Don't Give Away Rejected Applicant's Spot Until Appeal Process Ends
HUD rules require you to give every applicant you reject an opportunity to appeal the rejection. A written rejection notice must include the specifically stated reason(s) for the rejection, notice of the applicant’s right to respond to the owner in writing or request a meeting within 14 days to dispute the rejection, and notice that persons with disabilities have the right to request reasonable accommodations to participate in the informal hearing process [HUD Handbook 4350.3, par. 4-9(C)(2)].
If an applicant requests a meeting, a staff member other than the one who initially rejected the applicant must conduct the meeting [HUD Handbook 4350.3, par. 4-9(D)(1)]. And you must send the applicant a written final decision on his appeal within five business days after getting the applicant’s written response or holding an appeal meeting [HUD Handbook 4350.3, par. 4-9(D)(2)].
You may think that once you reject an applicant, you can rent an available unit to another applicant or place the next applicant in the rejected applicant’s waiting list spot during the appeal period. Although the Handbook doesn’t state that you must hold a unit vacant or keep a waiting list spot open during the up-to-19-day appeal period, if you give away the unit or the applicant’s waiting list spot while an appeal is pending, the right to appeal is meaningless.
Rejected applicants could complain to HUD that you treated them unfairly, or even claim that you discriminated against them based on, say, race or religion, if you give away “their” unit or spot to other applicants before considering their appeal. Therefore, you should hold a rejected applicant’s spot until after the appeal process is complete or until after the 14-day period ends with no appeal.