A Landlord's Guide to Part B

The Housing Assistance Payments (HAP) Contract is the single most important document defining your business relationship with the Public Housing Authority (PHA). While your lease agreement governs your relationship with the tenant, the HAP contract governs the flow of the subsidy payment from the PHA to you.

The contract is broken into several parts:

• Part A contains the specific details of the tenancy (names, address, rent amounts).
• Part C is the mandatory Tenancy Addendum that becomes part of your lease.

This article focuses on Part B: The Body of the Contract, which outlines the fundamental rules, responsibilities, and risks you accept when you participate in the Housing Choice Voucher program.

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The Owner’s Core Obligations Under the Contract

By signing the HAP contract, you are legally certifying and agreeing to several ongoing responsibilities. These are not suggestions; they are binding terms for the duration of the agreement.

• Maintain the Property to HQS: Your primary duty is to maintain the unit and premises in accordance with Housing Quality Standards (HQS). This includes providing all services, maintenance, and utilities that you agreed to in the lease. If you fail to maintain the unit to HQS, the PHA has the right to take action, as detailed below.
• Ensure Consistency with the Lease: The contract affirms that you have a lease with the tenant, that the lease is a standard form you use for unassisted tenants, and that it complies with state and local laws. Crucially, it confirms that the lease includes the mandatory HUD Tenancy Addendum (Part C).
• Charge a Reasonable Rent: Throughout the HAP contract term, the rent you charge can never exceed the “reasonable rent” as determined by the PHA. It also cannot exceed the rent you charge for comparable, unassisted units on the premises.
• Uphold Owner Certifications: The contract contains a list of certifications you make simply by accepting HAP payments. These include affirmations that you are maintaining the unit to HQS, you are not a relative of the family (unless approved as a reasonable accommodation), and that you will not receive any side payments for rent from the family or any other source.

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What Constitutes a Breach of Contract?

A breach is a serious violation of your obligations. According to the HAP contract handbook, any of the following actions by you, a principal, or another interested party is considered a breach:

Violation of any HAP contract obligation, including the critical requirement to maintain the unit in accordance with HQS.
Committing fraud, bribery, or any other corrupt or criminal act in connection with any federal housing program.
Engaging in any drug-related or violent criminal activity.
Violating any obligation under any other Section 8 HAP contract.

This last point is crucial—your performance across your entire Section 8 portfolio matters.

The PHA’s Remedies for a Breach

If the PHA determines you have breached the contract, they have powerful remedies at their disposal. The PHA must notify you in writing of its determination and may require you to take corrective action by a specific deadline.

If corrective action is not taken, the PHA may exercise any of its rights under the contract, which include:

1. Recover Overpayments: If the PHA paid you for a period where the unit was not HQS-compliant, they can demand that money back or deduct it from future payments.
2. Suspend HAP Payments: A temporary stop in payments while the PHA investigates a potential breach.
3. Abate HAP Payments: To “abate” means to reduce or stop payments. This is the most common remedy for HQS violations. The PHA will not pay you for any day that the unit fails to meet HQS. Payments do not resume until you have fixed the issue and the unit passes a re-inspection.
4. Terminate the HAP Contract: The PHA has the right to terminate the contract entirely. This is the most severe consequence, as it permanently ends the subsidy for that tenancy.

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Other Critical Terms in Part B

Beyond the core duties and breaches, Part B contains several other clauses vital for an investor’s understanding.

PHA and HUD Access Rights

As a condition of receiving federal funds, you must agree to provide the PHA, HUD, and the Comptroller General of the United States with full and free access to the contract unit and your records. This includes:

• Access to the Premises: To inspect the unit and ensure it meets HQS.
• Access to Records: To review accounts and other records relevant to HAP contract compliance. This includes computerized or electronic records.

Exclusion of Third-Party Rights

This is a key legal distinction. The HAP contract states that the family is not a party to or beneficiary of Part B. This means the tenant cannot sue you to enforce a clause in Part B of the contract. The tenant’s right to enforce action against you comes from the lease and the Tenancy Addendum (Part C).

Prohibition on Assignment

You cannot assign the HAP contract to a new owner—for example, if you sell the property—without the prior written consent of the PHA.

The Foreclosure Clause