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New Manager Information

Vouchers, Special Claims,

and Repayment Agreements

Project-Based Rental Administration

Housing Assistance Payment (HAP) Department

Welcome! This guide will help instruct you in how to successfully submit tenant information, submit Housing Assistance Payment (HAP) vouchers, special claims (unpaid rent, damages, or vacancy), and repayment agreements. To ensure you have answers readily available, the most common issues and questions are within this guide. It is our intention to provide you assistance to help reduce errors that may cause delays in your HAP. All of the forms in this guide may be copied, as needed. We have also included the full U.S. Department of Housing and Urban Development (HUD) Special Claims Guide starting on page 31 of this manual. Page 26 gives you step-by-step instructions about how to successfully complete all requirements for special claims. A HAP compliance specialist is always just a phone call or e-mail away. Each specialist is assigned a caseload and is available to help with any questions or concerns. All HAP compliance specialists are listed below with their extensions and e-mail addresses for your quick reference.

Pauline Betts, extension 730, [email protected] Debbie Cummins, extension 740, [email protected] Carrie O’Neal, extension 750, [email protected] Lisa Temple, extension 757, [email protected] Anita Toll, extension 728, [email protected]

For a complete list of properties assigned to each compliance specialist, please visit the Kentucky Housing Corporation (KHC) Web site, www.kyhousing.org, under Rental Assistance, Project-Based Rental Administration, Housing Assistance Payments, Property/Compliance Specialist List. If you have any questions or need additional information, please feel free to contact me or your assigned HAP Specialist at any time.

Sincerely,

Mendy Fryman, COS, FHC, CSC Compliance Specialist Manager Project-Based Rental Administration Kentucky Housing Corporation Toll-free in KY: (800) 633-8896 (502) 564-9946, extension 732 [email protected]

Table of Contents

Vouchers

Overview……………………………………..........................................…………………………...……………...1Transmitting Tenant Files………....………………………………………………………...................................….1Common TRACS Errors……….............…………………………………………………........................................8Unit Recap Form…………………………………………………......................................….…………………….11Signature Authorization Form………….............................………………………………..……………………...13Compliance Percentage…...................................……………………………………………....…………………15

Repayment Agreements

Overview…………………………………….............…………………………………………………………...…19Repayment Options……………………….................………………………………………………………………19Disposition of Funds Received……………................………………………………………………………….….20Voucher Adjustments………………………................……………………………………………………………..20Deducting Costs from Tenant Payments…..................………………………………………………………….…20Repay Agreement Payment Schedule Sample……….................……………………………………………..…22Repay Agreement Payment Schedule Form………….................…………………………………………….….23

Special Claims

Overview……………………………………………………………............…………………………………..….25Property Step-By-Step Guide…………………………………….................………………………………………26Special Claims Checklist………………………………………….................…………………………………...….29HUD Special Claims Processing Guide…………………………................…………………………………..….31Housing Owner’s Certifi cation and Application for HAP (HUD-52670)……………………………....................65Schedule of Tenant Assistance Payments Due (HUD-52670-A Part 1)………………………….…...................67Special Claims Schedule (HUD-52670-A Part 2)…………………………………………………..................…..68Special Claims for Vacancies During Rent-up (HUD-52671-B)…………………………………..................…..70Sample Checklist: Special Claim for Vacancies During Rent-Up……………………………….......................…72Suggested Waiting List Guidelines…………………………………………………………………...................….73Special Claims for Regular Vacancies (HUD-52671-C)…………………………………………....................….75Sample Vacancy Reconditioning Log………………………………………………………………....................…77Special Claims for Debt Service (HUD-52671-D)…………………………………………………..................….78Sample Checklist: Special Claim for Debt Service Claims……………………………………….......................…80Special Claims for Unpaid Rent/Damages (HUD-52671-A)……………………………………….....................81Examples of Tenant Damage versus Normal Wear and Tear…………………....................……………….……83Sample Life Expectancy Chart…………………………………………………….................……………………..84

Waivers............................................................................................................................................85

Property Informati on

Overview………………………………………………………………………........…………………………...87Property Information Sheet………………………………………………….................…………………………....89Direct Deposit Sign-Up Form……………………………………………….................…………………………….91W-9 Request for Taxpayer Identifi cation Number and Certifi cation……...................……………………………93

Quick Reference Calendar..............................................................................................................Inside back cover

Vouchers

OVERVIEW To receive Housing Assistance Payments (HAP) the property owner and/or agent (O/A) should transmit tenant files daily! This ensures that payments are received as needed and expected. Vouchers are due by the tenth of each month. If your voucher is late, you may not receive payment until up to 20 days after the received date. Reconciling vouchers must be completed each month before transmitting your next voucher. A quick reference calendar is available on the inside back cover of this guide. A Unit Recap Sheet (page 11) must be included with each voucher submitted. Properties are responsible for maintaining their Compliance Percentage and income limits must be correct on every HUD form 50059. When incorrect income limits are used, an applicant that is ineligible may be moved into the unit, in which case the subsidy on the unit could be lost. A Signature of Authorization (page 13) must be signed by the owner when a new O/A is added as an authorized signee for vouchers, claims, repayments, etc.

A hard copy and an electronic copy of the voucher are due to KHC no later than the tenth of every month. On the eleventh of the month, the HAP voucher is late!

If a voucher is late, payment may not be received for up to 20 days after the received date.

Tenant data may still be transmitted even after that month’s voucher submission. Voucher dates may be assigned to any tenant file transmitted. All payments are processed by KHC on the first business day of each month. Once the voucher is processed by KHC, it must be reconciled via CA WebTRACS on

KHC’s Web site, www.kyhousing.org. When the voucher has been reconciled, a closed date will be posted in the top left-hand corner.

KHC has a total of 380 properties or 22,859 units for which vouchers are completed.

TRANSMITTING TENANT FILES

O/As should transmit tenant files daily throughout the month to ensure prompt processing.

After sending files, O/As should check for and/or correct any TRACS errors. This is done by CA WebTRACS on KHC’s Web site, www.kyhousing.org. Common errors are listed on the following page.

KHC processes files daily and O/As will receive a response within a day of sending. KHC transmits and receives data daily from HUD.

1

CA WebTRACS

To access your daily tenant file submissions and view TRACS errors, visit the Contract Administrator Web

Tenant Assistance Certification System (CA WebTRACS) on www.kyhousing.org, Rental Assistance,

Project‐Based Rental Administration, Housing Assistance Payments (HAP), CA WebTRACS.

2

Click on “Login” to access your property’s TRACS information.

3

Enter your site number and password.

4

Select “File Submission History.”

5

Select the month and day to review.

6

You will see a list of files transmitted, including an Action Message, and received by Kentucky Housing.

This Action Message will indicate an Accepted, Warning, or Fatal error message. All Fatal errors must be

corrected and retransmitted to Kentucky Housing.

Refer to the MAT 10 Guide for all TRACS error information. The MAT 10 Guide is available on the TRACS Web site at http://www.hud.gov/offices/hsg/mfh/trx/trxsum.cfm. Click the link to TRACS Documents and follow the instructions provided. A quick reference to common TRACS errors is available starting on the next page.

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COMMON WEBTRACS ERRORS

“System calculated” TTP differs from reported value Tenant Rent differs from reported value Assistance payment differs from reported value Total allowances for dependents differs from reported value Total allowances differs from reported value Total Adjusted income differs from reported value Number of dependents differs from reported value Number of family members differs from reported value

This error was caused because a new family member was added. Correct number of family members and dependents; add $480 to the dependent allowance & total allowances. Correct adjusted income, TTP and tenant rent accordingly.

Invalid SSN number, SSN is not 9 digits Check all family members SSN-correct as necessary“System calculated” TTP differs from reported value Tenant Rent differs from reported value Assistance payment differs from reported value Total allowances differs from reported value Child care allowance for working differs from reported value Total Adjusted income differs from reported value

Code field C15 with C. If an adult is able to work because child care is available, put cost of child care in field B83. If an adult is able to go to school because child care is available, then put cost of care in field B84.

Unit not found Check unit number against KHC’s voucher report making sure all characters match. If different, correct. If not on voucher report, it is not currently a subsidized unit. Submit unit recap sheet & send transmission as baseline.

Certification already exists If the requested HAP amount is the correct amount, then the certification sent is a duplicate. If the HAP amount has changed since the last transmission, resend as a correction by completing fields B14 & B15.

Rent/UA does not match rent schedule Check to make sure Rent & UA are the current amounts listed on the rent schedule effective on the date of the certification.

Certification is not for current tenant. If there has been a change of head of household, make sure the previous head of household information is listed in field B4 through B9. Make sure that the date in field B5 is a MAT 10 file (full certification). If there was no change of head of household, check to make sure Head of Household social security number is correctly entered.

Security deposit is now being collected by TRACS Complete field B74 with amount of security deposit due.No matching certification found for correction submitted.

Remove the entries in field B14 & B15, thus allowing the recertification to process as an original recertification not as a correction.

Household must move out before a move in can be processed

Submit move out for previous tenant.

Household already established Project KY36_______Unit _____

Call the KHC Compliance Specialist. Someone listed in the household is still showing living in another or same Section 8 property.

Effective date cannot be greater than next recertification date

Check field B70 (next recertification date). If date is incorrect, correct it and retransmit. Example: If site has transmitted a unit transfer after an annual recertification has been transmitted, the site may have neglected to correct the next recertification date.

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TRACS calculated allowance for dependents differs from reported value.

Check field B70 (next recertification date). If date is incorrect, correct it and retransmit. Example: If site has transmitted a unit transfer after an annual recertification has been transmitted, the site may have neglected to correct the next recertification date.

