A recent court case (Matthews v. Housing Authority of Baltimore City, March 2014) shows the importance of keeping track of who is living in your HUD assisted or tax credit units. Both HUD and the IRS have strict requirements relative to unauthorized occupants. In the case of HUD properties, owners may be required to repay excess subsidy; in a LIHTC property, failure to properly document additional household members can lead to a loss of credits.
In the noted case, the Baltimore Housing Authority terminated the voucher of a resident after learning that her husband had listed her unit as his mailing address – he was not approved by the Authority as a member of the household. According to the resident, she and her husband had separated in 2002. In December 2011, the resident asked the Authority to add her husband to her voucher because they had reconciled. The husband signed the required forms allowing the Authority to run the required background checks.
Three of the background checks showed the husband’s address as the resident’s address, and the Authority notified the resident that her voucher would be terminated for permitting an unauthorized occupant. All the background checks showed the husband’s address as being that of the resident prior to the date she requested he be added to her voucher.
During a hearing on termination of the voucher, the resident stated that her husband used her address to receive mail from child support and veterans affairs because he did not have a regular address. The husband stated that he did not live in the unit and had been living on and off with his son for the prior ten years. The site’s visitor policy stated, “use of the unit address as the visitor’s current residence for any purpose that is not explicitly temporary shall be construed as permanent residence.” Based on this, the hearing officer considered the husband to be an unauthorized occupant and terminated the voucher. The resident appealed.
The Maryland Appeals Court reversed the hearing officer decision and ruled for the resident. The court ruled that the hearing officer improperly applied the visitor policy in concluding that the husband was an unauthorized household member. The visitor policy states that any adult, who has been in the unit more than 14 consecutive days without PHA approval, or a total of 90-days in a 12-month period, will be considered to be living in the unit as an unauthorized household member. One factor used in the determination of whether the person is living in the unit is the use of the unit address as a mailing address.
The court ruled that in order for the Authority to rely on the visitor policy as the basis for termination of the voucher, the entire policy had to be considered – not just the section on use of the address for mail purposes. At no time, before or during the hearing, did the Authority establish that the husband had been in the unit more than 14 consecutive days or a total of 90-days in a 12-month period. The Authority used only the issue of the mailing address as reason for termination. The court ruled that this did not prove that the husband actually resided in the unit.
This case illustrates the importance of owners knowing who is living in units at all times. One of the best ways to do this is through regular inspections – or walk-throughs – of all units (I recommend doing this on a quarterly basis). Another tool in the prevention of unauthorized occupants is the registering of automobiles at the property, and a requirement that overnight visitors obtain windshield passes. Regardless of the techniques used, management must constantly be aware of who is living at the property.