Court Upholds Lease Termination for Marijuana Possession

Facts: In April 2007, a resident signed a lease with Garden View, a nonprofit organization that provides subsidized housing for individuals living with HIV/AIDS and their families in Chicago. Garden View's property manager reviewed the lease provisions, including the prohibition against illegal drug activity, with the resident when he signed the lease.

Shortly after the resident moved in, the site manager discovered suspected marijuana in the resident's bedroom after he permitted her to inspect his unit. On May 2, 2007, the manager sent him a lease termination notice, and one month later, Garden View sought a formal order of possession of the premises based upon a breach of the lease terms.

The trial court sided with Garden View, finding a clear violation of the lease. The resident appealed.

Decision: The appeals court upheld the trial court's ruling.

Reasoning: In denying the resident's motion to apply a standard that went beyond the lease agreement, the trial court concluded that the terms of the lease governed whether Garden View properly terminated his occupancy and was entitled to possession of the unit. The resident had argued that HUD regulations required Garden View not only to show that it provided supportive services to him before terminating his tenancy, but also to warrant terminating his tenancy only in “the most severe case.”

The parties also disputed whether this provision applies based on whether Garden View is a “grantee” under the regulations. The court reasoned: “While we interpret the regulations as not requiring Garden View to provide supportive services or demonstrate that supportive services were rendered before termination of housing for violating the conditions of [the resident's] occupancy, we disagree with Garden View to the extent it seeks exemption from complying with the implementing regulations at all, because it does not meet the definition of grantee. The regulations define a grantee as ‘the person or legal entity to which a grant is awarded and that is accountable for the use of the funds provided.’”

The regulations note that nonprofit organizations that are ineligible to apply to HUD directly may receive federal funding as a project sponsor under contract with a grantee, the court stated. However, the court did not conclude that Garden View could never be considered a grantee under the regulations.

The regulations clearly envision that termination of housing may occur under certain circumstances, including violating the conditions of occupancy. Having already concluded that Garden View is not a grantee, the court then considered whether Garden View was bound to “ensure that supportive services are provided” to eligible participants in considering whether to terminate housing assistance. While the regulations appear to require that supportive services be provided as part of rental assistance to residents, the language does not support an interpretation that a project sponsor must provide both simultaneously, the court concluded.

Most important, the court reasoned, the resident agreed in the lease that his failure to comply with the term prohibiting illegal drugs in the unit constituted a material noncompliance with the lease and a basis for terminating it. Although the resident pointed out that the criminal complaint was dismissed against him, the lease agreement notes that proof of a lease violation is not dependent upon a criminal conviction and shall be established by a preponderance of the evidence, the court noted. And the record reflects that it is undisputed that the object found in the resident's unit contained marijuana—an illegal drug.

• Garden View, LLC v. Fletcher, August 2009