TRACS calculated allowance for dependents differs from reported value.

If family member has reached the age of 18 years, verify if they are a full-time student. If dependent (age 18) is a full-time student, complete field C10 with “S.” If dependent (age 18) is not a full-time student, correct field C7 to “O” (other adult member who in not the head, spouse, or co-head and whose income is counted in determining the family’s annual income.) This change in field C7 will adjust the dependent allowance.

Interim effective date is after next annual recertification date

Resend annual recertification

Move out date is greater than 14 days following the Date of Death

Verify date of death. If date of death is listed correctly, adjust move-out date to 14 days after date of death.

Unit transfer submitted for occupied address Resend previous tenants move out Invalid member eligibility code submitted Make sure all family members are listed as “EC” in field

C12 and “E” in B79. NOTE: Household assistance status “F” is valid only if there is a family member pending verification.

Household must be terminated before an initial certification can be processed.

Check TRACS submission report for errors on termination, fix error and resend termination. Also check the HUD secure systems under certification query for which tenant is listed in this unit.

Owners signed date is greater than current date Correct owners signature date to reflect date signed.Next recertification date exceeds one year Check field B70. Next recertification date should be one

year from annual recertification date. Incorrect race or ethnicity code submitted Check to insure one of the fields for race has been

populated (fields 18 thru 24) and field 17 is populated for ethnicity.

Tenant and SSA SS income materially different, SSA gives separate amounts.

List SS and SSI separately on the 50059.

Previous subsidy should be blank for move-in or initial certification.

No entry to be made in field B17.

There must be a valid correction type assigned for a correction.

Enter correction type in field B15.

Move out action not processed Check social security of the move out tenant for accuracy, correct as needed.

The asset status is I (imputed) but the date divested field is not populated.

Populate the date the asset was given away or change field E5 to C.

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UNIT RECAP

Property Name______________________________

Recap of Units for the Month of ________________

Each month TRACS calculates the compliance percentage based on the unit count. The percentage is also determined by timely annual recertifications. To help you reach and maintain the required 90 percent compliance, KHC must have an accurate unit count. Failure to meet this goal may result in a delayed HAP payment.

Please list below by unit number your current month’s vacant, market renter, and floating units or submit current rent roll.

Vacant

Unit #’s____________________________________________________________________

Market Renters

Unit #’s____________________________________________________________________

Units no longer receiving subsidy since last voucher

Unit #’s_____________________________________________________________________

Units receiving subsidy since last voucher

Unit #’s______________________________________________________________________

Off-line units (O/As, Maintenance, Office, etc.)

Unit #’s______________________________________________________________________

11

KENTUCKY HOUSING CORPORATION SIGNATURE AUTHORIZATION

Property_________________________________ Contract Number___________________

This is official notice of personnel authorized to sign official Section 8 business documents, including certifications (HUD 50059s), Housing Assistance Payments, Contract renewal worksheets and contracts, EH&S Owner Certifications, Rent Schedules (HUD-92458), Reserve for Replacement (HUD-9250), and Special Claims.

Employee Name Title Type(s) of Auth. E-mail address

The personnel listed above will continue to have signature authorization until KHC is notified, in writing, of any changes. ____________________________________________________________________________ Owner Signature Date

____________________________________________________________________________ Print Name Phone number

____________________________________________________________________________ Street Address

____________________________________________________________________________ City, State Zip

Return to: Kentucky Housing Corporation 1231 Louisville Rd. Frankfort, KY 40601 FAX-502-564-9962

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COMPLIANCE PERCENTAGE The HUD TRACS system automatically calculates compliance for properties based on unit count and timely annual reports. Properties are required to maintain 90 percent to be in compliance. Failed Compliance Percentage – If your property falls below 90 percent, any HAP vouchers you submit will be delayed. To prevent this delay and receive payments on time, we strongly encourage you to check your percentages in TRACS as often as you transmit files and address any error messages that may have been returned to you. To check your percentage, go to http://www.hud.gov/offices/reac/online/reasyst.cfm

Login under System Login

15

Enter your User ID and Password

Click on Tenant Rental Assistance Certification System (TRACS)

16

Click on Certification Query under Tenant section

Enter the property’s Contract Number (KY#)

17

Check the percentage and, if it is below 90 percent, check and correct the error messages.

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Repayment Agreements

OVERVIEW Chapter 8 of the HUD Handbook 4350.3 REV-1 outlines the tenant’s obligation to repay due to overpayment of housing assistance payments (Chapter 8, Section 8-20, Page 8-28).

Once determined a tenant owes, the O/A is required to reimburse HUD.

O/As should submit a copy of each repayment agreement with the voucher when the retro recertification is transmitted. A copy should also be submitted with the voucher when the last payment is applied.

The tenant and O/A must both agree on the terms of the repayment agreement before it can be applied to the voucher.

The tenant can consult with HUD’s Housing Counseling Agency in their area to assist them in working with the O/A to reach agreeable terms for the repayment agreement. See the Housing Counseling Agency Web site for a listing of agencies for each state at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.

O/As must not apply a tenant’s monthly rent payment towards the repayment amount owed. This would result in an accumulation of late rent payments.

O/As may retain an amount to cover their actual costs, which is the lesser of their actual costs or 20 percent of the amount received from the tenant.

Enclosed is a Repayment Agreement Payment Schedule (RAPS) sample (page 22), with a clean copy on page 23. O/As should use the RAPS to help track the tenant’s payments and this form should be submitted with each voucher to which a payment is applied.

REPAYMENT OPTIONS Tenants can repay amounts due:

In a lump sum payment. By entering into a repayment agreement with the O/A. A combination of either.

The monthly payment plus the amount of rent the tenant pays at the time the repayment agreement is executed should not exceed 40 percent of the household’s monthly adjusted income.

No specific payment time period maximum is indicated in the HUD Notice. The repayment agreement must be consistent with and reference the lease whereby the tenant is in non-compliance and may be subject to termination of their lease.

The repayment agreement should contain a clause whereby the terms of the agreement can be renegotiated if there is a decrease or increase in the family’s income.

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The repayment agreement must be signed and dated by the tenant AND the O/A.

O/As must not apply a tenant’s monthly rent payment towards the repayment amount owed. That would result in an accumulation of late rent payments.

DISPOSITION OF FUNDS RECEIVED The O/A should be familiar with their software’s capability that allows for adding Miscellaneous Accounting Requests (MAR) or manual adjustments to the HAP Voucher. O/As should consult their software documentation or software provider if assistance is required.

O/As should consult the TRACS Monthly Activity Transmission (MAT) User’s Guide to obtain updated instructions on MAR.

O/As must complete corrections to any prior certifications affected by the income change. Also, O/As must not fail to correct the prior certifications to avoid having large negative adjustments appear on the HAP Voucher.

VOUCHER ADJUSTMENTS No MAR is needed if a tenant is able to pay the entire amount due in one lump sum payment.

If the tenant pays a lump sum payment and enters into a repayment agreement for the remaining amount due, the O/A must first reverse the adjustment created by correcting the prior certification(s) less the lump sum payment by adding an O/A-initiated accounting adjustment (OARQ) MAR to the voucher.

If the tenant is subject to a repayment agreement, the O/A must first reverse the full amount of the voucher adjustment created by correcting the prior certifications.

Note: The Voucher Comment field allows for 78 characters to describe the transaction. The comment field must be completed describing the transaction, such as “Reversal of adjustments subject to repayment – Unit 1023, John Smith.”

As the tenant makes payments per the repayment agreement, the O/A must enter them as negative amounts on the voucher as OARQ MARs.

Example:

If the tenant pays $50, the OARQ will be for -$50. The comment field must be completed describing the transaction, as noted above.

DEDUCTING COSTS FROM TENANT PAYMENTS O/As may retain a portion of the repayments they collect from the tenants to help defray the cost of pursuing these cases if the tenant has improperly reported their income. This is not limited to cases where the O/A has determined fraud. O/As may retain an amount to cover their actual costs of the lesser of their actual costs or 20 percent of the amount received from the tenant.

Amounts retained by the O/A must be deposited in the project’s operating account.

20

As with all income and expenses of the project, O/As must keep records of the receipt and disbursement of all amounts collected from the tenant for audit purposes. At a minimum, the owner must record:

Date and amounts received from the tenant. Expenses incurred*, including:

o Staff time for verifying the unreported income. o Meeting with the tenant. o Drafting repayment agreements. o Generating and sending monthly invoices to tenant. o Generating manual voucher adjustments. o Collection agency fees, if applicable. o Costs of meeting state requirements.

Amount(s) retained. Voucher date(s) and amount(s) of reimbursement made to HUD.

Certification of the expenses used for deducting costs from tenant payments must be submitted with the repayment schedule to the HAP Compliance Specialist for verification.

Refer to the Enterprise Income Verification (EIV) Notice H 2010-10, issued July 1, 2010, for further repayment agreement information/requirements. The EIV Notice can be found at http://portal.hud.gov/portal/page/portal/HUD/program_offices/administration/hudclips/notices/hsg.

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REPAY AGREEMENT PAYMENT SCHEDULE

PROPERTY: ABC Apartments TENANT NAME: John & Jane Doe UNIT: 123 B

BEGINNING AMOUNT OF REPAYMENT: $800.00

PAY DATE

AMOUNT

PAID BALANCE *20% ACTUAL

COST

TOTAL

RETAINED

AMOUNT

REFUNDED

TO HUD

VOUCHER

DATE

PROPERTY

REP.

