If you live in housing subsidized by the federal Section 8 rental assistance housing program, there are several things you should know if your landlord asks for a security deposit. First, landlords who rent under Section 8 leases are subject to all state laws governing the security deposits. This means that if a landlord takes a security deposit from a tenant, the landlord must give the tenant a written receipt, must deposit this money in a bank account separate from the landlord's funds, and must pay the tenant interest on the tenant's portion of the security deposit. The amount the landlord can ask for as a security deposit might also depend on what type of Section 8 assistance you have.
If you can move from one property to another with your Section 8 voucher, that voucher is a "portable" voucher (also referred to as a "tenant‑based," "mobile," or "Housing Choice" voucher). If you have a portable Section 8 voucher, the landlord may charge a security deposit in an amount up to one full month's rent, just as she can in the private sector.51
If you cannot move from one property to another with your Section 8 assistance, you have a "project-based" subsidy. If you have a project‑based subsidy, the landlord may ask for a security deposit of $50 or your share of the rent payment—approximately 30% of your monthly income—whichever is greater.52 Thus, if your monthly income is $1,000 per month, 30% of your monthly income is $300, and therefore the maximum security deposit that your landlord can charge you is $300. Sometimes, landlords will try to collect the full rent as a security deposit from a tenant with a project‑based Section 8 subsidy. The full rent is the tenant's portion combined with the housing authority's portion of rent. This is illegal. The one exception is if you enter into a Section 8 lease after you have already lived in an apartment and already paid a security deposit based on the full market rent. In this case, a landlord is not required to refund the difference until you move out.
Unpaid Rent or Damages
If a tenant under a Section 8 lease moves out and there is unpaid rent or property damage, a landlord has a number of options. She can apply the tenant's security deposit, or, if the damage is more than the tenant's share of the deposit, the landlord can sue the tenant for the balance.53 (Note, however, that if a landlord sues a tenant who has very little or no money to pay any judgment, the landlord may never be able to collect this money).
A landlord with a "project-based" Section 8 lease has a third option. She may apply to the housing authority for a damage payment. If a landlord applies to a housing authority for a damage payment after a tenant moves out, this payment cannot exceed the actual cost to repair the damages or two months' rent at the full contract rent minus whatever security deposit she could have legally collected from the tenant (regardless of whether she actually collected it).54 The following example explains how this works:
|$1,000||=||Full contract rent for apartment|
|__ x 2|
|$2,000||=||Two months' rent|
|– 350||=||Tenant's share of rent or tenant's security deposit|
|$1,650||=||Amount landlord may be able to collect from housing authority and amount tenant, in turn, may owe housing authority.|
If the housing authority believes that the "project based" landlord's damage claim is valid and it pays the landlord, the housing authority may treat this payment as a debt you owe to the housing authority. Because the law does not specify any procedures that a housing authority must go through before paying a landlord's claims, many housing authorities pay such claims routinely, without investigating the tenant's side of the story. Even if the housing authority appoints an employee to hear both sides and resolve whether the claim should be paid, a tenant has no right to appeal to court if she disagrees. For this reason, tenants need to protect themselves by showing the housing authority that the landlord's claim is not valid, if that is the case.
There may be serious consequences that could hurt you if you fail to reimburse the housing authority for a valid damage claim. If you owe money to the housing authority, it or any other housing authority can refuse to give you a new Section 8 voucher so you can move to another housing unit. It can also refuse to let you back into the Section 8 program if you go off the program for any reason. And the housing authority may refuse to give you a subsidy to allow you to move to a new apartment, approve a new lease, or execute a new subsidy contract.55 If you cannot resolve the problem with your housing authority and former landlord, seek legal advice early, before the housing authority threatens to take action against you for not paying the claim.
51 24 C.F.R. §982.313. While there is no provision for charging a last month’s rent, there is nothing specifically in federal regulations that would prohibit this. If an owner demands a last month’s rent, it should be limited to your portion of the rent, since the owner will be paid by the housing agency for its portion of the rent for your last month. HUD regulations previously specifically did not permit charging last month’s rent for the Section 8 program, since the housing agency would reimburse the owner for any vacancy loss if the tenant moved out without prior notice. Attorney General v. Brown, 400 Mass. 826 (1987) (issue of whether landlord unlawfully discriminated against Section 8 subsidy holders because of policy of not accepting tenants where last month’s rent could not be collected). These regulations were changed in 1995. If an owner insisted that a Section 8 tenant pay the full contract rent as a last month’s rent, this would likely be a violation of G.L. c. 151B, § 4(10).
52 24 C.F.R. §886.315. For federal multifamily subsidized housing, there is no provision for charging a last month’s rent and the rules on what exactly can be charged for a security deposit vary by program. 24 C.F.R.§§ 880.608, 881.601, 883.701, 884.115, 886.116, 886.315, 891.435, 891.635, and 891.775; HUD Multifamily Occupancy Handbook 4350.3 CHG-1 (Aug. 2004), Chapter 6, § 2, and in particular Figure 6-6, which describes what can be charged for each program.
53 G.L. c. 186, §15B(4)(iii)-24 C.F.R. §982.313(e). The statute appears to let a landlord sue for the balance only where the tenant has "wilfully or maliciously" destroyed or damaged property. This limitation, which appears contrary to general tort law principles, has not been discussed in any published decision.
55 Brauer v. Philadelphia Hous. Auth., 495 A.2d 987 (90 Pa. Commw. Ct. 503, 507-08 (1985)) (Housing Authority does not have to offer tenant an opportunity to cure by paying for damages).