Multifamily Horror Story: Section 8 Abatement

[Ryan Daigle]

Thought you all would appreciate a dose of reality from the trenches of a multifamily operator - Section 8 abatement.

If you have Section 8 tenants at your property you have to be aware that there are three parties involved in the relationship (you, the landlord, the tenant, and HUD). There are certain situations, such as repair requests going ignored, where the tenant can report you to HUD and they will withhold paying rent. This is called abatement and can be an unwelcome surprise if it happens to you.

We recently had this happen to us not because we were being negligent in our landlord duties, but because there were outstanding maintenance requests to the previous landlord that caused HUD to stop paying until it got resolved. This information didn't transfer to us with the change of ownership so the first we knew of it was when we didn't get paid by HUD.

There are a lot of moving pieces when you're responsible for the living arrangements of your tenants, but even more so when there's another party involved that acts on their behalf. We caught this particular issue quickly and closed the gap with HUD to ensure it doesn't happen in the future so it's all good. Just something to be aware of when you're dealing with government programs and other third parties!

Do you have any abatement horror stories?

[Evan Polaski]

@Ryan Daigle, thankfully mine was years ago.  In Cincinnati, you have formerly annual inspections, now bi-annual.  They print a list of what failed, and give you a due date.  On the list of items, it states Landlord or Tenant responsibility.  

I had an inspection that one of the items was the lawn.  This was a single family house, and tenant was responsible per lease.  I believe it was in the fall, when you don't really need to cut grass too frequently, but either way, property failed.  I made my fixes before due date, and at reinspection lawn still was not cut.  Failed again.  

So, not only did my rent not get paid for a month (although was released upon reinspection), but I had to pay to get grass cut ($30, but it was the principle).  And, this was a section 8 tenant, so I didn't even try to bill back, since there was no money to pay it anyways.  Thankfully she moved out, and the next tenant was much better.

All told, it is more of a headache than a financial hardship.  But you are right, it is a 3 party agreement, and the 3rd party is a huge bureaucracy that works at their own pace with sometimes seemingly changing or just irrational rules.