INITIALS

4/1/2010 100 700 20 40 80 5/1/2010 mcd

5/10/2010 150 550 30 25 125 6/1/2010 mcd

*Per HUD Notice H10‐10, Issued July 1, 2010, the O/A's may only retain an amount to cover their actual

costs, which is the lesser of:

1. Their actual costs, or

2. 20 percent of the amount received from the tenant

Certification of the amounts retained by the owner due to tenant repayments must be submitted to the HAP

Compliance Specialist with each repayment schedule.

Example : Tenant pays $100.00. Property retains admin. costs of $20.00.

Indicate the following on the payment schedule:

$50.00 is actual costs for preparing the repayment agreement/payment (staff time, receipt to tenant,

documenting payment, submitting to KHC). $20.00 is 20% of tenant's payment.

Amounts retained by O/A's must be deposited into the project's operating account to offset the expenses

incurred for these cases. O/A's must keep records of the receipt and distribution of all amounts collected

from the tenant as well as documentation showing how expenses were calculated. All information must be

made available upon request for CA or HUD.

Sample

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REPAY AGREEMENT PAYMENT SCHEDULE

PROPERTY: ___________________________ TENANT NAME: __________________________ UNIT: ___________

BEGINNING AMOUNT OF REPAYMENT: $_____________

PAY DATE

AMOUNT

PAID

BALANCE OF

REPAYMENT *20% ACTUAL

COST

TOTAL

RETAINED

AMOUNT

REFUNDED

TO HUD

VOUCHER

DATE

PROPERTY

REP.

INITIALS

Certification of the amounts retained by the owner due to tenant repayments (no copies of the costs need to

be submitted but should be retained for audit purposes):

Signature Date

23

Special Claims

OVERVIEW Claims can be submitted to KHC for vacancy loss, tenant damages, and unpaid rent.

O/As should submit claims throughout the month and only one copy of the claim is required. All claims must be submitted within 180 days of the date the unit was ready for occupancy.

Once a claim has been approved and/or adjusted, it should be requested on the next voucher or within 90 calendar days. If not, the claim will expire.

The Special Claims Checklist (page 29), as well as all other required forms, must be used to assure you have provided all information needed for a claim. Each claim must contain authorized signatures, as listed on the property’s Signature Authorization (page 13) on file with KHC.

A KHC step-by-step guide begins on the next page to help you understand what goes on each line of the claim you have submitted. The claim forms are available in the HUD Special Claims Processing Guide.

The instructions in the HUD Special Claims Processing Guide should be followed to provide the proper documentation to KHC.

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PROPERTY STEP‐BY‐STEP GUIDE

Claims must be submitted within 180 days (6 months) of the date the unit was available for occupancy. All claims will require the unit ready date to be documented. If further documentation is needed to process a claim, you will be contacted by phone or e-mail and be given 3 days to submit the additional information. If missing information is not received the claim will be rejected and ineligible for resubmission. Processed claims not requested on a voucher within 90 calendar days of the approval date are expired/denied and not eligible for payment on a future voucher or for resubmission.

Regular Vacancy Units occupied by a police officer or a tenant that has been a Market Renter for over 60 days are not eligible for vacancy claims. All information on the claim form and all documentation should be thoroughly reviewed prior to submission. The waiting list and advertisement should cover the dates of the vacancy.

1. Tenants move out (MO) date (MO must be submitted to and visible in TRACS). 2. No. of days taken to clean/repair unit: This is the number of days maintenance took to get the

unit ready for occupancy. 1 day is the minimum. 3. This is the day following the MO. 4. This is the ready date plus 59 days. 5. Date unit was re-rented (unless the claim is for 60 days or more). A MI must have been

submitted to and visible in TRACS. If the new MI was a Market Renter, a copy of the Market Renter’s 50059 should be submitted with the claim in lieu of transmitting it to TRACS.

a. Unit Transfers (UT): If the claim is for a UT, the transfer waiting list and reason for the transfer should be included with the claim.

i. If the UT was due to a medical circumstance or a family composition change, payment up to 60 days will be made on each unit.

ii. If the UT was not due to a medical circumstance or family composition change, payment up to 60 days will be made on both units combined.

b. If the vacancy is over 30 days on a UT, documentation must be submitted for the transfer delay.

6. No. of days vacant (not to exceed 60 days). a. If the claim is for more than 30 days, a copy of the waiting list that covers before, during,

and after the vacancy period, should be included with the claim. It should clearly note the contact date(s) of each person on the list and the outcome of the contact.

b. Proof of advertising that covers before, during, and after the vacancy period, should be included with the claim. If the waiting list is closed or the vacancy was filled from the waiting list, advertising efforts are not required.

7. Contract rent at MO. This should match all forms submitted with the claim. 8. Contract rent divided by the number of days in the MO month. 9. Daily contract rent times the number of days vacant. 10. The result of line 9 times .80%. 11. Enter amounts paid by other sources: If the full security deposit was not collected, the claim is to

be reduced by the security deposit that should have been collected. If the uncollected security deposit has already reduced an unpaid rent/damage claim, it will not have to be applied on the vacancy claim. If any of the security deposit was retained by the owner (not fulfilling lease requirements or not giving a 30 day notice to vacate) the claim must be reduced by the amount retained.

12. The results of line 11 from line 9. 13. The claim amount is the lesser of line 10 or line 12.

26

Unpaid Rent/Damage Claims 1. Fill in Tenant Vacant Date and New Tenant’s Move-In Date (at top of form). 2. Security deposit collected. The security deposit disposition should include detailed information on

what amount should have been collected and what actually was collected. If the full security deposit was not collected, the amount of the full security deposit that should have been collected will be shown on the claim as the security deposit collected. If the uncollected security deposit has already reduced a vacancy claim, the amount of the security deposit actually collected will be used on the unpaid rent/damage claim.

3. Enter any interest earned on the security deposit. 4. This amount would be completed if the tenant paid any of the unpaid items at, after or before MO. 5. Total of 1, 2 & 3. 6. Contract rent at MO. 7. The results of line 4 minus line 5. If this amount is zero or a negative amount a claim cannot be

filed. 8. Unpaid rent at MO. Check this amount against the rent card or rent roll. The documentation

must clearly show the amount of unpaid rent, reasonable late charges, previous damage to the unit still unpaid, and failure to return keys. If the late charges appear not reasonable, submit a copy of the section of the lease that pertains to how late charges will be assessed. If the claim is requesting more than 60 days unpaid rent, submit eviction documentation. Legal fees, collection fees, and unpaid utility bills can not be included in the claim amount. Note: damages that occurred during the occupancy and left unpaid at MO are to be included with the unpaid rent amount/claim.

9. The result of line 4 minus line 7. 10. The lesser of lines 6 or 8. 11. The result of line 9 minus line 6, if this amount is zero or a negative amount a claim cannot be

filed for damages. 12. Cost to repair damages. Only extraordinary repairs and/or replacements should be claimed.

Normal wear and tear such as nail holes repaired, carpet shampooing, replacement of drip/broiler pans, light bulbs/ice trays, door stops, and routine cleaning should not be included in this amount. All damages being claimed must clearly show as tenant damage on the MO inspections. The MI inspection form must also be included to compare the condition of the unit at the time of MI.

13. The result of line 4 minus line 7. 14. The result of line 11 minus 12. 15. The lesser of lines 10 or 13.

Additional Documentation Required for Unpaid Rent/Damage Claims It must be documented that reasonable steps were taken to collect the debt from the tenant. A certified letter must be sent to the tenant detailing the unpaid rent and damages, disposition of the security deposit, demand for payment and advising the tenant that the debt is being turned over to a collection agency.

Submit invoices, receipts and/or owner certifications for items needing removal, repair or replacement. Items such as painting, carpet and flooring tiles/vinyl are prorated using the Life Expectancy Chart (Appendix 5D of the HUD Special Claims Processing Guide). When requesting payment for these items, the date the item was put in use must be documented.

Sample of Life Expectancy calculation:

Carpeting was installed 6/04 in a family property, tenants damaged the carpet beyond repair and moved out 6/06. The new carpeting cost $700 to replace. $700 divided by 60 (5 years life expectancy times 12) equal $11.67 times 36 (three years remaining life) equal $420 which is the total amount can pay for the carpet replacement.

27

KHC will return the Special Claims Schedule indicating whether the claim is approved, adjusted, or rejected, and will provide an explanation. If a claim is adjusted or rejected, you have the right to appeal the decision. This appeal must be submitted in writing within 30 days from the date the response was received.

28

Revised 03/12

Special Claims Checklist

Kentucky Housing Corporation requires only one copy of the claim to be submitted. All claims must be submitted within 180 days the unit became available for occupancy. Payment of approved/adjusted claims must be submitted on a voucher within 90 calendar days of the completion date All Claims

1. Completed form HUD 52670-A Part 2 listing all claims submitted.

Regular Vacancy Claims 1. Completed form HUD 52671-C (Regular Vacancy). 2. Completed security deposit disposition form. 3. Documentation verifying the unit ready for occupancy date. 4. Copy of the waiting list covering vacancy period (when requesting payment of

30 days or more). 5. Proof of advertising covering times prior to and during vacancy (when requesting

payment for 30 days or more and when the vacancy was not filled from the waiting list).

6. If the move-in is a tenant transferring from another unit, submit the following information relating to the transfer: In place transfer list Document the reason for the transfer.

7. If the move-in is a market renter provide move-in 50059. Unpaid Rent Claim

1. Completed form HUD 52771-A (Unpaid Rent/Tenant Damage). 2. Completed security deposit disposition form. 3. Copy of tenants tenant ledger report, rent card or rent roll. 4. Completed security deposit disposition form. 5. Evidence the owner took reasonable steps to collect the debt from tenant.

i.e. demand letter and collection agency attempt notice.

