Dos & Don'ts

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If a prospect mentions that she's planning to adopt a child, don't misinform her about the availability of appropriately sized units to discourage single parents with children from living at your site. If you do, you could be accused of discrimination against families with children, in violation of the Fair Housing Act.

Don't rely on the termination of Section 8 payments alone as sufficient grounds for terminating a resident's lease—particularly if the owner's actions were the reasons for the Section 8 termination. Make sure you have “good cause” before trying to evict any resident.

If a resident's interim or annual recertification indicates that his current income justifies a rent increase, make sure you send the proper HUD notice before increasing the resident's rent. If you don't send the proper notice and the resident doesn't pay the rent increase, you may not be able to evict him for nonpayment.

HUD permits owners to submit requests for rent increases, when substantiated, to provide sufficient and adequate funds to operate their sites. Use the following dos and don'ts if you're considering such a step:

• Prepare a well-thought-out budget forecast to support your request.

• Be mindful of HUD's current thinking about rent increases.

• Don't fail to document thoroughly.

• Don't budget capital expenditures in your operational budget.

The recently passed American Recovery and Reinvestment Act authorizes states to pay an additional $25 in unemployment compensation. HUD recently clarified that the law does not provide for this money to be excluded from income in assisted housing programs, so you must include it in calculations of annual income.

HUD considers unemployment compensation to be income, so be sure to include it in your income calculations when certifying and recertifying residents. Even if a resident doesn't know how long he'll be out of work and collecting benefits, according to Handbook 4350.3, an owner must calculate projected annual income by annualizing current income. So even if the unemployment compensation does not last for a full 12 months, assume current circumstances will last a full 12 months when projecting the resident's income.

When certifying households, don't assume you can always treat minors as dependents, says assisted housing consultant A. J. Johnson, an expert in HUD rules. Although most household members who are minors (that is, under 18 years old) should be treated as dependents, an “emancipated minor—a person under 18 years old who enters into a lease under state law—who is also the head of the household, co-head, or spouse of the head of the household must be treated as an adult [HUD Handbook 4350.3, par. 5-6(A)(2),(3)].