Unauthorized Household Members

Written by Jennifer Borland, Spectrum Enterprises

During a recent compliance review I was visiting a property to conduct file reviews and physical inspections.  There was one tenant file that I spent a great deal of time reviewing.  Let’s call the resident Susie. She was a single person and her only source of income was a job that included overtime pay as well as commissions.  After careful consideration I determined that her annual income was only about $100 under the income limit, this was within a few dollars of what the manager had calculated.  She was eligible, but extremely close to the 1-person income limit.

 When I inspected her apartment a few hours later I was surprised to find that Susie was not living alone.  In the apartment the manager and I found clothing, toiletries, mail, and other personal items belonging to a male adult and a child.  Based on observations made by myself and the manager, it was clear that the head of household had allowed her boyfriend and his child to move in with her.  It also appeared that the boyfriend was employed (his weekly schedule of hours was on the refrigerator). We didn’t have to open any drawers or closets to find evidence of the additional occupants.  It was all out in the open for all to see.

 Is it possible that this change in household composition could not have been anticipated at move-in? In some cases, yes.  A person might fall in love and want his or her significant other move in several months after move-in.  Susie had occupied the unit less than 30 days at the time of this review.  It did not seem likely that she had not expected other occupants.

 In this case, Susie’s income was about $32,000, about $100 under the 1-person limit.  We could see from the work schedule on the refrigerator that her boyfriend was working full time.  Even at minimum wage, that would be annual earnings of at least $15,000.  Together their income would be around $47,000.  The 2-person income limit for this unit: $36,720.  Even adding the child as a household member wouldn’t help; the 3-person limit was $41,280. This was looking like an over-income household.

 During the review, the manager and I agreed that this appeared to be a case of tenant fraud.  It seemed quite likely that Susie knew at the time of application and the time of move-in that her boyfriend would be living with her and that together they would not income qualify.  Susie was an original qualifying household for this LIHTC property.  Her actions had put the owner’s credits at risk.

What is your policy regarding adding household members after move-in? Within the first 12 months of the lease? How do you make residents aware of your policy? Spectrum recommends developing a strong written policy about adding household members in the first year of tenancy. Including your policy in the application and lease documents, having residents sign an acknowledgement is a great idea. It may not prevent all fraud, but it will give you support if you should encounter a resident like Susie and need to move to evict.

 


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