Note: Any charges for damages during tenancy that was previously billed and that were still unpaid at move out should be included in unpaid rent amount.

Damage Claims

1. Completed form HUD 52771-A (Unpaid Rent/Tenant Damage). 2. Completed Security Deposit Disposition Form. 3. Evidence the owner took reasonable steps to collect the debt from tenant,

i.e., demand letters and collection agency attempt notice. 4. Signed/dated Move-In and Move-Out inspection forms. 5. Itemized list of all charges to the tenant along with completed work orders and

invoices of purchases or services. 6. Pictures to verify extraordinary repairs/replacements and excessive cleaning (if

applicable).

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SPECIAL CLAIMS

PROCESSING GUIDE

June 2006

U. S. Department of Housing and Urban Development Office of Multifamily Housing

The information collection requirements contained in this Guide have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2502-0182. In accordance with the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a valid control number.

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TABLE OF CONTENTS

CHAPTER 1. GENERAL INFORMATION 1-1 PURPOSE ……………………………………………………………………. 1 1-2 PROCESSING RESPONSIBILITY…………………………………………... 1 1-3 APPLICABILITY……………………………………………………………... 1 1-4 OWNER/AGENT CLAIM SUBMISSION REQUIREMENTS………………. 2 1-5 OWNER/AGENT CLAIM PROCESS………………………………………… 3 1-6 HUD OR CA CLAIM REVIEW PROCESS…………………………………… 4 1-7 RETAINING COPIES OF CLAIMS…………………………………………… 6 CHAPTER 2. SPECIAL CLAIMS FOR VACANCY LOSS DURING RENT-UP 2-1 CONCEPT…………………………………………………………………….. 7 2-2 ELIGIBILITY REQUIREMENTS…………………………………………….. 7 2-3 OWNER/AGENT CLAIM SUBMISSION REQUIREMENTS………………. 7 2-4 OWNER/AGENT CLAIM TIMELINES……………………………………… 9 2-5 HUD FIELD OFFICE CLAIM REVIEW PROCESS…………………………. 9 CHAPTER 3. SPECIAL CLAIMS FOR VACANCY LOSS AFTER RENT-UP (REGULAR VACANCY) 3-1 CONCEPT…………………………………………………………………….. 11 3-2 ELIGIBILITY REQUIREMENTS……………………………………………. 11 3-3 OWNER/AGENT CLAIM SUBMISSION REQUIREMENTS……………… 12 3-4 OWNER/AGENT CLAIM TIMELINES…………………………………….. 15 3-5 HUD OR CA CLAIM REVIEW PROCESS………………………………… 15 CHAPTER 4. SPECIAL CLAIMS FOR DEBT SERVICE VACANCY PAYMENTS 4-1 CONCEPT……………………………………………………………………. 17 4-2 ELIGIBILITY REQUIREMENTS……………………………………………. 17 4-3 OWNER/AGENT CLAIM SUBMISSION REQUIREMENTS……………… 18 4-4 OWNER/AGENT CLAIM TIMELINES…………………………………….. 20 4-5 HUD FIELD OFFICE CLAIM REVIEW PROCESS………………………… 20

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CHAPTER 5. SPECIAL CLAIMS FOR UNPAID RENT, TENANT DAMAGES, AND OTHER CHARGES 5-1 CONCEPT………………………………………………………………………. 22 5-2 ELIGIBILITY REQUIREMENTS……………………………………………… 22 5-3 OWNER/AGENT CLAIM SUBMISSION REQUIREMENTS……………….. 25 5-4 OWNER/AGENT CLAIM TIMELINES………………………………………. 27 5-5 HUD OR CA CLAIM REVIEW PROCESS…………………………………… 28 5-6 REIMBURSEMENT OF FUNDS……………………………………………… 29 APPENDICES Appendix 1A Form HUD-52670 - Housing Owner’s Certification and Application

for Housing Assistance Payments Appendix 1B Form HUD-52670-A, Part 1 - Schedule of Tenant Assistance

Payments Due Appendix 1C Form HUD-52670-A, Part 2 - Special Claims Schedule Appendix 2A Form HUD-52671-B - Special Claims for Vacancies During Rent-up Appendix 2B Sample Checklist - Special Claims for Vacancies During Rent-up Appendix 2C Suggested Waiting List Guidelines Appendix 3A Form HUD-52671-C - Special Claims for Regular Vacancies Appendix 3B Sample Checklist - Special Claims for Regular Vacancies Appendix 3C Sample Vacancy Reconditioning Log Appendix 4A Form HUD-52671-D - Special Claims for Debt Service Appendix 4B Sample Checklist - Special Claims for Debt Service Claims Appendix 5A Form HUD-52671-A - Special Claims for Unpaid Rent/Damages Appendix 5B Sample Checklist - Special Claims for Unpaid Rent/Damages Appendix 5C Examples of Tenant Damages versus “Normal Wear and Tear” Appendix 5D Sample Life Expectancy Chart

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CHAPTER 1: GENERAL INFORMATION

Section 1-1 PURPOSE

This Guide provides the Department of Housing and Urban Development (HUD) field offices, Contract Administrators (CA), and owners/management agents information they need to prepare, review and approve special claims. As part of its commitment to provide affordable housing, HUD recognizes that owners of affordable housing have a potential financial risk because of the limitation on security deposits and the need to adhere to waiting list requirements; therefore, owners should be reimbursed for their financial loss through the special claims process.

Section 1-2 PROCESSING RESPONSIBILITY

A. Processing and approving special claims is the responsibility of the organization administering the assistance contract. This organization could be HUD, a Traditional Contract Administrator, or a Performance Based Contract Administrator (PBCA).

B. References to Contract Administrator (CA) in the Guide includes both the

Traditional Contract Administrator and the Performance Based Contract Administrator unless otherwise indicated.

C. This Guide expands on the guidance provided in Chapter 9 of Handbook 4350.3

REV-1, Occupancy Requirements of Subsidized Multifamily Housing Programs, for processing special claims.

Section 1-3 APPLICABILITY

A. The processes and procedures apply to all projects/contracts listed in Figure 1-1, unless otherwise stated.

B. Owners may claim reimbursement for the types of special claims eligible under

the assistance contract for their properties, as listed in Figure 1-1.

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Figure 1-1 Applicable Special Claim Types and Eligible Project/Contract Types

Special Claim Types

Eligible Project/Contract Types

24 CFR* Section

1. Vacancies during rent-up Section 202 PRAC, Section 811

PRAC 891.445(b)

2. Vacancies after rent-up Section 8, Section 202/8, Section 202 PAC, Section 202 PRAC, Section 811 PRAC

880.611(c) 884.106(c) 886.109(c) 886.309(d) 891.445(c) 891.650(c) 891.790(c)

3. Debt service claims Section 8 NC/SR (New Regulation contracts), RHS Section 515/8, Section 202/8, Section 202 PAC, PDSA/8

880.611(d) 884.106(d) 886.309(g) 891.650(d) 891.790(d)

4. Unpaid rent/damages Section 8, Section 202/8, Section 202 PAC, Section 202 PRAC, Section 811 PRAC

880.608(f) 884.115(a) 886.116(a) 886.315(d) 891.435(c) 891.635 891.775

* Code of Federal Regulations

Section 1-4 OWNER/AGENT SUBMISSION REQUIREMENTS

A. See Sections 2-4, 3-4, 4-4 and 5-4 of this Guide for the submission timelines for each of the four types of special claims.

B. In the event of a project opt-out or a terminated contract, all special claims must

be submitted to the appropriate HUD office no later than 90 calendar days following the effective date of the opt-out or contract termination. No loss incurred after the date of opt-out or contract termination shall be eligible for a special claim. HUD staff will review the special claims to determine eligibility for payment and notify the owner/agent of the approved amount and claim identification (ID) number.

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Section 1-5 OWNER/AGENT CLAIMS PROCESS

A. All required documentation must be submitted with the claim to ensure timely processing of the claim.

B. A checklist of required documentation must be used and submitted with each claim package to ensure all required documentation is submitted with the claim

form. See Appendices 2B, 3B, 4B and 5B for sample checklists for each claim type.

C. Any overpayment of subsidy and/or special claim identified during a voucher

review must be reimbursed to HUD before HUD or the CA can process or approve a special claim.

D. Any special claim reimbursement from HUD received by the owner must first be

applied toward any unpaid tenant rent due under the lease. Additionally, no reimbursement may be claimed for unpaid rent for the period after termination of

tenancy. However a special claim for vacancy loss may be submitted.

E. The owner must verify all tenant transmissions to TRACS (move-in, move-out, etc.) prior to submitting the special claim for approval. A move-in date is not required for special claims for vacancy loss during rent-up or for regular vacancies if 60 days have elapsed from the ready-to-occupy date, or if 180 days have elapsed for a debt service claim.

F. If TRACS will not accept a move-out, the owner/agent must submit a TRACS Multi-Family Move-Out Request Form to the multifamily helpdesk. The request form is located at http://www.hud.gov/offices/hsg/mfh/trx/trxdocs.cfm

G. Incomplete Claim Packages:

1. Within 30 calendar days from the date of receipt of an incomplete claim package HUD or the CA will either return the incomplete package or contact the owner by email, fax or telephone requesting the missing items. Either method is acceptable. It is the discretion of the HUD Field Office or CA which method they choose to use.

2. If the incomplete claim package is returned, a letter will be included with

the returned claim package indicating why it was determined that the package was found to be incomplete. If HUD or the CA uses the option of notifying the owner via email, fax or telephone requesting the missing items, HUD or the CA must specify the date by which the documents must be received.

