Owner May Be Liable for Charging Impermissible Rents
Facts: A group of Section 8 residents claimed that owners improperly charged them for washer and dryer rentals, renter’s insurance, and covered parking. The residents argued that “side payment” for these services constitute impermissible rent under the Section 8 contracts and regulations, and the owners therefore violated the Section 8 contracts and submitted false claims for reimbursement under the federal program.
In order to enforce additional rent payment requirements, the owners threatened the residents with eviction for nonpayment of the “side payments.” And the owners ultimately filed an eviction action against one of the residents for not making the side payments.
At a hearing, the parties agreed that if the additional charges can constitute additional rent, then the owner’s request to dismiss the resident’s claim without a trial must fail.
Ruling: A California district court found the resident’s allegations sufficient to interpret the additional charges as rent at this stage in the trial.
Reasoning: The complaint included several allegations consistent with resident’s argument that the charges were mandatory. For example, the owner never disclosed to residents that it was prohibited from charging additional rent payments; the owners recorded payment of the additional charges in their ledger for rents; the owners used nonpayment of the additional charges as a basis for threatening eviction, and for instituting eviction proceedings; and the residents ultimately agreed to pay the additional charges to ensure they wouldn’t lose their apartments and their Section 8 vouchers.
In addition, the residents sufficiently alleged illegal rent for the charge of laundry machines. The HAP contract specifically requires the owner to pay for all “utilities and appliances” unless otherwise specified in the HAP contract. The owners didn’t dispute that a laundry machine may constitute an “appliance,” nor could they reasonably do so. The HAP contract nowhere lists laundry machines as an appliance for which the tenant is responsible. The site’s Additional Services Agreements, which required residents to pay $40 per month for laundry machines, conflicts with the HAP contract and is superseded by it. The owner, then, is prohibited from charging for this appliance by the HAP contract.
- United States v. Wasatch Advantage Group, July 2017