Side Deals on Section 8 -- How to Get More Rent the Legal Way
/There is a way to get extra money each month from voucher holders that is perfectly legal and not considered a “Side Deal.”
What is a Side Deal?
A side deal is an agreement between a landlord and a tenant wherein the tenant pays an additional amount of rent that is not in the agreement with the tenant’s Public Housing Agency (PHA). It is illegal!
How Much Rent Should a HCV Tenant Pay a Landlord Directly?
A Housing Choice Voucher (HCV) recipient is required to pay the landlord 30-40% of her income toward rent. 30% is the normal amount PHAs have their HCV recipients pay. There is some wriggle room for each PHA to have the tenant pay up to 40%, which seems to be decided case by case.
What is the Penalty for Side Deals?
I found this:
“Example
On July 29, 2005, a Connecticut tenant filed a qui tam complaint, under 31 U.S.C. 3730, against her former landlord. See Coleman v. Hernandez, 490 F. Supp.2d 278 (D. Conn. 2007). The tenant complained that pursuant to a HAP contract the landlord had agreed to accept $1,550 per month for the rental of an apartment in Stamford. Of this $1,550, the tenant was personally responsible for $20, and HUD via the HA paid the complementary $1,530. In spite of the explicit prohibition in the HAP contract, however, the landlord required the tenant to pay an “additional rent payment” of $60 on six separate occasions. In other words, the landlord inappropriately extracted an additional $360 from the helpless tenant.
OIG is aware of numerous similar examples of this sort of egregious conduct nationwide.
Penalty
Pursuant to the False Claims Act, 31 U.S.C. 3729 et seq., persons who submit to HUD or a HUD intermediary claims that are false, fictitious or fraudulent are liable for an assessment equal to three times the amount of the claim, plus a penalty of between $5,500 and $11,000 per claim. The United States may take the position that the entire amount of its HAP payment, not merely the amount of the excess payment by the tenant, is the claim that should be trebled where landlords make false certifications concerning excess rent charged. Additionally, each periodic rent payment constitutes a separate claim; thus, in the Coleman case the court levied a $33,000 (6 × $5,500) penalty against the landlord for her $360 victimization of the tenant.”
What Are Legal Ways to Get More Monthly Income?
We landlords are allowed to charge for other items that are not rent if it is stated in the lease or if it is in an addendum to the lease. PHAs ask for a sample lease before approving the contract with the landlord. These extra fees MUST BE IN THE LEASE OR AS AN ADDENDUM. Each PHA has its own discretion to deny or offer a negotiation to the amounts.
Here are examples:
Pet fees
Lawn care
Snow removal
Internet
Parking spaces (apartments)
Cable
Laundry facility
Use of sheds or outer buildings
Reasons Not to Charge Extra
I really appreciate that the Public Housing Agency has determined how much 30% of my tenant’s income is. 30% of income SHOULD go to housing and if any more than that goes to housing, it is a very “house poor” way to live. It gets more difficult to keep up on home maintenance issues. It could cause the person to be late on rent trying to make ends meet.
I also need to know where this ability to pay extra has come from. Is it a boyfriend who is not on the lease? He could move out! Is it a side job of doing hair? What if she stops doing hair for whatever reason? Her voucher amount is not going to change if that side gig wasn’t part of her declared income. What if this side money of hers is found out by her PHA? They have amazing search engines. Then what if she loses her voucher? Where does that leave me?
Another concern is how does this look in court if your tenant quit paying that $300/month dog fee? The judge is not there to enforce Section 8, just the lease. But from my experience, judges want nothing to do with extra fees. They only enforce what is written up as rent.
There is the concern too of testers. A group called Project Sentinel in Santa Clara, California, sent out a survey to voucher holders asking them who offered to do side deals and who is currently part of a side deal. The tenants had no punishment for answering the questions, but they sure did receive awards if they turned in landlords.
“According to Project Sentinel, a tenant may be awarded a refund of the total side payments made to owner. In addition, the tenant could be awarded $1,650 to $3,300 for each month they made a side payment to the owner, regardless of the amount of side payment. Refund payments can go back as far as six years.”