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3. The owner must resubmit the complete claim package within 30 calendar

days from the date of the letter included with the returned claim package. If HUD or the CA elects not to return the package but to request via email, fax or telephone that the owner fax or mail the missing documents, the missing documents must be received by the date specified by HUD or the CA. Any claims received after the specified date will be denied and ineligible for resubmission.

H. Denied or Reduced Claims:

After the review of a complete package:

1. The owner/agent must appeal a denied or reduced claim within 30 calendar days from the date of the letter denying or reducing the claim, or the appeal will be denied. The appeal should include a brief explanation as to why the claim should be paid, along with any new or additional supporting documentation. The owner is allowed one original submission, one resubmission, and one appeal.

2. HUD or the CA will approve or disapprove the appeal within 30 calendar days from the date the appeal is received from the owner/agent.

3. The owner/agent must request payment for any approved claim(s) within 90

calendar days from the date of the approval decision. I. The owner/agent should request payment for an approved claim on the next

scheduled voucher. However, payment must be requested within 90 calendar days after approval date of the claim.

A special claim transmitted for payment is subject to the availability of funds.

J. The voucher must include the assigned special claims ID number for the type of

claim. Failure to include the assigned special claim ID on the voucher, entering the incorrect claim type or requesting a special claim amount that differs from the approved amount will result in rejection of the voucher.

Section 1-6 HUD OR CA CLAIM REVIEW PROCESS

A. A claim must be date stamped the day it is received.

B. HUD or the CA must maintain a Special Claim log containing: property name, contract number; type of claim, date received, unit number, tenant name, special claim ID number, date approved, whether the claim was adjusted, rejected, or

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appealed, the dollar amount submitted, dollar amount approved and payment status.

C. Special Claim ID Number.

1. For all approved or reduced claims HUD or the CA will notify the

owner/agent of the approved amount and claim ID number within 30 calendar days from the date of receipt.

2. HUD staff will use the Special Claims Approval option on the TRACS

Main Menu in Secure Systems to record the special claim and to create the special claim ID number. For each claim ID number, only one type of claim (rent-up vacancy, regular vacancy, debt service, and unpaid rent or damages) is permitted. Multiple special claims of the same type for the same contract will be processed together and assigned the same special claim ID number.

2. CAs will use their own system for assigning the special claim ID number.

The CA must follow HUD’s practice and assign a unique claim ID for each type of claim (rent-up vacancy, regular vacancy, debt service, unpaid rent, or damages). Multiple special claims of the same type for the same contract should be processed together and assigned the same special claim ID number.

D. Processing a Reduced Claim.

1. The review of claims that require a reduced or revised amount will be clearly annotated.

2. A reduced claim will be approved for payment at the reduced amount.

3. The owner/agent will be notified in writing of the reason(s) for reduction

and of the right to appeal the decision. The letter will include the owner/agents appeal rights, and the name and address of the person to whom the appeal may be made.

4. All appeals received from the owner/agent will be processed within 30

calendar days of receipt.

E. Incomplete Claims. 1. Within 30 calendar days from the receipt of an incomplete package HUD or the CA will either return incomplete claim packages or contact the owner by email, fax or telephone requesting the missing items.

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2. Incomplete claim packages returned to the owner will include a letter

stating the reason the package is incomplete and providing the owner/agent 30 calendar days from the date of the letter to resubmit a complete package. If the resubmission is received by HUD or the CA after the 30 day calendar deadline has elapsed, the claim will be denied and cannot be resubmitted.

3. If HUD or the CA elects not to return the package but to request via

email, fax or telephone that the owner fax or mail the missing documents, the missing documents must be received by the date specified by HUD or the CA or the claim(s) will be denied and cannot be resubmitted.

F. Processing an Unacceptable Claim.

1. An unacceptable claim will be marked as denied.

2. The owner/agent will be notified in writing of the reason(s) for denial and of the right to appeal the decision. The letter will include the owner/agent’s appeal rights and the name and address of the person to whom the appeal may be made.

3. All appeals received from the owner/agent will be processed within 30

calendar days of receipt. Section 1-7 RETAINING COPIES

A. HUD or the CA must retain copies (or electronic images), of approved claims and supporting documentation for three (3) years from the date of approval.

B. Owners/agents must retain copies of claims and supporting documentation for

three (3) years after the date the claim(s) was paid.

C. Approval of payment of claims does not prevent HUD or CA staff from reviewing special claims during subsequent Management and Occupancy Reviews and Annual Compliance Reviews, requesting reimbursement, if required.

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CHAPTER 2 SPECIAL CLAIMS FOR VACANCY LOSS DURING RENT-UP Section 2-1 CONCEPT Special claims for vacancy loss during rent-up are compensation to property owners for rental loss attributed to vacant units during the initial rent-up period of a property. Section 2-2 ELIGIBILITY REQUIREMENTS A. Project/Contract types:

Section 202 PRAC and Section 811 PRAC Note: Although vacancy loss during rent-up is permissible under the project-

based Section 8 regulations, Section 8 and Section 202/8 projects are no longer eligible because the authority has been repealed and all of the projects have passed the rent-up stage. Therefore, no claim for vacancy loss during rent-up should be submitted for project-based Section 8 and Section 202/8 projects.

B. Other requirements:

1. Only units that are in decent, safe and sanitary condition and are available

for occupancy during the vacancy period for which payment is claimed are eligible for special claims.

2. Owners/agents must comply with the PRAC Agreement and implement

diligent marketing efforts at least 90 calendar days prior to the anticipated date of initial occupancy.

3. By signing form HUD-52671-B, the owner/agent certifies they have taken

all feasible actions to fill the vacancy and did not reject eligible applicants.

4. Owners must comply with the required HUD-approved Affirmative Fair Housing Marketing Plan (AFHMP) and all Fair Housing and Equal Opportunity (FHEO) requirements.

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Section 2-3 OWNER/AGENT CLAIM SUBMISSION REQUIREMENTS The owner/agent must submit the following:

A. Claim forms:

HUD-52670-A Part 2, Special Claims Schedule HUD-52671-B, Special Claims for Vacancies During Rent-Up

B. Submit claim forms to:

HUD field office only

C. Supporting documentation:

1. Refer to Section 1-5 for the general requirements that are part of the claims process.

2. Provide a list of all units leased and available for lease as of the effective

date of the Permission to Occupy (Form HUD-92485) signed by the HUD Architect/Engineer or the effective date of the contract, whichever is later. In addition, justification must be provided for all vacant units, explaining why they remain vacant.

3. Documentation that marketing began at least 90 calendar days prior to

initial occupancy, including:

a. Copies of advertisements or invoices for advertising expenses substantiating the date marketing began.

b. Copy of the waiting list.

c. Documentation that explains the status of the waiting list and the

outcome of applicant contacts (i.e., date applicant was contacted, response of applicant, status of applicant’s move-in).

d. Copies of letters to rejected applicants demonstrating rejection

for good cause.

D. Checklist:

A checklist of required documentation must be used and submitted with the claim forms. See Appendix 2B for a sample “Checklist - Special Claim for Vacancies During Rent-up”.

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E. TRACS requirements:

If a unit was initially occupied within the claim period, the move-in date must be viewable in TRACS to support the date the claim period ends for that unit.

F. Claim amount:

May not exceed 50% of operating cost for the claim period.

Section 2-4 OWNER/AGENT CLAIM TIMELINES

A. Submission deadline:

The claim must be received by HUD within 180 calendar days from the date the unit is first available for occupancy and after the ending date specified below. If a claim is received after the 180 days, it will not be eligible for review.

B. Start date:

The claim period begins with the date of the permission to occupy the unit or the effective date of the contract, whichever is later.

C. Ending date:

The claim period ends on the date preceding the day on which the unit is initially occupied, or 60 calendar days from the start date, whichever is earlier.

D. Length of claim period:

The claim period may not exceed 60 calendar days.

Section 2-5 HUD FIELD OFFICE CLAIM REVIEW PROCESS

In addition to the general review requirements in Section 1-6, the reviewer must:

A. Confirm that all required documents are submitted with the claim and that they are signed appropriately.

B. Review all calculations on form HUD-52671-B (Appendix 2A) for accuracy.

C. Review the documentation describing the status of the waiting list and the

outcome of applicant contacts to determine if the owner/agent is maintaining the

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waiting list and is processing applications in a timely manner, including following-up on initial contacts and applicant responses. If it is discovered that the owner/agent has violated its waiting list policy, previously paid claims are subject to recapture.

D. Review copies of advertising and invoices to confirm that marketing began at

least 90 calendar days prior to the anticipated date of initial occupancy.

E. Review copies of letters to rejected applicants to confirm that rejection was for good cause.

F. Review the list of units leased and vacant and the justification for the vacant units

to determine the reasonableness of the justification.

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CHAPTER 3 SPECIAL CLAIMS FOR VACANCY LOSS AFTER RENT-UP (REGULAR VACANCY)

Section 3-1 CONCEPT

A special claim for vacancy loss after rent-up is compensation to the property owner for the loss of rental income of a unit that was previously occupied by an assisted tenant but has been vacant for circumstances beyond the owner’s control. Section 3-2 ELIGIBILITY REQUIREMENTS

A. Project/Contract types:

Section 8, Section 202/8, Section 202 PAC, Section 202 PRAC, Section 811 PRAC

B. The owner/agent is eligible to submit a special claim for vacancy loss after rent-

up if:

1. Upon learning of a vacancy the owner/agent transmits the move-out data to TRACS.

2. The former tenant was receiving rental assistance at move-out; or if the

rental assistance had been terminated prior to move-out, the assistance was terminated based upon the tenant’s failure to comply with his/her responsibilities to fulfill program requirements, such as:

Failure to provide the needed information relating to family

composition and income. Failure to provide social security numbers. Failure to sign consent forms and or verification forms. Failure to sign the form HUD-50059. Failure or inability to establish citizenship or eligible immigration

status. Failure to move to a different-sized unit within 30 days after the

owner notifies him/her that the unit of the required size is available.

