In Velez v. Cuyahoga Metropolitan Housing Authority, 2015 U.S. App. Lexis 13265 (6th Cir. July 30, 2015), an appeals court ruled that fees for short-term rentals are considered rent and must be paid as part of the rent under the Housing Choice Voucher (HCV) Program.
The plaintiffs in the case entered into one-year leases with a landlord. At the end of the one-year lease, the leases were renewed for terms of less than one-year. The landlord had a policy that when leases are not at least one year, tenants are required to pay additional fees. These fees ranged from $35 to $100 per month.
The policy of the Cuyahoga Metropolitan Housing Authority (CMHA) was not to treat such short-term fees as rent under the HCV program, but considered them to be “convenience fees” charged as consideration for the increased costs associated with the administration of leases with shorter term rentals. For this reason, the tenants were required to pay the fees out-of-pocket.
The plaintiffs filed a claim in district court against CMHA, arguing that the short-term fees were “rent.” The district court ruled in favor of CMHA, stating that the term “rent” under the U.S. Department of Housing & Urban Development (HUD) regulations does not include the fees that landlords charge for short-term leases. The plaintiffs then appealed to the U.S. Court of Appeals for the Sixth Circuit.
The appeals court relied on Section 8 of the Housing Act of 1937 and other HUD regulations in reaching its decision. Under the Act, housing assistance payments that a PHA makes on behalf of a low-income tenant are defined as the monthly assistance payment by the PHA, which includes a payment to the owner for rent to the owner under the family’s lease. HUD regulations define “rent to owner” as “total monthly rent payable to the owner under the lease for the unit. Rent to owner covers payment for any housing services, maintenance and utilities that the owner is required to provide an pay for.”
“Based on the plain meaning of the word in context, rent in Section 8 of the U.S. Housing Act means the amount paid under the lease for use and occupancy of the property,” the appellate court wrote. “Because the subject fees are an expense payable by the lessees for the occupancy of the rental unit, we conclude that the expenses are part of the lessees’ rent under the Act.” Based on this, the CMHA is required to pay the short-term rental fees charged to the plaintiffs. This assumes that the fees, when combined with other rent charged, do not exceed the HCV payment standard approved for the locality.
This is an important court ruling in that it stipulates that not only may owners participating in the HCV program charge additional rent for short-term rentals, but that PHAs are obligated to include the fees as rent when determining the PHA portion of the rent. This is the case as long as the rental amount does not exceed the local payment standard for the HCV program.