Many federally subsidized housing programs provide assistance to tenants in multifamily complexes owned by private owners. These programs are usually subsidized through insured, assigned, or noninsured below-market-interest-rate mortgages or through Section 8 Project-Based Rental Assistance (PBRA). Other common programs include the Section 236 and Section 221(d)(3) mortgage programs, Rent Supplement program, Section 202 senior housing program, Section 8 Loan Management Set Aside program, and the Section 8 New Construction, Moderate Rehabilitation, and Substantial Rehabilitation programs. The subsidies for these programs are tied to the unit, unlike the Section 8 tenant-based voucher program in which the subsidy travels with the tenant. If the tenant is evicted or moves from the unit, the tenant no longer receives a subsidy. In addition to applicable regulations,1  HUD Handbook 4350.3 for multifamily housing controls the operations of these varied programs.2

Over the past few years, the nation has lost more than 100,000 units from the privately owned but federally assisted HUD multifamily housing stock through prepayments of HUD-backed mortgages and Section 8 opt-outs and terminations. These units were originally subsidized with HUD-insured mortgages such as Section 236 or with project-based Section 8 assistance to make the units affordable to low-income persons. The expiration of long-term use restrictions that require rents to be affordable for low-income families has escalated the crisis in preserving affordable housing.

Upon expiration of the restrictions, the owners decide whether to remain in the program or to refuse contract renewal and “opt-out.” In 1997, Congress adopted the Mark to Market (M2M) program to incentive Section 8 multifamily landlords to renew their contracts by offering a mortgage restructuring option.

Some legal services programs have successfully challenged prepayments and Section 8 opt-outs to try to preserve low-income housing in their community.3  Some of the most common legal challenges include improper notice of prepayment, existence of state law mandating preservation of low-income housing, and fair housing challenges.

• 1See generally 24 C.F.R. §§ 880–891 (Section 8 PBRA programs); 24 C.F.R. §§ 221, 236 (referenced mortgage programs).
• 2U.S. Dep’t of Hous. & Urb. Dev., Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily Housing Programs (2013).
• 3215 Alliance v. Cuomo, 61 F. Supp. 2d 879 (D. Minn. 1999).

In these programs, the private owners select the tenants. The tenant’s income eligibility is basically the same as for the upper limit of public housing and tenant-based Section 8. The owner is responsible for developing reasonable selection criteria and may consider housekeeping habits, credit history, demonstrated ability to pay rent, and prior landlord references. Tenant screening criteria must comply with the Fair Housing Act.1  Some federally assisted properties may be designated specifically for seniors or people with disabilities; this  designation does not violate the Fair Housing Act if the designation was done properly.

An applicant has the right to respond to a rejection in writing and to request a meeting within 14 days.2  The person holding the meeting cannot have participated in the decision to reject the applicant. The most common reasons for rejection include poor credit history, prior criminal history, or negative rental history.

As with other federally subsidized housing programs, tenants may be entitled to additional protections if they have a disability or have been affected by domestic violence or if the housing provider receives Low-Income Housing Tax Credits.

• 1See generally U.S. Dep’t of Hous. & Urb. Dev., Handbook 4350.3 Chapter 2: Civil Rights and Nondiscrimination Requirements, Occupancy Requirements of Subsidized Multifamily Housing Programs (2013).
• 2 U.S. Dep’t of Hous. & Urb. Dev., Handbook 4350.3 Chapter 4: Waiting List and Tenant Selection, Occupancy Requirements of Subsidized Multifamily Housing Programs, at p. 4-27/28 (2013).

If a tenant lives in housing subsidized under Section 236, Section 221(d)(3), or Section 202 and does not receive a Section 8 subsidy, the tenant will have to pay at least the minimum base rent established for the complex. If the tenant’s unit also has a Section 8 subsidy, the rent is determined in the same manner as the rent for a public housing tenant. It is very important to accurately define the fact pattern and the applicable laws and regulations in order to determine how a tenant’s rent is calculated. For information on rent computation for the various programs, make sure to check the regulations for the particular program.