Note: Owners cannot submit a special claim for the unit when

termination of rental assistance was based on the tenant’s income increasing to where he/she no longer qualifies for assistance or for the period of occupancy by a police officer or security personnel.

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3. In projects that are partially assisted, if a tenant’s assistance is terminated tenant or moves out of a unit and the assistance is given to a tenant in a another unit effective the day after the termination or move out, the owner is not entitled to a special claim for a vacancy loss.

For example, in a partially assisted Section 236 project the tenant in Unit 26 who is receiving Section 8 assistance moves-out on July 26. The owner gives the Section 8 assistance to the tenant in Unit 30 effective July 27. The owner is not entitled to receive a special claim for vacancy loss for Unit 26.

4. The owner/agent is eligible to submit a special claim only for units that

are in decent, safe and sanitary condition and are available for occupancy during the vacancy period in which the payments are claimed. Vacancy loss claims may not be paid for the days a unit is being prepared for re-occupancy.

5. The owner/agent has taken and continues to take all feasible actions to fill the vacancy, including contacting any applicants on the waiting list and/or advertising the availability of the unit in accordance with Fair Housing and Equal Opportunity requirements in HUD Handbook 4350.3 REV 1, Occupancy Requirements of Subsidized Multifamily Housing Programs, Chapters 2 and 4.

6. The owner/agent has not rejected applicants, except for good cause in

accordance with the owner’s tenant selection plan.

7. By signing form HUD-52671-C, the owner/agent certifies they have not caused the vacancy by violating the lease, the contract, or any applicable law and that they have complied with all HUD requirements on termination of tenancy listed in HUD Handbook 4350.3 REV-1, Chapter 8.


A. Claim forms:

HUD-52670-A Part 2, Schedule of Special Claims HUD-52671-C Special Claims for Regular Vacancies

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HUD or the CA C. Supporting documentation:

1. Refer to Section 1-5 for the general requirements that are part of the claim

process. 2. A copy of the signed form HUD-50059 completed at move-in for the

former tenant which shows the amount of security deposit that was required.

3. Documentation that the appropriate security deposit was collected from

the tenant: for example, a copy of the original lease, a copy of the tenant’s rent ledger card, or a copy of the receipt(s) for security deposit.

Note: If the security deposit held by the owner met the rules in effect at the time the deposit was collected, or if the owner was not previously required to collect a security deposit under program requirements, the special claim will not be reduced because a security deposit wasn’t collected or where the deposit does not match the current rules.

4. A copy of the security deposit disposition notice provided to the tenant indicating the move-out date, amount of security deposit collected, amount of security deposit returned and any charges withheld from the deposit for unpaid rent, tenant damages or other charges due under the lease.

5. Documentation that verifies the date the unit was ready for occupancy.

Examples of such documentation could consist of the voucher adjustment page verifying the move-out date of the former tenant and the move-in date of the new tenant or the maintenance record or reconditioning log confirming the move-out date and the date the unit was ready for occupancy.

6. Copy of the waiting list from which the tenant was selected (i.e. unit

transfer waiting list, one-bedroom waiting list, etc.) or information from previous waiting list describing contact with the applicant and the outcome of the contact.

7. If the unit was not filled from the waiting list(s), documentation of

marketing efforts must be included such as copies of advertisements or

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invoices for advertising expenses that substantiate the date marketing occurred in accordance with the AFHMP.

D. Checklist:

A checklist of required documentation must be used and submitted with the claim forms. See Appendix 3B for a sample “Checklist -Special Claims for Regular Vacancies”.


1. The move-out or unit transfer date of the former tenant must be viewable in TRACS.

2. If the unit was rented within the claim period, the move-in or unit transfer

for the new tenant must be viewable in TRACS. If the unit is not re-occupied by a subsidized tenant, the move-in will not be viewable in TRACS; therefore, a hard copy of the form HUD-50059 for the market rent tenant must be submitted.

F. Claim amount:

1. A claim for a unit under a Section 8 contract, Section 202/8 or Section 202

PAC may not exceed 80% of the contract rent for up to 60 calendar days for each vacancy. A claim for a unit under Property Disposition Set-aside (PDSA/8) is an exception and may not exceed:

a. The housing assistance payment for the number of days elapsed

between the date the tenant vacated the unit and the last day of the month, plus

b. 80% of contract cost for any days the unit remains vacant in the

following month.

2. A claim for a unit under a Section 202 PRAC or Section 811 PRAC may not exceed 50% of the operating rent for up to 60 calendar days for each vacancy.

3. The claim must be reduced by any amounts the owner/agent has collected from other sources (i.e., security deposits, etc.)

Note: If the tenant failed to give proper notice to vacate as required under the lease, the security deposit may be included as an amount.

collected from other sources.

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The completed claim form and documentation must be received by HUD or the CA within 180 calendar days from the date the unit is available for occupancy. See Section 1-4.B for requirements for submitting claims when a contract is terminated.

B. Start date:

The claim period begins the day the unit is available for occupancy by another tenant. Vacancy loss claims may not be paid for the days a unit was being prepared for occupancy.

Example: A unit was vacated May 5, cleaned May 5 through May 8, and available for occupancy on May 9. The claim period would begin on May 9.

C. Ending date:

The claim period ends on the day preceding the day on which the unit is re-rented, or 60 calendar days from the date the unit is available for occupancy (start date), whichever is earlier.


The claim period may not exceed 60 calendar days.

Section 3-5 HUD OR CA CLAIM REVIEW PROCESS

In addition to the general review requirements in Section 1-6, the reviewer must:

A. Verify that the correct amount of security deposit was collected from the tenant at move-in.

B. Review copies of the voucher adjustment page(s) to verify move-out date of the

former tenant and move-in date of the new tenant and that appropriate move-in and move-out adjustments were made.

C. Review the maintenance record or reconditioning log to confirm the move-out

date and the date the unit was ready for occupancy.

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D. If the unit is not leased from the waiting list, review documentation of advertisements or invoices for advertising expenses that support that marketing was undertaken and substantiates the date marketing occurred. If the waiting list is closed, it is not necessary to review the owner’s/agent’s marketing and outreach methods.

E. Review the documentation describing the status of the waiting list for the past

several months and the outcome of applicant contacts to determine whether or not the owner/agent is maintaining the waiting list and is processing applications in a timely fashion, including following up on initial contacts and applicant responses. Claims will be denied when owners/agents are in violation of the waiting list policy or Fair Housing laws.

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CHAPTER 4 SPECIAL CLAIMS FOR DEBT SERVICE VACANCY PAYMENTS Section 4-1 CONCEPT Special claims for debt service vacancy payments are compensation to a property owner for units that have been vacant beyond the 60 calendar day limit for regular vacancy (either during or after initial rent-up) in order to avoid mortgage default. Section 4-2 ELIGIBILITY REQUIREMENTS


Section 8 NC/SR (New Regulation contracts), Section 202/8, Section 202 PAC, RHS 515/8, PDSA/8.

The following are not eligible for debt service payments: NC/SR Old Regulation contracts, Section 8 Loan Management Set aside (LMSA), Section 202 PRAC, Section 811 PRAC and projects that have prepaid their mortgage (uninsured projects). Debt service payments may not be applied towards management fees and/or owner distribution payments. Debt service payments must be placed in the operating budget for the project.

Note: Section 8 new construction and substantial rehabilitation new regulation

contracts: In general projects eligible to receive debt service vacancy payments are assisted under HAP contracts with the date "8-80" or later printed next to the form number. These form versions will contain a paragraph, typically located in section 2.4(e), concerning debt service vacancy payments. If there is a question regarding whether a project is eligible for a debt service vacancy claim (i.e. falls under the old or new regulations) contact HUD Field Office staff.

B. Other requirements:

1. Units must have been vacant and ready for occupancy for more than 60 calendar days. Owners may not receive payment for special claims for vacancy loss and debt service at the same time. Therefore, a unit is not eligible for mortgage debt service payments until the 60 calendar day vacancy loss period has ended.

2. Payments may not exceed the amortized principal and interest payments

due for that unit on the project’s first mortgage, or the net operating loss on an un-audited financial statement.

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3. Units must be in decent, safe and sanitary condition and available for

occupancy during the vacancy period in which the payments are claimed.

4. By signing form HUD-52671-D, the owner/agent certifies that they have they have followed their HUD approved Affirmative Fair Housing Marketing Plan when marketing available units.

5. Documentation of marketing activities, such as copies of advertisements

or invoices for advertising expenses that support that marketing was undertaken and substantiates the date marketing occurred if applicable.

6. Projects must show a net operating loss on an unaudited financial

statement. Depreciation and owner expenses cannot be included in this statement.

7. HUD must determine if the project can achieve financial soundness within

a reasonable period of time.


A. Claim forms:

HUD-52670-A Part 2, Schedule of Special Claims HUD-52671-D, Special Claims for Debt Service


HUD field office only, except in the case where the Traditional Contract Administrator is a State Housing Finance Agency and the property was financed by that agency. In that case the CA will review all debt service claims.

C. Supporting Documentation:

1. Refer to Section 1-5 for the general requirements that are part of the claim process.

2. Unaudited financial statement, covering a six-month period for which

claims are made.

3. Written narratives detailing the items below:

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a . Cause(s) of the vacancies.

b. Cause(s) of financial problems.

c. Actions taken to correct the financial condition and to prevent recurrence.

d. Sources of funds and time frames for paying off delinquent mortgage and excessive accounts. e. Evidence of marketing activities indicating an attempt to fill the

vacancy if applicable.

