Attach 4 Rental Procedures.pdf

Attachment 4

Rental Property Management Programs and Procedures

SECTION I - POLICY

1. General. Rentals are to be used only as appropriate to comply with other HUD programs such as occupied conveyance, or disaster relief, when it is determined that it is in the best interest of HUD.

All rentals are subject to Government Technical Representative (COR) approval. Leases must be in writing. Rental rates shall reflect fair market rents based upon comparable properties unless exempted by law, the PWS or the COR in writing.

2. Lease Term. Occupancy of acquired properties is temporary in all cases and is subject to termination as necessary to facilitate a sale or assignment of the property by HUD to another use or program. All rental units must meet habitability requirements. Occupied properties must not be held off the market and should be sold subject to occupancy if necessary.

3. Non-Discrimination. Tenants for any lease program will be selected without regard to their race, color, religion, sex, National origin, familial status or disability.

4. Lead-Based Paint. Properties constructed prior to 1978 shall not be leased to tenants with children under the age of seven (7) unless the property has been tested for the presence of lead based paint or lead based paint hazards and has been determined to be free of said hazards.

For housing built before 1978, the Contractor shall, on behalf of the Department, disclose the known presence of lead-based paint and lead-based paint hazards to tenants in accordance with the Lead

Disclosure Rule (24 CFR 35, subpart A; see www.hud.gov/offices/lead for more information).

Lead disclosure includes the actions below. These are required before ratifying a contract for housing lease, when the rental rate changes, or when the lease changes from a fixed termination date to a month-to-month arrangement. Exceptions are made if lead disclosure has been made to the tenants and no new information has been obtained subsequent to a previous disclosure, or if the lease duration is 100 days or less and no lease renewal or extension can occur, or if a certified lead-based paint inspector has found the housing to be lead-based paint free.

A. Give the tenant an EPA-approved information pamphlet on identifying and controlling lead-based paint hazards ("Protect Your Family From Lead In Your Home" pamphlet).

B. Disclose any known information concerning lead-based paint or lead-based paint hazards. The

Contractor must also disclose information such as the location of the lead-based paint and/or lead-based paint hazards, and the condition of the painted surfaces.

C. Provide any records and reports on lead-based paint and/or lead-based paint hazards which are available to the Contractor (for multi-unit buildings, this requirement includes records and http://www.hud.gov/offices/lead reports concerning common areas and other units, when such information was obtained as a result of a building-wide evaluation).

D. Include an attachment to the contract or lease (or language inserted in the lease itself), which includes the Lead Disclosure Rule's Lead Warning Statement and confirms that the Contractor has complied with all notification requirements. This attachment is to be provided in the same language used in the rest of the contract. The Contractor and the tenant must sign and date the attachment.

SECTION II — GENERAL PROCEDURES

1. Lease Program. The Department will lease its properties to comply with special HUD programs or when it determines that it is in the best interest of HUD. Situations where HUD will lease property include, but are not limited, to those programs shown under the Lease and Lease Option Programs in

Section III.

2. Approval Authority. The Contractor shall be authorized to enter into lease agreements with COR approval. The Contractor may not delegate this authority. The COR must approve the rental rate and the

Contractor must notify the occupants of that rate. Only those individuals specifically named in the

Contractor's Limited Power of Attorney may sign leases on behalf of HUD.

3. Contractor Case File. The Contractor's Case File must include:

A. Justification of the decision to rent. This decision must be reviewed at regular intervals to assure that rental remains the appropriate option.

B. Documentation supporting the rent level and services as stated in lease.

C. Repairs approved incidental to renting.

D. The original, executed lease and subsequent renewals. The original, executed lease must be in the case file.

4. Lease Forms. All lessees must execute either a HUD Standard Lease form or a Government Entity for

Defense or Law Enforcement Lease form. Any and all modifications or alterations must be approved by the COR.

5. Terms and Conditions of Occupancy. The conditions of occupancy shown in this paragraph are applicable to all lease programs unless specified otherwise in the specific program, as described in

Section III.

A. Occupancy. Occupancy of acquired property is temporary in all cases and is subject to termination when necessary to facilitate a sale, if assigned by HOC to a different use or program, or for cause as discussed in Eviction, Section V.

