With good renters, agreeing to Section 8 won't be a problem

With Good Renters, Agreeing to Section 8 Won't Be a Problem

07-Dec-1997 Sunday
(Page H-10 )

Robert Griswold | Steven R. Kellman | Ted Smith
This column on issues confronting renters and landlords is written by Certified Property Manager Robert Griswold, host of KSDO Radio's "Real Estate Today!" (Saturdays, 2-3 p.m., AM 1130) and by attorneys Steven R. Kellman, director of the Tenants' Legal Center, and Ted Smith, principal in a law firm representing landlords.

Q: I have tenants in my small apartment building who have been with me on a month-to-month rental agreement for about six months. They pay on time and have not caused any problems. They now tell me that they have been approved for the Section 8 program. Should I agree to the Section 8 program or should I serve them a 30-day notice? (Section 8 is a federal rental assistance program that provides subsidies to qualified households who pay no more than 30 percent of their income for rent.)

A: Smith: Whether a landlord should decide to use Section 8 for an apartment building is debatable. Landlords should be wary of the pitfalls. In every Section 8 lease agreement, there is a requirement to show just cause or violations of the agreement in order to evict. Not so in conventional month-to-month tenancy, where no reason need be given. Section 8 leases must be renewed annually, unless you have a good reason not to. In other words, once you're in this program, it might be hard to get out, unless you can show problems with the tenants or other good cause why you shouldn't continue.

A judgment against a Section 8 tenant might be difficult to collect since the landlord is dealing with a tenant who is either unemployed or has very low income.

Griswold: Ted has pointed out some of the legal issues (typically, the cons) that all owners considering participation in the strictly voluntary Section 8 housing program should carefully evaluate.

On the positive side, the Housing Commission or Housing Authority will subsidize a portion of the monthly rent with the tenants only required to pay 30 percent of their income toward rent as long as they continue to qualify for the Section 8 program.

However, on the downside, the payment for the first month or two can be late, sometimes up to 45-60 days after the rent is due as the initial paperwork takes awhile to get into the system.

Also, with the long waiting lists and the restructuring of HUD further reducing available funds, you do have some clout as tenants do not want to lose their eligibility.

The unit will have to be inspected each year, which should not be a problem for responsible landlords and actually has the benefit of keeping the tenants responsible for properly maintaining their premises in a clean and sanitary manner.

If you find that the pros and cons we have presented are acceptable, then the most important criteria is your experience with the current tenants. Since they pay on time and have not caused problems, I think the prudent decision is to keep them as Section 8 tenants.

Kellman: Your decision is a simple one. As Robert says, if you have good tenants, keep them and join the program.

If they paid the full rent on time, they surely will pay their reduced Section 8 share without a problem.

Further, you have tenants who have probably been waiting three years or more to be part of that program. Many tenants feel the great incentive is to be "good tenants" rather than risk losing those benefits.

Legally, the restrictions or cons that Ted mentions are not a big deal.

You can always opt out of the program with a simple good cause. You can still evict a tenant for nonpayment of his or her portion of the rent or for unlawful conduct.

My advice: Go for it!

Q: We lived in a rental home for six years before moving last month into a new home we purchased. While we were in the rental home we made some significant improvements. For example, we installed a new patio cover and deck, a new garage door and electric opener, and new landscaping.

Our lease agreement does not address issues concerning improvements to the property by the tenant, yet we feel that we enhanced the value and should be compensated. What are our legal rights?

A: Smith: Here's the landlord's position. You went out on your own to make these repairs and improvements. No one asked you to do them, nor did you expect to be paid for them. You did them for your own benefit. In fact, you violated the lease agreement by making improvements without first obtaining the landlord's consent.

While you might believe you "enhanced the value," in the landlord's eyes, you may have actually reduced the value -- or caused him expenses to restore it to the way it was before.

If everyone's reasonable, you might be able to work it out -- maybe an agreement with the landlord to give you some reasonable compensation for the improvements.

Kellman: Now Ted, it's not nice to take advantage of tenants who improve the landlord's property. Under the law, you, the tenant, may be entitled to be compensated for the costs or the value of the improvements.

The landlord would have had to give express (written) or implied permission for the improvements and accepted their benefits. You might have then created a form of contract to pay you for the benefits given to the landlord. The law seeks to prevent what's called "unjust enrichment" of the landlord in such cases.

It's simply not fair that the landlord sits silently while his property is improved, hoping that the improvements will come for free.

There is no free lunch here, Ted.

Ask for compensation from the landlord because if you don't, the law may also say that you are not expecting any and that may be just enough to tip the scales against you.

If you're a tenant or landlord, the authors stand ready to answer your questions in this column, although letters cannot be answered individually. Write them at: Rental Roundtable, Homes Section, San Diego Union-Tribune, P.O. Box 191, San Diego, CA 92112. Or you may e-mail them at rgriswold@retodayradio.com

Back to 1997 Rental Roundtable Index

Robert Griswold and the Real Estate Today! radio show strongly support the intent and the letter of all federal and state fair housing laws. As a reminder to all owners and managers of real estate, note that all real estate advertised is subject to the Federal Fair Housing Act, which makes it illegal to advertise "any preference, limitation, discrimination because of race, color, national origin or ancestry, religion, sex, physical disability, or familial status, or intention to make any such preference, limitation or discrimination." Additional state and/or local fair housing laws may also apply. Be sure to inform all persons that all dwellings offered or advertised are on an equal opportunity basis.

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Revised and Updated - Wednesday, April 26, 2006

Robert S. Griswold, CRE, CPM, CCIM, PCAM, GRI, ARM
Griswold Corporate Center
Griswold Real Estate Management, Inc.
5703 Oberlin Drive, Suite 300
San Diego, CA 92121-1743
Phone: (858) 597-6100
Fax: (858) 597-6161
Email: rgriswold.ret@retodayradio.com