Take Eight Steps When Transferring Households to Another Unit

From time to time, you may need to transfer a household to another unit at your site. For example, if a household has lost members, you may have to transfer it to a smaller unit because it’s no longer eligible to occupy the larger unit. Or you may be required by fair housing law to allow a household to transfer to a different unit to reasonably accommodate a disability. Whatever the reason for a transfer, once you’ve decided to do it, we recommend the following steps to process it.

From time to time, you may need to transfer a household to another unit at your site. For example, if a household has lost members, you may have to transfer it to a smaller unit because it’s no longer eligible to occupy the larger unit. Or you may be required by fair housing law to allow a household to transfer to a different unit to reasonably accommodate a disability. Whatever the reason for a transfer, once you’ve decided to do it, we recommend the following steps to process it. We’ve also given you Model Form: Get Proof of Reason for Unit Transfer, that you can use to show why you’re requiring or allowing a unit transfer.

Step #1: Keep Proof of Reason for Transfer

Although HUD doesn’t require you to, once you’ve decided to transfer a household, you should verify that the household file has adequate documentation of the reason for the unit transfer. You’ll need this proof if you bring a vacancy claim for the unit the household is vacating [HUD Handbook 4350.3, par. 9-14(D)(4)(b)(4)].

                You’ll also need this proof if a household ever accuses you of refusing to grant a unit transfer for a discriminatory reason. If a case like that went to court, you would want your household files to show that you transferred households only in accordance with your site’s unit transfer policy. To get proof of the reason for a unit transfer, it’s a good idea for you (or site staff if they’re processing the unit transfer) to fill out a unit transfer form. Your form, like our Model Form, should ask for:

                Background information. This should include site name; household name; unit number and size of the move-in unit and the move-out unit; and anticipated unit transfer date.

                Reason for transfer. Leave several lines so you can give this information in detail.

                Documents related to transfer. Have a check box on the form where you can indicate whether all the documents related to the unit transfer are attached to the form, including those that back up the reason for the transfer. Also, give examples of the types of documents that might qualify, such as a 50059 printout that shows that the household size has changed. Then, be sure to attach those documents to the form.

                Signature of site manager. No matter who fills out the form, you, as the site manager, or another appropriate supervisory staff member, should sign it. That way, you’ll be able to verify that the household files have the documents they need. This will also give you one more chance to review the reason for the unit transfer and determine that it conforms to your site’s unit transfer policy.

Step #2: Notify Household of Transfer

If you’re requiring a household to transfer units (for example, because it has become too small for the unit it currently occupies), notify the household in writing that it must move within 30 days or pay HUD-approved market rent if it remains in the unit [HUD Handbook 4350.3, par. 7-16(B)(1)].

                If the household has requested the unit transfer, your site’s unit transfer policy should set a reasonable time frame in which the household should move after you notify it that you have a unit available. However, the handbook doesn’t address notification in this situation.

Step #3: Evaluate Whether Site or Household Must Pay for Move

Evaluate whether the site or the household must pay for the move. The site may have to pay for the move if you’re letting a household transfer units as a reasonable accommodation of a disability [HUD Handbook 4350.3, par. 7-16(B)(2)]. If a tenant is transferred as a reasonable accommodation to a household member’s disability, then the owner must pay the costs associated with the transfer, unless doing so would be an undue financial and administrative burden. In these situations, you should ask your attorney for advice.

                The handbook also isn’t clear about who must pay for other types of unit transfers—for example, when a household must move because its unit size isn’t appropriate for the household. Often, the household pays for the move. But because the handbook isn’t clear, to be on the safe side, ask your contract administrator or local HUD office whether you or the household must pay for the move.

Step #4: Conduct Unit Inspections

Conduct the following unit inspections for transfers:

                Move-out inspection. Conduct a move-out inspection of the unit from which the household is moving. Don’t forget to tell the household when you’ll conduct the move-out inspection and let it accompany you if it wants to [Handbook 4350.3, par. 6-29(A)(2)].

                Move-in inspection. Conduct a move-in inspection of the unit to which the household is moving. Do this jointly with the household head before you and the household sign the lease for the new unit (see Step #6) [Handbook 4350.3, par. 6-29(C)(1)].

Step #5: Use Software to Record Move-Out

Use your TRACS-compliant software to record the unit transfer and submit information on it to TRACS, says Jed Graef, affordable housing compliance manager for a software company. How you should do this depends on your software. If the unit transfer involves a change in subsidy (say the household is moving from a unit with Section 236 assistance to one with Section 8 assistance), you might have to handle your software submission differently than if you were recording a unit transfer that doesn’t involve a change in subsidy, says Graef. Ask your software vendor for instructions if you’re faced with this type of unit transfer.