B. Other Terms and Conditions:

1) Leases shall be executed for all occupied properties.

2) Leases shall be written on a month-to month basis unless a fixed term is required to comply with disaster relief or upon receipt of written instruction from the COR.

3) Leases with a fixed term expire automatically at the end of the initial lease term. If the

Contractor does not give the proper notice to quit and vacate the premises prior to the end of the initial lease term, and the tenant remains in the property, tenancy will continue on a month-to-month basis. The Contractor's notice to quit and vacate will coincide and expire with the expiration of a monthly rental period. The tenant is responsible for rent payment during the 30-day notice period.

4) A tenant must have the financial ability to pay the monthly fair market rent specified by HUD and contained in the lease agreement.

5) The tenant must agree to allow access to the property, with two days notice, during normal business hours by HUD representatives for inspection of the property or HUD Contractors doing repairs, and must allow access for real estate brokers and their clients

6) Other terms and conditions as contained in the lease agreement are incorporated herein by reference and are made a part of the conditions for occupancy. Should there be any inconsistency between the policies as stated herein and the terms of the lease, the terms of the lease prevail.

C. Equipment, Furnishings, Services and Repairs. Determinations of HUD's obligations for appliances, maintenance, repair and utilities are made on a case-by-case basis. In all cases, the agreed upon services or furnishings will be as defined by the terms and conditions of the lease.

6. Property Management. Ongoing management of leased properties is the responsibility of the

Contractor.

7. Rent.

A. Rate. The rent will be the fair market rate based on rents charged for comparable rented properties, unless exempted by law, the PWS or the COR in writing. The Contractor is responsible for recommending the fair market rent for approval by the COR, notifying the tenant of the rental rate at the time the occupant is approved for occupancy, and executing the lease.

Documentation supporting the rent rate must be filed in the case file. No rent may be collected until occupancy is approved and title is taken in the Secretary's name. The resulting lease will be dated effective as of the date of acquisition of the properties for tenants approved under occupied conveyance.

B. Rent Due Date and Payment Method. Rent is due on the first of the month and may be paid by personal check or certified funds. The Contractor shall not accept cash payments. The account will be considered delinquent if the rent is not received within ten (10) days of the due date or, if paid by check, the funds are not honored by the tenant's bank.

C. Adjustments to Tenant Accounts. With COR approval, the Contractor may prorate a tenant's account to reflect unused rent or a credit for emergency or pre-approved repairs paid by the tenant. In any case involving a refund of unused rent, this adjustment may not exceed one-month's rent.

D. Delinquency. If the account becomes delinquent, the Contractor shall, no later than five (5) business days following the date of delinquency, send written notice of the amount due to the tenant with a demand that the late payment be received before the next full rental payment is due.

If payment is not received the Contractor shall attempt collection as described in Section IV of this Attachment.

8. Fair Housing. The Contractor must ensure that there is no discrimination by race, color, religion, sex, disability, familial status, or national origin.

9. Processing Requirements for SAMS. The following SAMS reports will be used by the COR to monitor rent collections: TMRP AG Aged Delinquency; TM RP HI List Lease History, and CL RP CE Lockbox

Cash By Entity.

SECTION III - LEASE AND LEASE-OPTION PROGRAMS

1. Occupied Conveyance. See Section 5.2.1.1.4 of the FSM Performance Work Statement

2. Occupancy for Caretaker Services. A caretaker lease is allowed, at low or nominal rent, when occupancy is necessary to protect a property from vandalism or rapid deterioration. The Contractor shall make determinations of whether a property is likely to be vandalized based upon information pertaining to past acts of vandalism in the immediate area of the property and obtain approval from the COR.

To support determinations, the Contractor shall use information from all sources including personal observations of the area, property inspection reports, Contractor reports and information reported by area residents. Where caretaker's lease is allowed, the case file must be documented to show the basis of the determination to lease. The Contractor shall use the standard lease attached.

3. Occupancy to Improve Marketability of Two-to-Four Unit Properties. If qualified, rent-paying tenants will improve the marketability of multi-unit properties, the Contractor may, with COR approval, lease these properties.

