Terminating Leases or Tenancy

The HOME and LIHTC requirements related to refusing to renew leases or terminating an occupant’s tenancy are substantially similar: both require that such actions require serious violations of the lease or applicable Federal, state, or local law. Tenant-landlord law and practices are heavily influenced by state and local law as well. Property managers should be sure that they understand when they can lawfully refuse to renew leases and terminate tenancy in their jurisdictions.

Using an Occupied Unit to Restore Unit Mix Compliance

The owner/manager can redesignate a unit with another that is occupied by an existing income-eligible tenant to restore unit mix compliance, for both the HOME and LIHTC Programs. However, both programs require that the terms and conditions of residing in an assisted unit be defined in the tenant’s lease. Therefore, when using this type of substitution, the owner/manager must amend the tenant’s lease to comply with the applicable program(s) requirements.

For instance, if a very low-income tenant resides in a market rate unit, and the income of a tenant in a Low HOME rent unit goes over income (income above 80 percent of AMI), the owner/manager can redesignate the market rate unit that is occupied by the income-eligible tenant as a Low HOME unit. The very low-income tenant’s lease must be amended to include the applicable Low HOME rent, an explanation of the HOME income-eligibility requirements, and the HOME rent rules. The lease cannot include any of the lease terms prohibited by the HOME Program.

The owner/manager redesignates the over-income unit as a market rate unit. Rent adjustments must be made as soon as the tenant’s lease permits, and the lease should be revised accordingly.

The HOME Program specifies that property owners or managers can only terminate the tenancy or refuse to renew the lease of a tenant of a HOME-assisted unit for good cause. Good cause includes any of the following:

  • Serious or repeated violation of the terms and conditions of the lease
  • Violation of applicable Federal, state, or local law(s)
  • Completion of the tenancy period for transitional housing.

The owner can state other circumstances that would be considered “good cause” and should include these in the lease. The HOME Program further imposes notification and documentation requirements that must be met. A 30-day termination notice is required by the HOME statute.

The LIHTC rules specify that property owners/managers can terminate or refuse to renew the lease of a tenant in an LIHTC unit only under specific conditions, including any of the following:

  • Material noncompliance with the lease
  • Failure to carry out obligations under any state or local landlord and tenant law
  • Other good cause. (Note, the conduct of a tenant cannot be categorized as “other good cause” unless the owner has given the tenant prior notice that the conduct shall, going forward, be a basis for terminating tenancy.)

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