Story Time
One of my first tenants who had been with us for at least a decade gradually had her children move out from her three-bedroom home that we rented to her for $800/month. Her voucher amount kept getting lower. It was down to around $600/month. This did not work for us! Our beloved tenant also became disabled. So I asked her adult children if they would please rent the garage from us so we could afford to keep their mother in her home.
What I needed to do was ask the tenant to pay a fee to use the garage and put it in her lease and submit it to her caseworker. But I did not know that at the time. Instead I told her children, who were concerned their mother would have to move, that as long as they paid me $200 to use the garage, per a garage lease I drew up, that we could keep her at the house. The children would never sign the lease though. It was a lot of back and forth.
It only worked for a couple months that we received our full $800/month. Then the adult children started fighting with each other. Then they conveniently forgot they agreed to pay for the garage. We ended up in court in front of a judge. The son accused us of making a side deal. Fortunately, I had a lawyer and the judge did not care about that. She only cared about the missing rent. At this point the tenant was even behind on her portion of the $600/month. So my judgment wasn’t for nearly how much it needed to be. It was irrelevant anyway because at this point my tenant was disabled and uncollectible. It was just sad because we watched her children grow up in that house. We provided her and her children really nice housing for a decade. Then we had to have a bailiff remove her things. And it turns out the garage was packed the worst!
Conclusion
I have asked many directors of PHAs if they have ever sent anyone to jail for side deals or charged anyone with fraud. The answer was always a reluctant no. I was told they prefer to work with their few and far between landlords who will rent to HCV recipients. If they do find a landlord doing something wrong, they are more likely to have that landlord correct it financially. They will also quit working with some landlords.
I think most of us just want what is just. I need a fair amount of rent. The people who were awarded a voucher just need safe and reasonable housing. The PHA caseworkers just need to get their job done. I prefer to stay positive and hopeful about everyone’s intentions and choices.
Most likely the landlord will have to pay restitution although it is a criminal offense.
https://howtogeton.wordpress.com/legal-ways-to-pay-more-rent-on-section-8-housing-vouchers/
Some leases bundle in services that Housing Authorities do not consider rental expenses. For example:
Pet fees
Lawn care & snow removal
Internet
Parking spaces
Cable
Laundry facilities or washer/dryer in apartment
Use of sheds or outbuildings
Snow removal
Some of our readers were able to speak with their landlords and request to remove these fees from their rent. The fees were not included in the “rent,” but instead noted in the lease as a separate fee, or attached to the lease in an addendum.
Important: Before going forward with an arrangement like this, make sure the lease language and any addendums gets approved by your housing worker. Side deals with landlords are not allowed, any financial arrangements with landlords must be approved by the housing authority.
“Example
On July 29, 2005, a Connecticut tenant filed a qui tam complaint, under 31 U.S.C. 3730, against her former landlord. See Coleman v. Hernandez, 490 F. Supp.2d 278 (D. Conn. 2007). The tenant complained that pursuant to a HAP contract the landlord had agreed to accept $1,550 per month for the rental of an apartment in Stamford. Of this $1,550, the tenant was personally responsible for $20, and HUD via the HA paid the complementary $1,530. In spite of the explicit prohibition in the HAP contract, however, the landlord required the tenant to pay an “additional rent payment” of $60 on six separate occasions. In other words, the landlord inappropriately extracted an additional $360 from the helpless tenant.
OIG is aware of numerous similar examples of this sort of egregious conduct nationwide.
Penalty
Pursuant to the False Claims Act, 31 U.S.C. 3729 et seq., persons who submit to HUD or a HUD intermediary claims that are false, fictitious or fraudulent are liable for an assessment equal to three times the amount of the claim, plus a penalty of between $5,500 and $11,000 per claim. The United States may take the position that the entire amount of its HAP payment, not merely the amount of the excess payment by the tenant, is the claim that should be trebled where landlords make false certifications concerning excess rent charged. Additionally, each periodic rent payment constitutes a separate claim; thus, in the Coleman case the court levied a $33,000 (6 × $5,500) penalty against the landlord for her $360 victimization of the tenant.”