NC Affordable Housing Conference Rhian Mayhew Brownlee Whitlow

NC Affordable Housing Conference Rhian Mayhew Brownlee Whitlow & Praet, PLLC

Disclaimer • This presentation is not legal advice and should not be relied upon as such. • The views expressed in this presentation are not necessarily those of the conference or any of the conference sponsors.

Some Common Programs • Low-Income Housing Tax Credit Program (LIHTC) • Section 8 • Project-Based Rental Assistance • Housing Choice Vouchers • Tenant-Based Section 8 Vouchers (sometimes referred to as Housing Choice Vouchers) • Project-Based Vouchers

Low-Income Housing Tax Credit Facts • Not a HUD housing program • Good cause required to terminate the tenancy during or at the end of a lease term. • Tenant protections in LIHTC projects are governed by federal statute. IRS revenue rulings and procedures also apply.

What is Section 8? • Federally funded rental assistance program that pays private landlords the difference between what a low-income household can afford and the fair market rent. • Section 8 may refer to the Housing Choice Voucher (HCV) program or the Project-based Rental Assistance (PBRA) program. In both programs, the tenant typically pays 30% of their monthly income for housing costs. • The Housing Choice Voucher program includes tenant-based vouchers and project-based vouchers.

Section 8 Project-based Rental Assistance Facts • • • Type of HUD Multifamily Subsidized Housing Program Largest project-based rental assistance program Privately owned & managed Owner contracts directly with HUD makes rental assistance payments to private nonprofit or for-profit landlords on behalf of low-income tenants. • Tenants pay 30% of monthly income for rent. HUD pays the owner the remainder up to the area's Fair Market Rent.

Tenant-Based Voucher Facts • Rental vouchers that let people choose their own housing in the private rental market • Renter finds a unit (within certain requirements) and a housing authority pays a portion of the rent to owner • HAP contract regulates relationship between PHA & owner

Project-Based Voucher Facts • • Project-based, but part of Housing Choice Voucher Program Owner contracts with PHA to rent unit to low-income families. HAP contract regulates relationship between PHA & owner. Voucher is attached to units instead of tenant

Due Process Rights • US Constitution protects citizens against certain types of intrusions by the government. One source of protection: Due Process Clause. • Tenants have a property right in their continued tenancy/participation in federal housing program. So, to terminate the tenancy, certain requirements have to be met for the protection of the tenant. • Due process requires that tenants cannot be terminated except upon good cause. • While courts differ with respect to what due process procedures must be afforded at termination, courts consistently hold tenants must at least have: (1) adequate notice of termination, eviction or other action, (2) meaningful & impartial pre-termination hearing to rebut evidence against them & (3) written ruling detailing the hearing findings & reasoning. • To bring claim alleging violation of due process rights, tenant must prove: (1) government deprived them of a protected property interest and (2) government actor did not provide adequate procedures for that deprivation.

Low-Income Housing Tax Credit Terminations NC Mandatory Lease Addendum: Landlord may not terminate the tenancy or refuse to renew the lease except for good cause, which includes, but is not limited to: • Serious or repeated violations of the material terms and conditions of the lease or house rules, or violation of applicable federal, state or local law. • Increase in income generally isn't good cause for termination or refusal to renew.

Section 8 Project-based Rental Assistance Terminations Landlord must have good cause to terminate a tenancy. Good cause includes: • • Material noncompliance with lease; Material failure to carry out obligations under state landlord & tenant act; Criminal activity on NEXT SLIDE; and "Other good cause" (but can only terminated based on "other good cause" at the end of any initial or renewal term)

Continued • Drug-related criminal activity on or near premises by tenant, household member, or guest & any such activity on premises by person under tenant’s control; • Illegal drug use by tenant or household member or pattern of illegal drug use that interferes with health, safety, or right to peaceful enjoyment of premises by other residents; • Alcohol abuse by tenant or household member that threatens health, safety, or right to peaceful enjoyment of the premises by other residents; • Criminal activity by tenant, household member, guest or other person under tenant’s control that threatens health, safety, or right to peaceful enjoyment of premises by other residents, or of their residences by persons residing in immediate vicinity of premises; • Tenant fleeing to avoid prosecution or confinement after conviction of felony, or high misdemeanor in NJ; • Tenant's violation of condition of probation or parole imposed under fed. or state law

