A Potential Section 8 Pitfall

This post is for all of my Section 8 landlord readers out there.  I'd like to start off by saying that I have personally had a number of Section 8 tenants, and by and large it's been a good experience.  As a landlord, you pretty much know that you're going to get paid, which is up there at the top of the list of a landlord's concerns.

During the course of a recent case I came across an issue that I probably should have been aware of but for whatever reason was not, and I wanted to share my experience so that you can benefit from it, too.  As many of you know, in a Section 8 lease the tenant signs your normal lease, but then the local governing body (Cincinnati Metropolitan Housing Authority in my area) adds their own addendum, which becomes part of the lease.  It's that addendum that you want to pay attention to...

In this case, the property was being rented as Section 8 for the first time and the tenant had moved in.  Not long after move-in, the unit failed the Section 8 inspection for what would probably not be an issue to most tenants or to you and me, but it was an item that would be extremely difficult and expensive to cure.  At that point the landlord just wanted out, but here's where things went south...

In this case, as with many Section 8 leases that I've worked with, the tenant was responsible for a small portion of the monthly payment, and Section 8 paid the rest.  When the landlord did not timely cure the issue, Section 8 stopped paying, but the tenant kept paying the tenant's small share.  So the lease was breached, right?  Wrong.  As I read deeper into the documents, I found out that so long as the tenant was paying and Section 8 had a justifiable reason for not paying, there was no breach.  The terms required the landlord to wait six months from the last Section 8 payment before the landlord could terminate the lease.  That's six months of receiving a small fraction of the expected rent.  Ouch!

The story had somewhat of an okay ending in that we were able to work out an agreement among the parties, but heads up to the Section 8 landlords out there - be sure you know what you're getting into.  If your inspection fails and you can't or aren't willing to incur the cost of remedying the issue, you could be stuck in a very bad cash flow situation if the tenant keeps paying the tenant's share.

I welcome my Section 8 landlord readers to share their experiences in the comments.  Have you run into this issue, and if so how did you handle it?

Please remember that these posts are for informational purposes only and should not be considered or relied on as legal advice.  If you are ever in doubt about your rights under the law, you should consult an attorney familiar with the law in your area.