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Questions on Leases

Tenant Security Deposits

Will the security deposit amount following the rehab be at a higher level than public housing?

The tenant’s existing security deposit will transfer at the RAD closing. Future tenants will pay security deposits according to PBRA / PBV rules.

Applicability of HUD Model Lease form 90105a for PBRA Conversions

In considering a RAD conversion from public housing to PBRA, would the Form HUD-90105a Model Lease for Subsidized Programs be required under PBRA?

Yes. The current form of model lease, and instructions for implementing the model lease, are contained in Handbook 4350.3 Occupancy Requirements of Subsidized Multifamily Housing Programs (see Appendices 4-A and 4-E). Additionally, PIH Notice 2012-32 REV 1 requires additional resident rights be included in the lease.

PBV Conversion and Request for Tenancy Approval (RFTA)

Are PBV units under RAD required to have a Request for Tenancy Approval (RFTA) filled out by the owner and tenant?

No, this provision of the housing choice voucher regulations (24 CFR 982 subpart G, section 302) does not apply to the PBV program (see 24 CFR 983.2.c).

Lease Agreement

Once conversion is completed, are there restrictions regarding the form of lease used or can a PHA use a lease of their choosing?

For RAD PBV conversions, the normal voucher program lease requirements are applicable. For RAD PBRA conversions, the normal PBRA lease requirements are applicable. See HUD Handbook 4350.3 Chapter 6. In both cases, the lease must include the tenant rights as required in PIH Notice 2012-32 REV 1

PH Tenant Leases for Less than a Year

We expect to have vacancies at the property that we are converting between now and closing. When a Public Housing tenant signs a lease, they are required by HUD to sign for a year for the initial lease term. We don’t want to have vacancies because that negatively impacts the budget, but we wouldn’t be able to keep a PH tenant on a PH lease once we convert. How should this be handled? Can we modify the PH lease to make it shorter?

PHAs should enter into normal lease terms with any resident moving in prior to conversion. All public housing residents, regardless of when they moved in, will need to be given at least 30-day prior notification that their public housing lease will be terminated at the effective date of the new HAP contract.

Tenant Notice of New Leases

Must a PHA give tenants 30-day notice of the effective date of the new lease?

PHAs must give tenants at least 30-day notice of their public housing lease termination (recognizing that the exact date of closing, and thus the exact effective date of the HAP, is not known). HUD recommends that PHAs provide this notification to residents along with a notification of the effective date of the new lease. However, PHAs should consult with legal counsel, especially with respect to the requirements of state and local tenant laws.

Security Deposit Requirements for RAD PBRA Conversions

We have converted 164 units of PH to RAD under PBRA. Are we now required to pay interest on Security Deposits and to keep these funds in a separate bank account?

RAD PBRA conversions are subject to HUD Handbook 4350.3 Occupancy Requirements for Subsidized Programs. Paragraph 6-17.B of the Handbook states, "The owner must place the security deposits into a segregated, interest-bearing account. The balance of the account must equal the total amount collected from all tenants then in occupancy, plus any accrued interest." Also refer to paragraph 6-18 regarding 'Refunding and Use of the Security Deposit' which states that any interest earned on the security deposit is to be paid at move-out, provided the tenant is due a refund of the security deposit. For existing tenants, this requirement applies to any security deposits carried over from their public housing tenancy. No new or additional security deposit can be required for existing tenants. For new tenants, collection of security deposits must be done in accordance with the HAP Contract and with the requirements of the Handbook.

Tenant Repayment Agreements

How should PHAs handle existing tenant repayment agreements through a RAD conversion? Must the repayment agreement stay with the PHA?

As with any other assets/liabilities of a property, the PHA and new owner must determine whether to transfer the repayment agreement with the property at conversion or to retain the repayment agreement on the PHA's books. Once determined, it is the responsibility of the PHA or Owner to maintain the terms of the repayment agreement and tenant rights.

HAP Effective dates during COVID-19

If a PHA/owner anticipates needing more time after a RAD closing to sign tenant leases during COVID-19, will HUD provide any flexibility around the timing of the effective date of the HAP contract as outlined in the Section 1.13.A of the RAD Notice?

In order to provide PHAs and owners additional time to execute individual leases with tenants in light of social distancing measures, HUD will permit the HAP effective date to be the first day of the third full month after closing upon request (rather than the first day of either of the first two months following closing). For example, a closing that occurs on May 15th could elect a HAP effective date of June 1st, July 1st, or August 1st. This option will be available for any closing that occurs through September 30, 2020.