Material Noncompliance with Lease • One or more substantial lease violations; • Certain repeated minor lease violations that: (i) Disrupt the livability of project, (ii) Adversely affect health or safety of any person or right of a tenant to quiet enjoyment of the leased premises & related facilities, (iii) Interfere with management, or (iv) Have adverse financial effect on project; • Failure to timely supply info on income & family composition for interim & annual recertifications; • Knowingly providing incomplete or inaccurate info as required by landlord to verify tenant income & family composition; and • Nonpayment of rent or any other financial obligation due under lease (except payments made after due date but within any state law grace period= minor violation)

Section 8 Tenant-Based Voucher Terminations During lease term, landlord may terminate tenancy only for good cause. But landlord may terminate tenancy without good cause at end of initial lease term or any renewal term, unless lease itself or other applicable law requires good cause for non-renewal. Good cause includes: • Serious or repeated violation of the terms & conditions of lease; • Violation of law which imposes obligations on tenant in connection with occupancy of the unit; • “Other good cause”; • And criminal activity-related provisions on NEXT SLIDE

Continued • Drug-related criminal activity on or near premises by tenant, household member, or guest, or such activity on premises by any other person under tenant’s control; • Pattern of illegal drug use that interferes with health, safety, or right to peaceful enjoyment of premises by other residents; • Criminal activity that threatens health, safety, or right to peaceful enjoyment of residences by persons residing in immediate vicinity of premises; • Violent criminal activity on or near premises by tenant, household member, or guest, or any such activity on premises by any other person under tenant’s control; • Fleeing to avoid prosecution, or custody or confinement after conviction, for felony or attempted felony under laws of place from which individual flees (or for NJ, a high misdemeanor); and • Violating condition of probation or parole.

Project Based Voucher Terminations • Same good cause grounds as for Tenant-Based Vouchers • But note: good cause is required to terminate the tenancy at any time.

Termination for “Other Good Cause” PBRA: A termination for “other good cause” can only take effect at the end of any initial or renewal term. • “Other good cause” isn't defined, but must give tenant prior notice that the conduct could lead to termination. Notice must be served on tenant as you would serve a termination notice. PBV “other good cause” exs: (1) Failure to accept the offer of new lease or revision; (2) family history of disturbance of neighbors or destruction of property, or of living or housekeeping habits resulting in damage to unit or premises TBV “other good cause” exs: Same as PBV plus— (3) owner’s desire to use the unit for personal or family use, or for purpose other than as residential rental unit; or (4) business or economic reason for termination (such as sale of the property, renovation of the unit, or desire to lease unit at higher rent). • But during initial lease term, you may terminate for “other good cause” only if termination is based on something family did or failed to do. So, during initial lease term, you can't terminate based on grounds 3 and 4.

Section 8 Project-based Rental Assistance Termination Notices Must: • State the date the tenancy is terminated; • State the reason(s) for eviction with enough specificity to enable tenant to prepare a defense; • Inform tenant that if they remain in unit on termination date, landlord may seek to enforce the termination only by bringing a judicial action, at which time tenant may present a defense; • Advise tenant they have 10 days in which to discuss the proposed tenancy termination with landlord; • Advise that persons with disabilities have the right to request reasonable accommodations to participate in the meeting with landlord. • In nonpayment of rent case, notice must also state the amount due and the date of

Section 8 Project-based Rental Assistance Termination Notice Period and Service Notice period: • State law & the lease govern the length of the notice period • Except lease termination for “other good cause" requires at least 30 days’ notice to tenant. Service of notice: • Must serve the notice by first-class mail and by personal delivery on an adult at the unit, inserting the notice under or through the door, if possible, or tacking the notice on the door. • Notice is considered effective as of the date of the later means of service (with the date of mail delivery measured from mailing, not receipt).

