'm with you.  Maybe TELL the tenant you're going to evict her and she'd better talk to the HA to get it straightened out, but don't start the process until January or something to give the HA time to actually try and do something.  Just an idea...But then, I'm way to soft to be my own PM.  Hahaha!  Good luck!

In my opinion, the HA won't even lift a finger at the "threat" of an eviction.  You need to begin the process for them to even pay it any mind.

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