Owners of multifamily federally assisted housing are required to have good cause to refuse to renew a lease or to evict a tenant. Tenants may only be evicted for material noncompliance with the rental agreement, material failure to carry out obligations under any state or local law, criminal activity, or other good cause.1  Material noncompliance includes one or more substantial violations of the lease; repeated minor violations of the lease that disrupt the livability of the project, adversely affect health, safety, or the right to peaceful enjoyment of the premises, interfere with management of the project, or have an adverse financial impact on the project; nonpayment of rent or other charges; criminal or drug-related activity; and failure to comply with the recertification process.

The owner must serve a termination notice upon the tenant by sending a letter properly addressed and stamped to the tenant at the tenant’s address in the project with a proper return address and by serving a copy of the notice on the tenant by delivering it to any adult person answering the tenant’s door, or if no adult responds, by placing the notice under the tenant’s door or affixing the notice to the door. Service is not deemed effective until service has been made by both methods.2

The notice of termination must be in writing and must state that the tenancy is terminated on a date which is specified therein; state the reasons for the eviction with enough specificity for a tenant to prepare a defense; advise the tenant that if the tenant remains in the premises on the date specified for termination, the landlord may seek to enforce the termination by bringing court action, at which time the tenant may present a defense; and be served properly.3

Many HUD multifamily properties use the HUD Model Lease for Subsidized Programs.4  The form lease and the HUD handbook require that any termination notice advise the tenant of the right to request a meeting to discuss the proposed lease termination and that the request be granted if made within 10 days of receipt of the notice. Even if the lease does not expressly provide for such a meeting, you should always ask for one per HUD Handbook 4350.3 Chapter 8 (if the handbook applies to the property’s subsidy program).5  This will give you a chance to negotiate and, even if a compromise cannot be reached, the meeting is an opportunity for pre-trial discovery.

The time period for the notice of termination depends upon the reason for the eviction. In material noncompliance terminations, state law and the lease determine the length of notice required. A 30-day notice of lease termination is required for terminations based upon “other good cause.” A landlord under the federally assisted multifamily housing programs may not rely upon any grounds at trial that were not stated in the notice of lease termination unless the owner had no knowledge of those grounds at the time of the notice to vacate.

As of November 8, 2021 and until rescinded by HUD, 30 days’ notice is required for eviction for nonpayment of rent from most HUD Section 8 Project-Based Rental Assistance properties or from Section 221(d), 236, and 202 below-market-interest-rate mortgage properties. The notice must include information about available rental assistance.6

• 1U.S. Dep’t of Hous. & Urb. Dev., Handbook 4350.3 Chapter 8: Termination, Occupancy Requirements of Subsidized Multifamily Housing Programs, at p. 8–11 (2013); 24 C.F.R. §§ 247.3; 880.607; 881.601; 883.701 (check applicability of Part 247 and for excluded programs review applicable program regulations).
• 224 C.F.R. § 247.4(b) (check applicability of Part 247 and for excluded programs review applicable program regulations).
• 324 C.F.R. § 247.4 (check applicability of Part 247 and for excluded programs review applicable program regulations); Versailles Arms Apartments. v. Pete, 545 So. 2d 1193 (La. App. 4th Cir. 1989) (landlord failed to comply with HUD program notice requirements as reflected in lease agreement).
• 4U.S. Dep’t of Hous. & Urb. Dev., Form 90105a, Model Lease for Subsidized Programs (2007).
• 5 U.S. Dep’t of Hous. & Urb. Dev., Handbook 4350.3 Chapter 8: Termination, Occupancy Requirements of Subsidized Multifamily Housing Programs, at p. 8-5 (2013).
• 624 C.F.R. §§ 247.4; 880.607; 882.511; 884.216; Supplemental Guidance to the Interim Final Rule “Extension of Time and Required Disclosures for Notification of Nonpayment of Rent", Notice PIH 2021-29, H 2021-06 (Oct. 7, 2021).