Project-based Vouchers and Tenant-Based Vouchers Termination Notices • PBV: Must specify the grounds for termination of tenancy • TBV: Must specify the grounds for termination of tenancy during the term of the lease • HUD regulations don't prescribe a minimum time period for notice, but simply refer to requirement to give tenant notice under state or local law. Manner of service to tenants is regulated by state law and, if applicable, the lease. • The notice of termination grounds may be included in or combined with any "owner eviction notice" to tenant. • Owner eviction notice: a notice to vacate, or a complaint or other initial pleading used under State or local law to commence an eviction action. • Must give PHA copy of any owner eviction notice to tenant. • HUD-required Tenancy Addendum says that owner must give notice to PHA and tenant at same time.

LIHTC Termination Notice No federally required pre-judicial administrative review or grievance process and no prescribed notice content, period, or manner of service. So, must look to state law or the lease. State housing finance agencies may require lease addenda with additional protections for tenant. NC Mandatory Lease Addendum: To terminate tenancy or refuse to renew lease, landlord must take the following actions based on the gravity of the lease violation: • Minor violations, not related to health, safety, criminal activity, actions by tenant creating hostile environment, damage to property, or Program eligibility caused by applicant misrepresentation— Must first provide tenant with written notice of lease or house rules violation and provide tenant with reasonable period to cure of at least 10 days. If tenant fails to cure violation, you must provide written notice to tenant of the violation with sufficient specificity to enable tenant to prepare a defense. The notice must be served at least 20 days before the termination date, & must comply with all requirements of NC law & other applicable programs. • Serious violations related to nonpayment of rent, health, safety, criminal activity, actions by tenant creating hostile environment, damage to property, or Program eligibility caused by applicant misrepresentation— Not required to provide a reasonable period to cure, or an additional notice period, beyond what NC law requires.

How Specific Breach Description Must Be in Termination Notice • The NC Court of Appeals recently ruled that a notice of lease termination does not have to include a description of the specific conduct upon which the termination is based. • Instead, a notice of lease termination will satisfy the specificity requirement so long as the information provided “is sufficient to put [the tenant] on notice regarding the specific lease provision deemed to have been violated. ”

Eviction for Non-Payment of Rent • N. C. G. S 42 -3 allows landlord to file for eviction based on non-payment after providing tenant with 10 -day notice to pay or quit and tenant failing to either pay the amount owed or surrender possession. • But if the lease provides that you must give a certain number of days' notice, you should give that number of days' notice instead of giving the default 10 day notice. • Use whichever notice period is longer—Lease, applicable HUD regulations or required lease addendum. • Tenant isn't responsible for payment of portion of rent covered by assistance payment.

Eviction for Criminal Conduct • Landlord must prove criminal conduct by a preponderance of the evidence. • Before trying to evict, check: • whether alleged activity is “criminal” & if so, whether it is drug-related, • if activity isn't drug-related, check activity location, timing, & effect on the property, • whether offender was “guest” (temporarily staying in unit) or “other person under tenant’s control” (invitee not staying in unit), • for procedural mistakes (e. g. in termination notice) • possible defenses like waiver, statute of limitations, reasonable accommodation, equal protection, or unlawful discrimination.

Evictions for Criminal Conduct Continued • Landlord not required to dismiss eviction action if tenant is acquitted or charges are dropped. • BUT remember, landlord must prove criminal activity by a preponderance of the evidence. • HUD takes position that landlord isn't required to wait until the criminal prosecution is completed to proceed with eviction. • An arrest alone is not sufficient to prove criminal behavior by a preponderance of the evidence. • HUD defines “drug-related” as use or possession of a controlled substance with intent to sell, distribute or use.

Thank you for attending! For further questions please reach out to the presenters at: Rhian Mayhew Rmayhew@bwpf-law. com Brownlee Whitlow & Praet, PLLC Peter Gilbert peterg@legalaidnc. org Legal Aid of North Carolina, Inc.