Hi, Todd Ortscheid here with GTL Real Estate. This week I wanted to talk about a little bit about Section 8 tenants. This is a common question we get from both landlords and from tenants about whether we rent to Section 8 tenants and what we think about the program.
As a general rule, we've got nothing against the tenants who are receiving Section 8 assistance. In our experience, most of the tenants are great. They take good care of the property. They're responsible tenants like anybody else. Of course there's a few bad apples here and there, but that's the case with tenants who aren't receiving Section 8 assistance, also. That's nothing special for that class of tenant.
The problem doesn't really come in with the tenants. The problem with Section 8 is the housing authority. When you're renting to a Section 8 tenant, you're not just dealing with that tenant. There's also a middleman involved, which is the city or the county housing authority that is basically dispensing the money that the government is providing for that tenant's housing assistance.
They cut the check to you for however much assistance they offer that tenant. Sometimes they're paying the tenant's whole rent. Sometimes they're just paying a portion of it. Sometimes they're providing utility assistance. It just depends on the individual situation, how much money that tenant makes. Various factors goes into how they decide what that tenant receives, but they're basically acting as a middleman in this situation, to be that dispenser of that money for that assistance. They think that gives them special rights to tell you what to do.
If you want to rent to that Section 8 tenant that they're providing that assistance to, they make you submit to an inspection of your property that they conduct with their vendor, where they make determinations about what they think you have to do to your property.
They also have you sign what's called a Housing Assistance Program Agreement. Basically, it acts as a pseudo lease that overrides your normal lease agreement. There's a lot of provisions in that HAP agreement that restrict your rights as a landlord and place all sorts of additional burdens on you.
For example, you have to submit that property not just to that initial inspection but to yearly inspections. That inspector is going to come in, and he's going to tell you what you need to do to your house.
Let's say you've had this Section 8 tenant in your house for a couple of years. The inspector comes out for the inspection, and he decides the carpet needs to be replaced in his opinion. Well, you go out and you look at the house. The carpet seems fine to you. You just think it needs a professional cleaning, which your lease says is the tenant's responsibility to do and which state law doesn't say that it's a landlord responsibility. There's no requirement in state law for you to replace carpet in the house. But the Housing Authority's inspector is telling you you have to do it.
Furthermore, they're telling you in their notice that if you don't do it, they're going to cut off their payments assisting the tenant. Now you've got a tenant that's been in the house for a couple of years. It's a good tenant. They haven't done anything wrong, but the housing authority is telling you, spend $4,000 for this unnecessary repair just so you can keep this tenant and their housing assistance coming in from the government. If you don't do that, we're going to cut off the money, and most likely, the tenant is not going to be able to pay.
Obviously, this creates a bad situation. Because of this, we don't like to deal with housing authorities. This is just one example of the problems we have. Other issues are the housing authority is in no hurry to pay you. We usually receive checks from housing authorities around the 10th of the month, sometimes the 7th or 8th, but even that is completely unreasonable. Our leases say the rent is due on the first of the month, and it's late if it's not paid by the 2nd. Even landlords that are a little more lenient say that there's a late fee after the 5th, but the housing authority doesn't care. They're going to pay when they're going to pay, and they're going to tell you you can't charge the tenant a late fee for them getting the rent to you late.
You're left in a situation as a landlord, where you're basically having your rights as a property owner and as a landlord infringed. The housing authority's basically deciding what your rights are. They don't care what state law says. It doesn't matter to them. They're just setting their own rules, and you have to abide by them if you want to keep getting that rent.
For that reason, our policy as a company is we won't sign those HAP agreements, those Housing Assistance Payment agreements. We just won't sign them. We won't enter into a separate third party agreement with a housing authority.
What we say is we're more than happy to rent to a Section 8 tenant, but the housing authority's going to have to pay that rent on the tenant's behalf without us entering into a third party agreement. We're not going to let the housing authority do their own inspection. We do our own inspections. We comply with state law. If that's not good enough for the housing authority, then we're not going to accept their agreement. We're just not going to have anything to do with that.
We don't have a policy that we won't rent to Section 8 tenants. We're happy to accept a Section 8 tenant, but the housing authority has to go by our lease. They have to follow our procedures. They have to go by state law. They can't be doing their own thing with their own agreement.
If the housing authority is going to insist upon that, then we can't rent to that tenant, or at least we can't rent to that tenant under that HAP agreement. The tenant can rent the property on their own without that Housing Assistance Program if they qualify using all of our normal criteria, but we will not take part in a program that requires us to enter into a third party agreement that restricts our rights and the rights of the landlord beyond what the state law already is.
That's basically our policy on Section 8. That's the reason that we have that policy. We recommend that landlords follow the same sort of policy if they're not having their property managed through a property management company just so you don't end up in these situations where a local housing authority is trying to impose their will upon you as the property owner.
Just some things to keep in mind if you're thinking about renting Section 8. If you have any questions about any of this, send us an email at firstname.lastname@example.org. If you need any help managing your property, of course, let us know. We'd be happy to talk to you.