Private owners who participate in the HUD multifamily housing programs have agreed to rent their complex or a portion of their complex to low-income families for a given term, usually at least 20 years. They are subject to periodic REAC (Real Estate Assessment Center) inspections by HUD. When operating costs for the units rise and the subsidized owners run short of money, they usually reduce services and maintenance. HUD has published a pamphlet for families living in multifamily housing called “Resident Rights and Responsibilities.” This pamphlet, available from HUD and the local HUD field office, describes tenants’ right to decent, safe, and sanitary housing.1

Residents of HUD multifamily complexes cannot use the local PHA to try to get the owner to make repairs or abate their rent because the landlord’s contract for subsidy payment is directly with HUD. When confronted with a need for repairs, tenants should report maintenance concerns to management of the complex. If the problem is not rectified in a timely fashion, the tenant should make a complaint to their local HUD field office. The tenant may also call the HUD National Multifamily Clearinghouse at 1-800-685-8470 or the HUD Office of the Inspector General Hotline to report fraud, waste, or mismanagement at 1-800-347-3735. This approach may be successful in getting the repairs made to the premises. If HUD cancels its contract with the owner or forecloses on a HUD-insured mortgage, the tenant may then be eligible for replacement housing in the form of relocation vouchers and relocation assistance payments.

Note that HUD is implementing new standards to replace HQS starting in 2023 across all HUD programs.2

• 1U.S. Dep’t of Hous. & Urb. Dev., Resident Rights & Responsibilities.
• 2For more information about NSPIRE standards, see Nat’l Standards for the Physical Inspection of Real Estate (NSPIRE), U.S. Dep’t of Hous. & Urb. Dev. (last visited Oct. 8, 2023).

Many rural residents face the dual problem of limited income and a chronic lack of affordable housing. Section 515 Rural Rental Housing is managed by the U.S. Department of Agriculture (USDA)1 . The Rural Housing Service (RHS) is authorized to make loans to provide rental housing for low- and moderate-income families in rural areas. Section 515 multifamily properties may have two types of units: “subsidized” and “unsubsidized.” Tenants in “unsubsidized” units pay a “basic rent” that is below market or 30% of their adjusted income, whichever is greater2 . The property may also have “subsidized” units that have a deeper subsidy either through RHS or a different source. The tenants in these units pay 30% of their income on rent3 . Tenants also receive a utility allowance4 . Though rarely used for this purpose, Section 515 loans may also be used for congregate housing for the elderly and people with disabilities.

• 142 U.S.C. § 1485.
• 27 C.F.R. § 3560.203.
• 3Id.
• 47 C.F.R. § 3560.202.

In order to be eligible for occupancy, the tenant must be a United States citizen or qualified non-citizen and qualify as a very-low, low, or moderate-income household, or, if a tenant receives other housing benefits such as Section 8 assistance, be eligible under the requirements of those programs1 . Applicants to Rural Rental Housing are entitled to appeal an admission denial through a grievance process2 .

• 17 C.F.R. § 3560.152.
• 27 C.F.R. § 3560.160(d)(6).

Borrowers must use a lease approved by USDA and that complies with 7 C.F.R. § 3560.156 and state law. Some lease requirements are:

• Lease must be in writing.
• Initial lease must be for a 1-year term.
• If the tenant is not subject to occupancy termination, a renewal lease or lease extension must be for a 1-year period.
• Lease must contain procedures that the borrower and the tenant must follow in giving notice required under terms of the lease including lease violation notices.
• Lease must contain procedures for resolution of tenant grievances consistent with the requirements of 7 C.F.R. § 3560.160.
• Lease must have terms under which a tenant may, prior to lease expiration, terminate the lease for good cause with 30 days’ notice.

The only grounds for termination or non-renewal of the lease are material noncompliance or other good cause.1  Section 515 tenants have a right to cure any violation before eviction.2  A tenant may not be evicted when the lease expires unless there has been a lease violation or the tenant is no longer eligible.3  Borrowers may evict a tenant for criminal activity or alcohol abuse by household members in accordance with provisions of 24 C.F.R. §§ 5.858–5.861.4

A borrower who proposes to take an adverse action against a tenant must notify the tenant in writing by certified mail or hand delivery and give the specific reasons for the proposed action.5  The notice must state a specific date by which lease termination will occur; state the basis for the lease termination with specific reference to the provisions of the lease or occupancy rules that have been allegedly violated; explain the conditions under which the borrower may initiate judicial action to redress the lease violation;6  and state that the tenant has an opportunity to correct the violation.

