As compliance consultants who review thousands of HUD and LIHTC files, we have put together some frequently asked questions regarding household composition. We are hoping that the following FAQs will provide you with guidance concerning household composition.
Q. A married couple qualified at the time they moved into their LIHTC unit. They got divorced a year later, and one spouse moved out of the unit. The remaining spouse has a new roommate, and the roommate’s income was verified. Their combined income now exceeds the LIHTC income limit but is still below the 140% level. Do they still qualify for the unit?
A. Yes. The household was initially qualified, and the change in household composition does not constitute a new household since an original household member is still residing in the unit. We recommend that you re-qualify the entire household at the time of the roommate addition. One reason for doing this is to determine if the roommate would be income eligible if living in the unit by themselves. If the original occupant moves from the unit leaving just the roommate, you could end up with an over income household. If the roommate would not qualify by themselves, you must take additional action. You can still allow the person to move in, but it is critical that your lease agreement clearly states that the roommate does not have rights to the apartment should the original household members were to vacate the unit.
Q. An applicant has indicated on her housing application that she wants to include a live-in aide. The issue is that the live-in aide is married with two kids. Are the live-in aide’s spouse and kids allowed to live in the unit with this applicant?
A. In order to treat the live-in aide as a Live-In Aide (LIA) as defined by HUD (meaning that the LIA’s income is excluded from gross income, and he/she has no rights to the unit), the LIA’s family members cannot live in the qualified unit with her/him and the applicant. However, if the applicant is willing to consider the LIA as a household member, then you can qualify the LIA and the family members. In this case, the person would not be a Live-In Aide according to HUD’s definition; all of their income would be counted, and they would all have rights to the unit and be parties to the lease.
Q. Do I count children as household members if they do not live with my tenant on a full-time basis?
A. Only children who live in the unit at least 50% of the time in the household would be counted as household members. Proof of custody is recommended especially if it appears the household would not income qualify for the LIHTC program without the child/children.
Q. A tenant in an LIHTC unit moved in two months ago and had asked if his 22-year-old son can move in with him. Is that permissible?
A. It depends on. We highly recommend that all leases for LITHC include a clause that no household changes can occur during the first six months so that questions regarding the income-qualified status can be avoided (this applies to adults, not to the birth or adoption of a child). That being said, if you wish to allow the household addition, we recommend that you re-qualify the entire household at the time of the addition. One reason for doing this is to determine if the new occupant would be income eligible if living in the unit by themselves. If the original occupant moves from the unit leaving just the new household member, you could end up with an over income household. If the new occupant would not qualify by themselves, you must take additional action. You can still allow the person to move in, but it is critical that your lease agreement clearly states that the new occupant does not have rights to the apartment should the original household members were to vacate the unit.
Q. Can a three-person household reside in a one-bedroom unit?
A. It depends on. For HUD units, owners must have written standards as long as the standards do not violate fair housing requirements or contain prohibited policies. They must also comply with Federal, State and local fair housing and civil rights laws; tenant-landlord laws; zoning restrictions; and HUD’s Equal Opportunity and nondiscrimination requirements under HUD’s administrative procedures. A two-persons-per-bedroom standard is acceptable, but owners may establish different standards based on specific characteristics of the unit and property.
Possibly the biggest secret in the affordable multifamily housing industry is: brand new properties are some of the riskiest on REAC inspections. This statement crosses many lines of conventional wisdom.
REAC inspections are primarily about determining whether things work or not. For the most part, it’s not about what should be and what shouldn’t be, but a simple assessment of the item in front of you. The item that doesn’t work can be old, or it can be new; malfunction knows no boundary or age.
A classic example is a brand new breaker panel: The inspector comes into the electrical room (yes, it is a locked room with a sign that says “stay out under penalty of death”), and the cover is loose. The age of the panel is irrelevant, what matters is that the cover doesn't work correctly.
But the property looks great
Perfect. Inarguably the most beautiful property in the city - it even received the mayor’s award for nicest property built in the last 200 years. But in the back of the property, someone backed into the wall, leaving a hole in the building, damaging the fence as well, creating a rut in the grounds with a tire, and then a pothole in the driveway from spinning their tires. With that, this property could receive a failing score.
If your property is new and wonderful, we applaud your efforts to build housing for those who need it most, but don’t ever let what you think and know of your achievements deceive you
Over the last two years, we at US Housing Consultants have developed a new inspection product for new developments - evaluating issues that might be deficiencies under the UPCS Inspection code, even on a new property. This Due Diligence Pre-REAC Inspection determines what issues need to be addressed by the developer or General Contractor during construction and help you, the manager or owner, get potential REAC issues on the GC’s punch list before they close out.
As an example, we were recently working at a property on the Big Island of Hawaii where the contractor had installed several dozen solar panels, all of which had pressure relief valves installed, and none of the pressure relief valves had proper extension pipes installed. While not a huge expense to repair, the issue would represent a significant penalty on a REAC Inspection. We have seen countless other examples, from improper installation of sprinkler heads, improper installation of electrical equipment, to failure to paint the walls and the doors properly.
The same can be said for properties as it relates to Handicapped Accessibility or compliance with UFAS and ADA. Many new properties get everything almost right, install the grab bars 1/2” too high, don’t install the right faucet hardware, install the wrong number of parking spaces or more often than not - the wrong number of accessible units. The best time to address these future discrepancies is right away.
Our Due Diligence inspection can help identify UPCS issues and problems with handicapped accessibility requirements before they become compliance issues, and possibly while the corrections can be part of the development budget.