4. Occupancy Prior to Closing or Where Sales Closing is Delayed At Length. Occupancy of a property by the purchaser before sales closing is prohibited except in extreme circumstances when the COR authorizes pre-closing occupancy.

5. Occupancy Where Inventory Exceeds Sales Market Absorption Capability For An Extended Period.

In areas where unusually high concentrations of HUD-owned properties are negatively impacting

HUD's absorption rate, the COR may determine that it is in the best interest of the Department to remove some properties from the market and lease them. At the direction of the COR, the

Contractor shall advertise and execute six month or one-year leases for specific properties that had previously been offered through the lottery, exclusive and extended listing options and remain unsold. This option is rare and may be initiated only by the COR.

6. Temporary Housing for Disaster Victims/Housing Relief Programs. Acquired properties must be phased into disaster housing relief programs pursuant to legislative and administrative requirements.

Under a Memorandum of Understanding between the Department and the Federal Emergency

Management Administration (FEMA), acquired properties must be made available to temporarily house victims in areas declared by the President to be major disaster areas. The President determines, at request of the State Governor, when a declaration is warranted, pursuant to the

Robert T. Stafford Disaster Relief and Emergency Assistance Act, PL 93-288 as amended by PL

100-707, administered by FEMA. Pursuant to the terms of the MOU, following the declaration of a disaster, FEMA must request that the HOC Director in the Region of the disaster area, implement the MOU, as follows:

A. FEMA Request for a List of Available Properties. FEMA will request a list of available properties.

Following notification from HUD, the Contractor shall prepare a list of available properties. Eligible properties must be habitable, not under lease or sales contract nor committed to another use or program, and ready for immediate occupancy.

B. Distribution of List.

1) FEMA will provide lists from their resource bank of available housing, including the HUD-owned properties to disaster victims who are having difficulty finding rental housing that meets their needs. The disaster victims must locate their own housing and will directly contact the Contractor.

2) The Contractor shall not hold eligible properties off the market. As necessary, FEMA may request updated lists of available properties.

C. Leasing to Disaster Victims. The Contractor shall rent directly to the disaster victim, as follows:

1) Lease. Occupants must execute a lease, Form HUD-9532.

2) Term. The term of the lease is month-to-month not to exceed one year and subject to termination when the HOC notifies the Contractor that the emergency is over.

3) Maintenance and Operating Costs. The Contractor is responsible for payment of property taxes and maintenance costs normally required of a landlord pursuant to local law.

4) Rent. The rental rate will be set by the Contractor based on fair market rents. If, based on the tenants' financial circumstances, the Contractor believes that less than the fair market rent is appropriate; the Contractor shall provide its justification to the COR and obtain approval for a reduced amount. If less than fair market rent is charged, the Contractor shall amend the lease to state: "Rent abatement must terminate when the landlord determines the state of emergency is over, or within 12 months of this lease, whichever comes first."

D. Delinquency. Should a tenant become delinquent, the tenant is not entitled to the 10-day grace period and may not be granted the 10-day grace period unless and until the account becomes current.

E. Partial payments. The Department will not accept partial payments on delinquent accounts when the

Contractor has filed for eviction since the acceptance of partial payment may jeopardize eviction action. Exceptions will be based on the HOC's determination that the delinquency will be cured in a reasonable period. Payment will be applied to the oldest outstanding accounts.

F. Other Disasters. In response to a request from FEMA or a local government, HUD-owned properties may be used for temporary housing for homeless victims of a civil disturbance or a disaster that has not been formally declared a major disaster by the President. At the direction of the COR, the Contractor shall coordinate with FEMA or an agency of local government to develop a plan to identify appropriate properties and make them available. The COR must approve any temporary rental plan developed in response to a local emergency.

G. Documentation for File. Case files for each property leased under this program must include: a summary report of the disaster; the original, signed lease; a narrative report concerning the tenant;

the condition of the property before and after occupancy; prevailing market rent; and, if a nominal rent is charged, the justification for charging less than fair market rent.

7. Lease by Government Agencies for Defense, Law Enforcement or Other Purposes.

A. At the direction of the COR, the Contractor shall furnish all possible assistance to government agencies, such as the Department of Defense, Department of Treasury, Federal Bureau of

Investigation, Drug Enforcement Administration and U.S. Marshals Service, in leasing acquired home properties for defense, law enforcement or other purposes.

