Owner Can Evict Resident for Unauthorized Occupants

A site owner sued to evict a resident for lease violations with regard to the number of occupants residing in the unit. The site operates under guidelines established by both HUD’s project-based voucher program and the LIHTC program. Applicants must meet the criteria for both programs. And the site has a two- to three-year waiting list.

In addition, the site has a resident selection plan to ensure applicants are chosen in accordance with HUD and LIHTC requirements and established management policies. The selection plan references the HUD requirement that a property manager use income limits in determining eligibility and explains how a tenant’s subsidized rent is based on household income.

The selection plan also sets forth the site’s occupancy standards, which, following HUD guidelines, require a minimum of three and maximum of six household members to live in a three-bedroom apartment, the largest apartment at the site. The selection plan also sets forth the procedural steps required to add a household member after initial occupancy, including that any new proposed household member is subject to an eligibility determination and must be approved before moving into the unit. According to site manager, the site’s resident selection plan was authorized by the state’s housing credit agency.

Resident Certifications on Occupancy

On numerous occasions, the resident certified that she was the head of a five-person household. In 2016, when she submitted an application for a three-bedroom apartment, she certified that she was the head of a five-person household, which included her and her four children; her marital status was “separated”; she expected no additions to the household in the next year; and there were no “absent” household members who under normal conditions would be living with her.

Upon the application being approved, she signed a lease. The lease limited the number of people allowed to live in the apartment to one adult and four children. The lease named the authorized occupants and permitted the owner to end the lease with 30 days’ written notice after serving a notice to cease if any unauthorized occupant lived in the apartment.

In February 2018, the resident completed a “Recertification Questionnaire,” in which she again declared she was the head of a five-person household, consisting of herself and her four children, and there were no absent household members who under normal conditions would live with her or planned on living with her in the future.

And at lease renewal in April 2018, she signed a lease and certified she was the head of a five-person household with one other adult (her oldest child) and three children, listing the same individuals she had listed in her application, the prior lease, and her recertification questionnaire. She agreed to “immediately notify the [l]andlord of all changes in household composition.” The lease contained the following terms:

1.       For any adult persons to be added to the [l]ease, they must fill out an application and all persons must meet the [l]andlord’s “Tenant Selection Criteria.” Any occupant deemed permanent by the [l]andlord that does not comply with this procedure or vacate promptly when determined ineligible or jeopardizes the household tax credit compliance is the responsibility of the [t]enant and grounds for termination of the [l]ease.

2.       USE OF PROPERTY. The [a]partment is to only be used as a private residence by the [t]enant(s) and occupants listed above. No additional occupants are permitted. IF ANY OTHER PERSON IS FOUND LIVING IN THE APARTMENT THE TENANT AGREES THAT THE LANDLORD MAY TERMINATE THIS LEASE. The [t]enant may not sublease the [a]partment or assign this [l]ease.

3.       Further, the [t]enant agrees to take no action to jeopardize the [l]andlord’s tax credit compliance. Should it be determined that [t]enant’s continued occupancy, for whatever reason, jeopardizes the [l]andlord’s tax credit compliance, the [t]enant agrees to voluntarily relocate to another dwelling and relinquish tenancy in their current unit.

Unauthorized Occupants

In January 2019, the resident completed an LIHTC tenant income self-certification in which she certified she had the same household composition as described in the lease. However, by April, the owner served a “notice to cease/comply” on her. The notice advised her that it had “discovered that a male individual . . . who is believed to be your husband . . . residing in your unit despite not having authorization from the [l]andlord to do so.”

Because her husband wasn’t listed as an authorized occupant on the lease and hadn’t been approved by the owner to reside in the apartment and relying on multiple provisions of the lease, the owner told her that if her husband didn’t vacate the apartment on or before April 26, 2019, the owner would “take steps to terminate [her] tenancy.”

Instead of removing her husband from her apartment by the date, the resident sent a letter requesting her husband and son be permitted to submit an application to be added to the lease. Before she provided that letter, however, her husband had submitted to the United States Postal Service a change-of-address form, indicating his mail should be sent to a post office box instead of the resident’s address, where it had been sent.

In June, the owner served a “notice to quit and demand for possession.” The notice advised the resident that her lease would terminate on July 31, 2019. The owner cited in the notice the resident’s failure to remove her husband from the apartment in accordance with the Notice to Cease and her continuing violation of the lease by permitting him to live in the apartment.

At trial, the site manager and the resident testified. The resident asserted her “spacious” apartment could comfortably fit herself, her five children, and her husband. She conceded her husband had been “in and out” of the apartment and had received mail there since January 2019. She also testified her 13-year-old had moved into the apartment in August 2019.

The trial court ruled in the owner’s favor and found “there has been substantial non-compliance by unauthorized occupants.” On appeal, the New Jersey appeals court affirmed the lower court’s decision [Montgomery St. Hous. Urban Renewal v. Sheriff, June 2021].

Takeaways

The resident’s noncompliance with the unauthorized-occupant terms of the lease was supported by ample evidence. Also, the court found that the terms of the lease were clear and unambiguous. The apartment “is to only be used as a private residence by the [t]enant(s) and occupants listed above. No additional occupants are permitted.”

In addition, the lease set forth in capital letters: “IF ANY OTHER PERSON IS FOUND LIVING IN THE APARTMENT THE TENANT AGREES THAT THE LANDLORD MAY TERMINATE THIS LEASE.” The lease required “any adult persons to be added to the [l]ease . . . [to] fill out an application and all persons must meet the [l]andlord’s ‘Tenant Selection Criteria’” and made noncompliance “the responsibility of the [t]enant and grounds for termination of the [l]ease.”

The court also said the unauthorized-occupant provisions of the lease were reasonable and consistent with public policy. They ensure a tenant is in compliance with occupancy standards, which provide for proper utilization of housing units and fairness to applicants and tenants. They also ensure compliance with household income limitations by preventing a tenant from adding an occupant whose income could cause the household income to exceed the appropriate income limits.