In a recent case, a Section 8 owner wasn’t able evict a nonpaying resident because the owner had renewed the resident’s lease while the resident was in arrears from a previous lease term. According to a New Jersey trial court, the owner’s decision to renew the resident’s lease while there was unpaid rent constituted a waiver of the right to evict the tenant for nonpayment. 

Lease Renewal, Rent Acceptance

When the owner sought to evict the resident from her subsidized apartment for nonpayment of rent accrued during a prior lease term, the resident argued that the owner’s decision to execute a new lease agreement with her and the acceptance of rent payments under this new lease meant the owner had waived its right to evict for past-due rent under the previous lease. 

The court agreed with her that when an owner renews a tenant’s lease and accepts rent under the new lease, this action demonstrates an intent to continue the tenancy and effectively waives the right to evict for nonpayment of rent under the prior lease. The owner tried to argue that federal laws mandated the lease renewal. However, the court didn’t find anything in federal law that overrides New Jersey state law on waiver of eviction rights. 

In fact, federal regulations state that contracts between a PHA and the owner of existing Section 8 housing units require that “during the term of the lease, the owner shall not terminate the tenancy except for serious or repeated violation of the terms and conditions of the lease, for violation of applicable Federal, State, or local law, or for other good cause. . .” And nothing in the regulations expressly prevents an owner from refusing to renew a lease without good cause.

Takeaway

Carefully consider the implications of lease renewals and rent acceptance. Exercise caution when renewing leases for tenants in arrears. Before entering new lease agreements with residents in arrears, seek legal advice to evaluate the potential risks of waiving eviction rights. Entering into a new lease and accepting rent under it may bar eviction actions for prior nonpayment. Remember that nonpayment of rent is a valid ground for declining to renew a lease, but owners must act promptly and consistently to enforce their rights.