One of the lesser-known provisions in the recently revised HUD Model Lease for Subsidized Programs addresses the termination of rental assistance when a resident owns real property that could be used as a residence. Although this requirement may not arise frequently, it is a crucial compliance consideration for owners, managers, and residents alike.

The Core Requirement

Under 24 CFR § 5.618, assistance may be terminated if a tenant owns, has the legal right to reside in, and has the legal authority to sell real property that is suitable for occupancy by the household. In plain language, if a family owns a home they could live in, they generally cannot also receive a Section 8 rental subsidy.

The rule ensures that scarce subsidy dollars are reserved for households without viable housing alternatives. However, HUD’s regulation also provides clear exceptions and recognizes situations where "ownership" should not automatically disqualify a family.

Key Exceptions

A household’s assistance cannot be terminated under this rule if:

• The property is covered by HUD’s Homeownership Option or assistance under 24 CFR 982.620.
• The property is jointly owned with a non-household member who resides there.
• The tenant (or family member) is a victim of domestic violence, dating violence, sexual assault, or stalking under VAWA protections.
• The property is currently being offered for sale.

What Counts as "Suitable for Occupancy"

Not every piece of property a family owns is considered a livable home. A property is deemed "suitable" unless the family demonstrates that it:

• Fails to meet disability-related needs (e.g., accessibility, proximity to transportation, additional bedroom needs).
• It is too small for the household size.
• Creates a geographic hardship, such as extreme commuting distance to work or school.
• It is unsafe due to its physical condition and cannot be reasonably repaired.
• It is legally uninhabitable under state or local laws.

Practical Implications for Managers

• Screening and Recertification: Managers should ask about real property ownership during initial certifications and annual recertifications.
• Documentation: If a tenant claims an exception or hardship, obtain clear, fair housing-compliant documentation.
• Notice and Due Process: Any termination action must follow HUD’s notice requirements and provide the resident with an opportunity to contest the determination.

Conclusion

This lease provision highlights HUD’s effort to strike a balance between subsidy stewardship and fairness to tenants. For property managers, the key takeaway is vigilance: ensure you ask the right questions, recognize the exceptions, and document thoroughly before pursuing termination. For residents, it serves as a reminder that while owning a home can be an asset, it may also impact eligibility for subsidized rental assistance.