Section 8 versus Non-Section 8: What Colorado Landlords Need to Know

Filed Under (Leases and Landlord Tenant) on 09-27-2012

section 8 rentals, section 8 rules, low income housing, landlord responsibilites

By Victor Grimm, Esq.  and Rachel Brand

The Section 8 Housing Assistance Program is a subsidy program for very low-income tenants. The federal government, through the Department of Housing and Urban Development (HUD), pays all or some of a tenant’s rent in the private housing market.

Colorado landlords don’t have to accept Section 8. When a potential tenant calls to ask if you accept Section 8 vouchers, it’s okay to say no. 

Still, Section 8 may appeal to landlords for a variety of reasons. There’s a large market of Section 8-qualified tenants, and, for your part, working with Section 8 means steady, guaranteed payments. But before you post “Section 8 okay” on your ad, you should know that the program has specific rules and hoops to jump through. Read below how working with Section 8 differs from renting to conventional tenants.

Condition of the property

No matter who you rent to in Colorado, when you rent it out, you “warrant” or agree that your property is “habitable” or fit to live in. The rules governing habitability are spelled out in the Warranty of Habitability law. Section 8 takes this one step further.

Before you can rent to a Section 8 tenant, an inspector from your local public housing authority will visit your property. To pass the test, your property must offer:

•    The kitchen: hot and cold running water with no obvious leaks; a working stove and refrigerator; enough space to prepare food; two electrical outlets.
•    The bathroom: a sink or washbasin; a toilet; a tub and/or shower; privacy; working lights; a window that opens and can be locked.
•    Exterior: no peeling, chipped or cracking paint; stairways with four or more steps must have a handrail; bug and rodent free; working smoke detectors outside each bedroom.

None of these barriers is especially high, but you may need to make minor fixes to comply. Note that scheduling the inspection, fixing any small repairs and passing the test can take time, which can mean that your property may be unoccupied before you collect rent. On the other hand, a third-party inspection can prove beneficial should disputes arise in the future as to the condition of the property (such as a security deposit deduction issue). 

Payment coordination

There can be payment delays, particularly at the start of your contract with the housing assistance provider. Usually these get ironed out over time. And while housing authorities require that Section 8 tenants pay their portion of the rent on the first of month, you may have to face the usual challenges in collecting rent.

Evictions

You cannot evict a tenant for the housing authority’s failure or refusal to pay its portion of the rent, but you can evict if your tenant fails to pay his or her portion.

In the course of an eviction, you may choose to use a special Section 8 Demand for Payment or or Compliance note. In addition, you must serve the pay or quit notice in all three of the following ways:

•    Posting or hand delivery to the tenant;
•    Faxing or mailing a copy of the demand to the Section 8 provider (housing authority); and
•    Mailing a copy to the tenant’s address.

For practical purposes, the three days starts running once all three steps are complete. Also note that Section 8 tenants often have free legal help, so it’s important to comply with all applicable laws and use the latest eviction forms.

And, in many instances, if a Section 8 tenant is evicted, the tenant loses the right to receive further housing subsidies. That means Section 8 tenants may have extremely strong incentive not to be in default under the lease. 

Some final cautions

Tenants are on Section 8 for a reason: lack of money.  So if they destroy your property or don’t pay rent, they may have little or no assets to sue for. While this might be true for some conventional tenants as well, it is an obvious concern when Section 8 tenants are involved.

Also: the Section 8 program does NOT screen tenants. Therefore, it’s essential for you, the landlord, to screen tenants carefully for past criminal behavior, evictions, foreclosures, and other red flags.

For more information, see The Landlord & Tenant Guide to Colorado Leases and Evictions, 5th Edition, by Victor M. Grimm, Esq. and Denise E. Grimm.





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