Subsequently, termination may only occur when the incidences related to the termination are documented and there is documentation that the tenant was given notice prior to the initiation of the termination action that their activities would result in occupancy termination.7

Note that a grievance is not available for “lease violations by the tenant that would result in the termination of tenancy and eviction.”8

• 17 C.F.R. § 3560.159.
• 27 C.F.R. § 3560.159(a).
• 3See 7 C.F.R. § 3560.158.
• 47 C.F.R. § 3560.159(d).
• 57 C.F.R. § 3560.160(e).
• 624 C.F.R. § 3560.159(b).
• 724 C.F.R. § 3560.159(a).
• 824 C.F.R. § 3560.160(b)(2).

An applicant or tenant who wants to contest an adverse action must make a written request for a meeting within 10 calendar days. If the grievance is not resolved to the tenant’s satisfaction, the borrower has 10 calendar days to prepare a written summary of the meeting including the borrower’s position, the tenant’s position, and results of the meeting.1

The tenant then has 10 days calendar days from receipt of this summary to request a hearing from the owner. A hearing panel is then selected, and a hearing is scheduled within 15 calendar days after receipt of the tenant’s request. A tenant has a right to examine and copy records and regulations.2  At the hearing, the tenant has the right to be represented by a lawyer or another representative, to present written and oral evidence, to present witnesses or refute and cross-examine witnesses, and to a decision based solely upon the facts presented at the hearing.3  A written decision from the formal hearing must be prepared within 10 calendar days. The decision must be sent to the RHS for review to ensure compliance with USDA regulations. Upon receipt of the decision, the owner and the tenant must take the actions (or refrain from taking the actions) specified in the decision.4

There are some exceptions to the grievance and appeals procedure, including RHS-authorized rent or rule changes, discrimination complaints, disputes between tenants, and some evictions.5

• 124 C.F.R. § 3560.160(f).
• 224 C.F.R. § 3560.160(g).
• 324 C.F.R. § 3560.160(h).
• 424 C.F.R. § 3560.160(i).
• 57 C.F.R. § 3560.160(b)(2).

This program allows nonprofit organizations to receive funding for many services, including transitional housing for persons currently homeless and permanent housing for homeless individuals with disabilities. Transitional housing assistance is designed to facilitate the movement of homeless individuals to independent living within 24 months (or a longer period as determined by HUD to be necessary to make the transition). Residents may be required to pay up to 30% of their adjusted income as their share of rent. Participants in this type of program may be required to leave the program at the end of the period or if they violate program rules. Termination is to be viewed as last resort, and the termination process requires that the residents be given written notice with a clear statement of the reasons for the termination. Residents are entitled to appeal the decision with an opportunity to present oral or written objections to a person other than the person who made the adverse decision or a subordinate of that person. A prompt written notice of the final decision is required.1

• 124 C.F.R. § 583.300(i).

Since 1992, HUD has awarded Shelter Plus Care funds to state and local governments and PHAs to serve homeless persons with disabilities such as serious mental illness, chronic substance abuse, and AIDS and related diseases. The program was created on the premise that housing and services need to be connected in order to ensure stability of housing for this population. The funds can be used to provide rental assistance in four ways: tenant-based rental assistance, sponsor-based rental assistance, project-based rental assistance, and moderate rehabilitation for single-room-occupancy dwellings (SROs). Only tenant-based rental assistance travels with the participant. Residents may leave a project or sponsor-based rental assistance program and be readmitted. The resident’s share of the rent is set at 30% of the resident’s adjusted income. The occupancy agreement is automatically renewable upon expiration, except on prior notice by either the tenant or the landlord. Residents may be terminated from the program if they violate program requirements, but termination is viewed as a last resort.1  The termination process requires written notice and an opportunity for a review of the decision, in which the participant is given the opportunity to present written or oral objections before a person other than the person (or a subordinate of that person) who made or approved the termination decision.2

• 124 C.F.R. § 582.320(a)–(b).
• 2Id.

The Supportive Housing Program and the Shelter Plus Care program were consolidated with other “legacy” homeless services programs under the Continuum of Care (CoC) program through the Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009.1  

While individual program regulations still apply, HUD also issued interim regulations for CoC recipients and subrecipients in 2012.2

• 142 U.S.C. 11381, et seq.
• 224 C.F.R. § 578.