1) Terms of Agreement - The COR, shall coordinate with agency officials to determine the number of units required, the duration of the assistance needed and allocation of responsibility for repairs, appliances, furnishings and payment of utilities between HUD, the agency and the tenant, and will document this understanding in writing. Generally HUD will only authorize those repairs, equipment and services essential to ensure habitability in a clean, safe and secure dwelling.

2) Notice of Available Inventory. Based on the written terms of agreement and at the direction of the COR, the Contractor shall notify Base Commanders, housing officers and other designated agency officials of HUD-owned properties available for rent.

3) Joint Inspection. Each unit to be rented by the military or other agency will be inspected prior to occupancy by a representative of the agency and by the Contractor to reach agreement on necessary repairs, furnishings and lease terms consistent with the terms of agreement document.

4) HUD-Supplied Services and Equipment. If the teams of agreement require HUD to provide appliances, utilities, or repairs, the Contractor shall provide the needed services or equipment after approval of the costs by the COR and will be reimbursed for approved costs as a pass-through expense. Routine maintenance and grounds care will be provided as determined in the terms of assistance document but is typically the responsibility of the tenant.

5) Rent. The Contractor, through the COR will consult with the HOC Counsel for current rental rates, guidelines for which are provided by Title 10 USC Section 2828. Within those limits, rent must be based on comparables rented to the military or Coast Guard, not private sector rentals.

6) Lease. The Governmental Entity for Defense or Law Enforcement lease form will be executed for each unit by the Contractor with COR approval and an authorized representative of the military command or law enforcement agency.

7) Term. The lease becomes effective on the date properties are made available for agency use, regardless of whether they remain vacant, and runs to the end of each fiscal year or as otherwise provided in the terms of agreement document. Extensions pursuant to provisions in the lease must be by written request approved by the COR.

8. Tenant's Right of First Refusal. See Section 5.2.2.1 of the AM PWS

SECTION IV - RENT MONITORING AND COLLECTION

1. Collection by the Contractor. The Contractor shall collect and deposit rent as shown in HUD Handbook

4310.5 REV 2.

2. Work out Agreement for Delinquent Rent. When the COR has decided that it is to HUD's advantage to keep a property occupied, the Contractor shall attempt collection of delinquent rental payments rather than pursue eviction. The occupant may be allowed to pay off the delinquency at a rate of not less than one-half the delinquent month's rent, plus the current month rent until the delinquency has been brought current.

3. Lease Termination. After a decision by HUD to terminate a lease, the occupants will be notified to vacate the property. The Contractor shall take appropriate eviction action under the laws of the state in which the property is located, in any of the following situations:

1) Failure of the tenant to execute a lease, or to comply with the lease;

2) Failure of the tenant to allow reasonable access to the property upon proper notice;

3) Necessity to prepare the property for sale; or

4) Assignment of the property by HUD to a different use or program.

SECTION V - EVICTION

1. Eviction procedures must begin the day after the second month's rent becomes delinquent unless the tenant is making payments under a repayment plan.

2. The Contractor shall initiate and administer eviction actions when approved by the COR if:

A. The claim amount does not exceed $5,000;

B. No question of title is involved; and

C. No novel or important question is presented. Questions of law should be established at the direction of the COR through consultation with HUD's Area or Regional Counsel. The FSM shall also consult with private fee counsel, as appropriate.

3. Cases that do not meet the above criteria must be brought to the attention of COR who will consult with

HOC Counsel.

4. When a defendant's answer or counterclaim raises questions of title or presents a novel or important question, or claims monetary damages, the case must be brought to the attention of COR who will consult with HOC Counsel for Litigation.

5. Legal expenses specifically associated with these actions are reimbursable by HUD. However, no expenses shall be incurred without specific authorization by the COR.

6. The Contractor, through the COR, should consult with HOC Counsel to determine each State's requirements with respect to naming the plaintiff. Generally, eviction actions should be brought in the name of the Secretary of HUD. Eviction actions must be brought in appropriate state or municipal courts or in the case of the District of Columbia, the Superior Court.