x Just Cause Evictions - Spectrum Enterprises


Just Cause Evictions

Written by Cathy Turner, Spectrum Enterprises

Last November Spectrum Seminar’s held the annual symposium in New York City. During one of the sessions we discussed significant increases in income discovered at the first annual certification. A question was asked whether or not it is recommended for a management company to terminate a household’s tenancy whenever income is above the move-in limit at the first annual certification.

I found this question particular disturbing and absolutely caution you against this practice. As you all know, households can often have changes in circumstances that result in an increase in income after move-in. The only time a household should be asked to leave their unit when fraud has occurred. If you discover that the household did not disclose all sources of income prior to move-in then eviction proceedings should be started.

If move-in documentation is solid and the household had an unanticipated change in income such as a promotion or new employment, eligibility is not affected. Once a household is income eligible, they are always eligible and should not be asked to leave the property.

Please refer to Chapter 26 of the IRS Audit Guide (Tenant Good Cause Eviction and Rent Increase Protection)

Good Cause

The owner of an IRC §42 property must be able to demonstrate if challenged in state court that good cause existed to support the eviction or termination of a tenant from a low-income unit. For purposes of IRC §42(h)(6)(E)(ii)(I), good cause is determined by the state and local law applicable to the location in which the IRC §42 property is located. State or local law examples of good cause evictions may include nonpayment of rent, violations of the lease or rental agreement, destruction or damage to the property, interference with other tenants or creating a nuisance, or using the property for an unlawful purpose.

Out of Compliance

Annual Certification

Owners are out of compliance if they fail to certify annually, or certify incompletely or inaccurately, under the penalty of perjury, that for the preceding 12-month period no tenants in low-income units were evicted or had their tenancies terminated other than for good cause and that no tenants had an increase in the gross rent with respect to a low-income unit not otherwise permitted under IRC §42.

In Summary evicting households simply because their annual income has increase is not “Good Cause”. Is practice could lead a report of noncompliance.

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