Potential Section 8 Fraud: Seeking Resolution

[Brendan M Loftus]

Hi All,

I purchased a house in Atlanta back in early 2021 and I took on the current tenant who was with the section 8 program. The seller informed me the monthly rent was $1,550 including the tenant and city payments. This was also the amount stipulated in the lease, however I failed to review the HAP agreement as I was newer to RE investing at this time. I handed the property over to my PM, however, the Atlanta Housing Authority (AHA) recently informed my PM the portion of rent being charged to the tenant was significantly overstated. In other words, the seller was overcharging the tenant by about $200/month, which the housing authority didn't agree to and as a result, I will have to credit back the tenant about ~$4.5k from the last two years.

I understand it is my responsibility as a buyer to conduct my own due diligence, for which I take full responsibility not verifying the stated rent via the HAP agreement. However, I believe I was mislead by the seller who sold me a property with a higher monthly rent than what should have been.  My understanding is this is a federal crime to illegally charge the tenant more than the agreement with the housing authority. 

I am seeking resolution and would appreciate any input from the BP community. I will be taking the following steps:

1. Repay the tenant 100% of the amount she was overcharged.

2. Contact the seller. Seek full or partial recourse.

3. Seek resolution with my property manager. They are working with the city to correct the rent amount. However, I am upset they did not identify this sooner. I will request a copy of their errors & omissions policy. 

4. Learn from my mistakes and conduct better diligence going forward.

Any insight is appreciated. Thank you.