D. Checklist:

A checklist of required documentation must be used and submitted with the claim forms. See Appendix 4B for a sample “Checklist – Special Claims for Debt Service”.


1. If the unit was previously occupied, the move-out or unit transfer for the former tenant must be viewable in TRACS.

2. If the unit was rented within the claim period, the move-in or unit transfer

for the new tenant must be viewable in TRACS. If the unit is not re-occupied by a subsidized tenant, the move-in will not be viewable in TRACS; therefore, a hard copy of the form HUD-50059 for the market rent tenant must be submitted.

F. Claim amount:

The owner may request a claim for the lesser of:

1. The amount of the amortized principal and interest payments attributable to the vacant unit(s). Form HUD-52671-D must be used to calculate this amount. Daily debt service is found in Exhibit 2 of the Housing Assistance Payments (HAP) contract, or

2. The amount of the operating loss attributable to the unit, exclusive of

depreciation and any owner expenses. This amount is calculated on an un-audited financial statement.

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The claim form must be filed semi-annually, starting 6 months after the “regular vacancy” claim period (60 calendar days). The HUD field office may authorize a more frequent submission schedule if the semi-annual schedule threatens the project’s performance.

B. Start date:

The day following the 60 calendar-day vacancy loss period.

Example: Initial 60 calendar-day vacancy loss ends January 31. Submit claims for the two six-month periods ending July 31 and January 31.

C. Ending date:

The date on which the unit is rented, or 12 months after the start date, whichever is earlier.


The claim period may not exceed 12 months.

Section 4-5 HUD FIELD OFFICE CLAIM REVIEW PROCESS A. HUD has the responsibility for the review and approval of debt service special claims except in the case where the Traditional Contract Administrator is a State

Housing Finance Agency and the property was financed by that agency. In that case the CA will review all debt service claims.

B. PBCAs may not review or approve special claims for debt service.

1. HUD will forward the results of its review to the PBCA.

2. If the claim has been approved, the PBCA will be instructed to issue an approved special claims ID number to the owner for submission with the

next monthly HAP billing.

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C. In addition to the general review requirements of Section 1-6, the reviewer must:

1. Confirm that all required documentation is submitted with the claim, and that the claim is properly signed.

2. Review all calculations on form HUD-52671-D for accuracy. The

reviewer will need to determine the debt service (amortized principal and interest payment) attributable to the unit(s) through prorating. The debt service can be found in Exhibit 2 of the HAP contract. The claim payment must be the lesser of the calculated debt service and the net operating loss.

3. Review documentation of advertisements or invoices for advertising

expenses that support that marketing was undertaken and substantiates the date marketing occurred.

4. Review financial statement to confirm that the project has not provided the

owner with sufficient revenue to cover expenses less depreciation (i.e., the project shows a net operating loss).

5. Review the narratives provided and available financial information to

determine whether the project is likely to achieve financial soundness in a reasonable period of time.

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CHAPTER 5 SPECIAL CLAIMS FOR UNPAID RENT, TENANT DAMAGES, AND OTHER CHARGES Section 5-1 CONCEPT A special claim for unpaid rent, tenant damages and other charges due under the lease is reimbursement to a property owner for a former tenant’s failure to pay the monthly rent, other charges due under the lease, or for damages caused by the negligence or abuse of the former tenant. Section 5-2 ELIGIBILITY REQUIREMENTS


Section 8, Section 202/8, Section 202 PAC, Section 202 PRAC or Section 811 PRAC.

B. The owner is eligible to submit a special claim for unpaid rent, other charges due

under the lease and damages if: The former tenant was receiving rental assistance at move-out; or if the rental assistance had been terminated prior to move-out, the assistance was terminated based upon the tenant’s failure to comply with his/her responsibilities to fulfill

program requirements, such as:

Failure to provide the needed information relating to family composition and income.

Failure to provide social security numbers. Failure to sign consent forms and or verification forms. Failure to sign the form HUD-50059. Failure or inability to establish citizenship or eligible immigration

status. Failure to move to a different-sized unit within 30 days after the

owner notifies him/her that the unit of the required size is available.

Note: Owners cannot submit a special claim for the unit when termination of

rental assistance was based on the tenant’s income increasing to where he/she no longer qualifies for assistance.

C. In projects that are partially assisted, if a tenant’s assistance is terminated or a

tenant moves out of a unit and the assistance is given to a tenant in another unit effective the day after the termination or move out, the owner is not entitled to a special claim for unpaid rent, tenant damages, or other charges.

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For example, in a partially assisted Section 236 project the tenant in Unit 26 who is receiving Section 8 assistance moves-out on July 26. The owner gives the Section 8 assistance to the tenant in Unit 30 effective July 27. The owner is not entitled to receive a special claim for unpaid rent, tenant damages, or other charges for Unit 26.

D. Other requirements for unpaid rent and other charges due under the lease:

1. The owner/agent collected the appropriate security deposit from the

tenant. If the owner/agent did not collect the appropriate security deposit from the tenant, the claim will be reduced by the amount of the security deposit the owner should have collected from the tenant.

Note: If the security deposit held by the owner met the rules in effect at

the time the deposit was collected, or if the owner was not previously required to collect a security deposit under program requirements, the special claim will not be reduced because a security deposit wasn’t collected or where the deposit does not match the current rules.

2. By signing form HUD-52671-A, the owner/agent certifies they have billed

the tenants for unpaid rent and have taken all reasonable steps to collect the debt:

a. A certified letter has been sent to the tenant detailing the unpaid rent and other charges, the disposition of the security deposit, demanding payment, and advising the tenant that failure to pay the sums due will result in the owner/agent hiring a collection agency to collect the debt. The letter must include a notice to the tenant that they have a right to discuss the charges with the owner/agent.

b. If the tenant did not make payment on the monies owed, other efforts were attempted to collect the monies (i.e., engaging a collection agency).

3. State and local law must permit such amounts to be deducted from the tenant’s security deposit.

4. “Other charges” due under the lease are to be included with unpaid rent.

a. Allowable “other charges” due under the lease include:

(1) Failure to return keys. (2) Late fees, if allowable under the lease and state or local

law.

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(3) Any charges for damages during tenancy that the tenant

was previously billed for and that were still unpaid at move-out.

b. Not allowable “other charges” due under the lease include:

(1) Legal fees. (2) Collection agency fees. (3) Unpaid utility bills left by the tenant.

(4) Cost of photographing unit to prove tenant damage.

c. Section 202/8, Section 202 PAC, Section 202 and Section 811

PRAC leases do not allow for charges for late fees, returned checks or unreturned keys therefore these charges are not allowable as special claims.

E. Other requirements for tenant damages:

1. By signing form HUD-52671A the owner/agent certifies they have

determined the damage claim was due to the tenant’s negligence or abuse.

2. Only extraordinary repairs and/or replacements should be claimed. See Appendix 5C, “Tenant Damages versus Normal Wear and Tear.”

3. The owner/agent cannot request reimbursement on the damage claim for items where reimbursement was made from the Reserve for Replacements or Residual Receipts accounts or by insurance coverage. An owner/agent should be encouraged to apply for insurance reimbursement prior to submitting a claim to HUD. However, it is important to note, if an owner receives special claims reimbursement for damage covered by the owners insurance after HUD has already paid, the owner is required to repay HUD.

4. Any damages, other than those billed during tenancy, found and billed at

move-out are claimed as damages on the claim form. 5. Failure to provide the tenant with an itemized listing of damages will result

in the denial of the claim.

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A. Claim forms:

HUD-52670-A Part 2, Schedule of Special Claims HUD-52671-A, Special Claims for Unpaid Rent/Damages

B. Submit forms to:

HUD or CA

C. Supporting documentation for unpaid rents and other charges due under the lease:

1. Refer to Section 1-5 for the general requirements that are part of the claim process.

2. Evidence that the owner/agent took all reasonable steps to collect the debt.

Such information must include: a. A copy of the signed form HUD-50059 completed at move-in

which shows the amount of security deposit that was required. b. Documentation that the appropriate security deposit was

collected from the tenant: for example, a copy of the original lease, a copy of the tenant’s rent ledger card, a copy of the receipt(s) for security deposit.

c. Copy of the certified letter sent to the tenant detailing the unpaid rent and other charges due under the lease, the disposition of the security deposit, demanding payment, and advising the tenant that failure to pay the sums due will result in the owner/agent hiring a collection agency to collect the debt. The letter must include a notice to the tenant that they have a right to discuss the charges with the owner/agent. (See Security Deposit Disposition Notice 3-3.C 4).

d. Documentation that the matter was turned over to a collection

agency for collection and that the collection agency has attempted to collect the debt (i.e., copy of the agency’s first demand letter).

e. Documentation for other charges that were due under the lease that demonstrates the charges were approved by HUD.

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D. Supporting documentation for a damage claim:

1. Evidence that the owner/agent took all reasonable steps to collect the debt (see item C.2 above for documentation requirements).

2. The owner/agent must certify the submitted claim is not the result of normal wear and tear or routine maintenance. See Appendix 5C, Examples of “Tenant Damage versus Normal Wear and Tear”.

3. Copies of the move-in and move-out inspection reports. 4. A copy of the security deposit disposition notice provided to the tenant

which indicates the move-out date, amount of security deposit collected, amount of security deposit returned and any charges withheld from the deposit for unpaid rent, tenant damages or other charges due under the lease.