Step #6: Sign Lease and Process Other Documents

You must process the following documents for a unit transfer:

                Lease and addendums. You and the household must sign a new lease and any applicable lease addendums for the new unit [Handbook 4350.3, par. 6-5(B)(3)]. You aren’t allowed to just make handwritten modifications to the lease covering the move-out unit.

                50059 printout. The 50059 printout details the household’s certification or recertification information and shows a household’s rent. When you record the unit transfer with your software, it should generate a 50059. You and the household must sign the 50059 when you sign the new lease.

                Lead-based paint disclosure form. This form tells households what you know about lead at your site. The handbook is unclear about whether you can forgo having a household sign this form for transfer units if it signed it before and you don’t have any new information about lead at your site [Handbook 4350.3, par. 6-8(B)(5)]. But because the penalties for not having households sign the form are severe, it may be best to have the household sign it again when signing the new lease.

                HUD/EPA lead hazard information pamphlet. This pamphlet informs households about the dangers of lead. The handbook suggests that sites don’t have to give this pamphlet to a household again if you haven’t gotten any new information about lead at your site [Handbook 4350.3, par. 6-8(B)(5)].

                House rules and pet rules. House rules are rules that relate to the safety, care, or cleanliness of the site or the safety and comfort of the households. Pet rules set out the rules governing pets at sites. Even though you gave copies of these rules to the household when it signed its first lease, give it copies again.

                Rights and Responsibilities brochure. This brochure outlines a household’s rights and responsibilities at the site. Give a transferring household a copy when it signs the new lease.

Step #7: Charge New Security or Transfer Existing Security Deposit

In a unit transfer, HUD says you may charge a new and different security deposit or transfer the security deposit from the move-out unit to the move-in unit [Handbook 4350.3, par. 6-16(A)]. It’s up to you. If you collected the appropriate security deposit when the household moved to the site, you won’t jeopardize your right to make special claims for unpaid rent or damages by not asking for a new deposit. But collecting a new security deposit may give you greater protection if the household damages the unit. You’ll need to weigh this benefit against the administrative cost of requiring new security deposits for transfers.

                If new security deposit charged. HUD says that if you charge a new security deposit for a unit transfer, you must close out the old security deposit on your books, deducting any unpaid rent or other charges (such as charges for damage) and refunding any remainder. Then you collect the new deposit amount appropriate to the unit [Handbook 4350.3, par. 6-16(B)].

                Keep proof of both the new and old security deposits, such as accounting records and security deposit disposition forms or receipts. Depending on what your contract administrator or local HUD office requires, you may need documentation of both security deposits for a damage claim.

                If old security deposit transferred. Transferring the old security deposit usually involves writing the amount of the prior security deposit amount on the new lease. You can’t increase or lower that amount. Depending on how you account for security deposits in your books (for example, if you organize security deposits by unit numbers) you might have to take some steps to show what you did.

                You can keep proof of the transfer of the security deposit by filling out a security deposit disposition form that shows you transferred the security deposit from one unit to another. Or you could write a short memo to the file.

Step #8: Properly Bill HUD for Units Involved in Transfer

When you transfer a household to a new unit, you must change how you bill HUD for the rent it pays for that household’s unit. According to Graef, here are HUD’s rules for billing for units involved in unit transfers:

  • Stop billing for the move-out unit as of the day before the transfer date;
  • Start billing for the move-in unit on the unit transfer date [Handbook 4350.3, par. 9-12(E)(4)(b)].

                Because you bill HUD by submitting a voucher one month in advance, you’ll have already billed HUD for the entire month of the move by the time the household moves. If you’ve overcharged HUD as a result, one solution is to bill HUD less in the next voucher, explains Graef.

                For example, on July 15, 2013, a household moves from unit 1A to unit 1B. On June 10, when the site sent HUD a voucher for July, unit 1B was vacant. That voucher billed HUD $300 for unit 1A and $0 for unit 1B (unit 1B’s subsidy rent is $250). But according to HUD’s billing rules, HUD should be charged only $272 for July for those two units—$135 for unit 1A ($300/31 days X 14 days) and $137 for unit 1B ($250/31 days X 17 days). So the site had overcharged HUD $28 for July because of the unit transfer. On the next voucher, the site should deduct $28 from the amount it bills HUD to account for the overcharge, says Graef.

                When you record the unit transfer with your TRACS compliant software, the software should automatically adjust your site’s next monthly voucher to accommodate HUD’s rules on billing for unit transfers. But be sure to check your next voucher before you mail it to HUD or your contract administrator and confirm that the software accurately adjusted the billing to account for the transfer, says Graef.

Insider Source

Jed Graef: Affordable Housing Compliance Manager, MRI Software LLC, 28925 Fountain Parkway, Solon, OH 44139; www.mrisoftware.com.

See The Model Tools For This Article

Get Proof of Reason for Unit Transfer