How to Handle the Death of a Household Member
By Daniel Bagliore
Dealing with the death of a resident is an understandably difficult task for any site manager. The manager must be sensitive to the fact that the family is grieving the loss of a loved one, busy with funeral arrangements, and handling the financial affairs of the deceased.
Although a site manager must remain professional in this situation, a manager of a Section 8 property in particular has an obligation to act quickly after the death of a tenant to ensure compliance with certain HUD requirements while simultaneously mitigating the financial loss to the site.
Remaining Members and Succession Rights
When a resident dies, the manager needs to determine if there is a remaining household member with succession rights to the subsidized unit. According to HUD, a remaining household member is one in which the individual is of legal contract age under state law and was a party to the lease at the time the tenant died [HUD Handbook, par. 3-16(B)(1-2)]. Section 202 and 811 sites have additional succession requirements; for these sites, managers should refer to HUD Handbook 4350.3, paragraph 3-16(B)(3).
The remaining household member must report the death of the resident to management and an interim recertification should be processed in accordance with HUD requirements and your internal procedures. The effective date of the interim recertification will depend on several factors, including the time frame in which the resident’s death was reported and the effect the removal of the household member will have on tenant rent [HUD Handbook 4350.3, par. 7-13]. The tenant rent and HUD assistance payment will be adjusted accordingly.
Also, remember to execute the HUD Form 50059 (Owner’s Certification of Compliance with HUD’s Tenant Eligibility and Rent Procedures) for the interim recertification and a new HUD Model Lease with the remaining head of household and any other adult household members.
Death of Sole Household Member
Addressing a resident’s death becomes more urgent when the deceased was the sole household member. Since the deceased lived alone, and there were no eligible remaining household members, the manager must make special efforts at recovering the unit in a prompt and legal manner. This is due to the special HUD rules that apply when the sole household member dies.
Subsidy considerations. According to HUD, when the sole household member dies, subsidy is limited to the earlier of 14 days (two weeks) from the date of death or when the unit is vacated (that is, when the owner receives possession of the unit). As such, the owner is ineligible to receive subsidy for the unit even when it continues to be held by the family beyond the two-week period. When the owner is unaware of the death, and/or the family refuses to return the unit to the owner within the two-week time frame, it could become a significant financial loss to the site. Although the reference to the aforementioned 14-day time frame was removed from HUD Handbook 4350.3, REV-1, CHG-4, it continues to remain a requirement of HUD’s Monthly Activity Transmission (MAT) User Guide.
Example: Ms. Smith resides in unit 1A at your site. The contract rent for the unit is $1,100, of which HUD currently pays $1,000 per month. On Aug. 31, 2014, you learn that Ms. Smith died on July 10, 2014, and immediately contact the family, which returns the unit to you on Sept. 2, 2014. The move-out is processed with the October 2014 HAP voucher and, since subsidy for this unit stops on July 24, 2014 (14 days from the date of death), the site is required to return to HUD all rental assistance received since that date, which, in this case, amounts to $2,226 ($226 for July 25-31; $1,000 for August; and $1,000 for September).
Internal controls. Compliance with HUD requirements is mandatory and therefore, as a manager, you should be as proactive as possible in addressing the death of the sole household member to mitigate the financial loss to your property. To this end, you may wish to implement one or more of the following internal controls:
> Educate residents. Encourage your residents to immediately advise you of the death of any tenants within the building. Also, notify your residents through resident orientation and/or house rules that HUD will discontinue subsidy 14 days after the death of the sole household member and recommend that they discuss with their family the need to promptly return the unit to the owner in the event of his or her death.
Some sole household members believe that possession of the unit may automatically transfer to another person upon their death even if that individual is not on the lease. You should educate your tenants on HUD’s rules regarding succession rights; a resident may wish to consider adding one or more eligible individuals to the lease to ensure legal succession rights.
> Train staff. Maintenance staff often serves as the eyes and ears of your site and may quickly learn about the death of a resident. Make your maintenance staff aware of the HUD requirements and have them immediately report to you the death of any tenant.
> Scan obituaries. Regularly review the obituaries in your area and be cognizant of any posted notifications in your building announcing the death of a tenant.
> EIV reports. Since Jan. 31, 2010, HUD has required owners to utilize the EIV Deceased Tenant Report at least quarterly to address the death of subsidized tenants. This report is updated weekly and will provide you with a list of deceased residents at your site. You are required by HUD to follow up with households that may have deceased tenants. Single-member deceased households are denoted with an asterisk on the report.
Your contract administrator will review the EIV Deceased Tenant Report during management reviews to ensure that appropriate certifications are processed to reflect the death of the resident and will expect to see a move-out certification for single-member deceased households terminating subsidy 14 days after the tenant’s death or earlier.
You can use this report to your advantage by generating it more frequently, such as weekly or monthly, to learn quickly of a tenant’s death and follow up as appropriate. Make sure your procedures are reflected in your written EIV Policies and Procedures.
When to Consider Legal Action
If the family holds the subsidized unit following the death of the sole household member, you should consult your attorney and consider legal action to regain possession and charging the family for use and occupancy beyond the subsidy termination date. Quickly recovering a unit previously occupied by a deceased sole household member will reduce the potential financial loss to the site and allow you to turn and re-rent the unit to the next eligible household.
About the Author
Daniel Bagliore is Director of Compliance, Unithree Investment Corp., 240 Parkhill Ave., Staten Island, NY 10304.