5. A repair cost breakdown that must include at least one of the following: a. Invoices b. Receipts c. Owner/agent certification d. Other documentation acceptable to HUD or the CA

The owner/agent must determine the useful life expectancy of replaceable items that have been damaged by the tenant. Refer to Appendix 5D for a sample “Life Expectancy Chart” to determine the predicted life expectancy of replaceable items.

Example: In 2000 new carpeting was installed in a unit. The owner/agent determines that the carpet had a life expectancy of five years and would not have expected to replace the carpet until 2005. In 2001, a family moved into the unit and then moved out in 2003. At move-out, the entire carpet had to be replaced two years earlier than expected. The family should not be charged more than 2/5 of the cost of the new carpeting. If the carpeting had been in service for five or more years at the time the family moved-out, none of the cost of replacing the carpet would have been charged to the family.

E. If a claim is also being made for unpaid rent and other charges due under the lease

for the same unit and tenant, the claim for tenant damages must be calculated on the same form HUD-52671-A and filed as one claim.

F. Checklist:

A checklist of required documentation must be used and submitted with the claim forms. See Appendix 5B for a sample “Checklist- Special Claims for Unpaid Rent/Damages.

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G. TRACS requirements:

The move-out or unit transfer for the tenant who owes the unpaid rent or who was responsible for the damages must be viewable in TRACS.

H. Claim Amount:

1. The total claim for unpaid rent and damages for any Section 8 units may not exceed the monthly contract rent in effect when the tenant vacated the unit (or at the time the tenant’s rental assistance was terminated), minus the security deposit, plus interest earned and amounts collected from the tenant or other sources to cover the unpaid rent and damages.

Example: $65.00 is held by the owner, which includes the security deposit and interest earned. The tenant left the unit owing $300.00 in unpaid rent and $200.00 in damages. The owner/agent is unable to collect payment from the tenant for the unpaid rent or damages. The contract rent at the time the tenant moved-out is $400.00. HUD will pay up to $335.00 (contract rent minus the security deposit and interest).

2. For the LMSA program the total claim limit is the security deposit and the

remainder of one month’s contract rent. 3. For the PD program the limit is two month’s rent less the security deposit

collected or potentially collected. Section 5-4 OWNER/AGENT CLAIM TIMELINES

A. Submission deadline: The claim forms must be received by HUD or the CA within 180 calendar days from the date the vacated unit is available for occupancy.

B. Start Date: N/A

C. Ending date: N/A

D. Length of claim period: N/A Section 5-5 HUD OR CA CLAIM REVIEW PROCESS In addition to the general review requirements in Section 1-6, the reviewer must:

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A. Review all calculations on HUD-52671-A for accuracy. B. Confirm that the appropriate security deposit was collected from the tenant. If the

owner/agent did not collect the appropriate security deposit from the tenant, the claim will be reduced by the amount of the security deposit the owner/agent did not collect.

C. Confirm that any other charges due under the lease are allowed under the lease for

the project.

D. If the tenant did not make payment, confirm that the owner/agent pursued the debt through a collection agency and the collection agency attempted to collect the debt.

E. Review the owner/agent breakdown of costs to repair the damages and confirm

that the costs are reasonable for the work described.

F. Confirm that the damage charges were not due to normal wear and tear but were for extraordinary repairs and/or replacements. Appendix 5C provides guidance on the distinction between allowable claims for tenant damages and normal wear and tear on a unit and may be provided to an owner/agent for clarification on this matter.

G. Verify that the owner/agent used the life expectancy for replaceable items to

calculate how much, if any, of the replacement cost should be charged to the tenant.

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Section 5-6 REIMBURSEMENT OF SPECIAL CLAIMS PAYMENTS Any reimbursement from HUD received by the owner must be applied first toward any unpaid rent due under the lease.

A. No reimbursement may be claimed for unpaid rent for the period after termination of tenancy.

B. If the tenant reimburses the owner/agent for the monies owed after a claim has been paid for unpaid rent, other charges due under the lease, or tenant damages, the owner/agent must refund the tenant’s payment to HUD.

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Appendix 1A

65

Appendix 1B

67

Appendix 1C

68

Appendix 2A

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Appendix 2B

SAMPLE CHECKLIST

Special Claim for Vacancies During Rent-Up

Property Name: _________________ Contract No. _________________ Attach the following items to the claim submission

1._________ Completed form HUD-52670-A, Part 2 2. ________ Completed form HUD-52671-B. 3. ________ A list of all units leased and available for lease as of the effective date of

the Permission to Occupy (form HUD-92485 signed by the HUD Architect or Engineer) or the effective date of the contract, whichever is later. Also include justification for all un-leased units explaining why they remain vacant.

4. ________ Evidence that marketing began not less than 90 days prior to initial

occupancy, including copies of advertisements, or invoices for advertising expenses substantiating the date marketing began and a copy of the waiting list.

5. _________ Waiting-list documentation. Documentation should include the outcome

of applicant contacts, (i.e. date applicant was contacted, response of applicant and the status of applicant’s move-in).

6._________ Copies of letters to rejected applicants demonstrating rejection for good

cause.

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Appendix 2C

SUGGESTED WAITING LIST GUIDELINES

A. Updating Waiting lists.

1. Waiting lists must be kept current, and should be updated at least annually.

2. Owners are required to develop a written “Waiting List Policy” outlining the following as required by Handbook 4350.3 REV-1:

How often an applicant must contact management to stay active on the

list. Method for contacting management (telephone, mail, etc.). A recording process to be used by management. How often an applicant will be offered a unit before they are either

removed or dropped to the bottom of the waiting list.

3. Send a letter to each applicant stating your “Waiting List Policy” and asking him or her to respond. The letter should cover the following:

Request a response from the applicant that includes applicant’s name,

level of interest in remaining on the waiting list, any change in eligibility status, family size, unit size needed and need for Section 8 assistance (if project has both market and affordable units).

The letter should also indicate a date by which a response is needed, and notify the applicant that he/she may be removed from the waiting list if there is no response. If the applicant does not respond by the deadline date, make one attempt to contact.

Remind the applicant of the necessity to report any changes in address or telephone number.

4. Document all actions taken with copies of letters sent, those returned

undeliverable, follow-up responses, and action taken. Retain applications and documents for three years after placing in the inactive file. Document waiting list status.

B. Pre-Certify the top applicants for each unit size.

1. Owners/agents should determine the project’s average annual turnover rate, and at all times have the top 2 or 3 applicants from the waiting list, for each bedroom size, verified and ready to move at the earliest time possible after being notified.

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2. In most instances, an incoming tenant will have to give his or her current landlord proper notice. However, the tenant should be certified in advance to shorten the process.

3. Applicants that have been certified for occupancy should be placed in a file marked “Ready for Move-In”. The file should be updated on a regular basis to ensure the verifications are valid as outlined in HUD Handbook 4350.3 REV-1.

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Appendix 3A

75

Appendix 3-C

Sample Vacancy Reconditioning Log 1. Project Name: ________________________________________________________________ 2. Contract Number: ________________________________________________________________ 3. Unit Number: __________________ 4. Date of Death: __________________ 5. Date of Unit Transfer: _____________________ 6. Date of Move-Out: ____________ 7. Anticipated Move-In Date: ________________ 8. Maintenance: Start Date: ______________ 9. Finish Date: _____________________________ Comments: _______________________________________________________________________ _________________________________________________________________________________ 10. Painted: Start Date: _______________ 11. Finish Date: _____________________________ Comments: ________________________________________________________________________ __________________________________________________________________________________ 12. Carpet Cleaned: Start Date: ______________ 13. Finish Date:_____________________________ Comments: ________________________________________________________________________ __________________________________________________________________________________ 14. Unit Cleaned: Start Date: _________________ 15. Finish Date: ______________________________ Comments: _________________________________________________________________________ ___________________________________________________________________________________ 16. Date Approved for Occupancy: _______________ Approved By: ___________________________________________ Date: ________________________

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Appendix 4A

78

Appendix 4B

SAMPLE CHECKLIST

Special Claim for Debt Service Claims

Project Name: ______________________________________

Contract Number: ______________________________________ Unit Number: ______________________________________ Attach the following items to the claim submission 1. _______ 2. _______ 3. _______ 4. _______ 5. _______ 6. _______

7. _______

8. _______

Completed form HUD 52670-A, Part 2. Completed form HUD-52671-D.

Unaudited financial statements covering a six-month period for which claims are made. Written narrative detailing the following items: Causes of vacancies. Causes for financial problems. Actions being taken to correct the financial condition and to prevent recurrence. Sources of funds and time frames for paying off delinquent mortgage and excessive accounts. Efforts to market the vacant units if applicable.

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Appendix 5A

81

Appendix 5C

EXAMPLES (Not all inclusive) of TENANT DAMAGE versus “NORMAL WEAR AND TEAR”

Normal costs of turning over an apartment after a tenant vacates may not be included on a claim to HUD for tenant damages. The costs an owner incurs for the basic cleaning and repairing of such items necessary to make a unit ready for occupancy by the next tenant are part of the costs of doing business. The following is a list of items typically attributable to routine use or “normal wear and tear”.

Normal Wear and Tear

Fading, peeling, or cracked paint Slightly torn or faded wallpaper Small chips in plaster Nail holes, pin holes, or cracks in wall Door sticking from humidity Cracked window pane from faulty foundation or building settling Floors needing coat of varnish Carpet faded or worn thin from walking Loose grouting and bathroom tiles Worn or scratched enamel in old bathtubs, sinks, or toilets Rusty shower rod Partially clogged sinks caused by aging pipes Dirty or faded lamp or window shades

Tenant damages usually require more extensive repair, and at greater cost than “normal wear and tear”, and are often the result of a tenant’s abuse or negligence that is above and beyond normal wear and tear.

Tenant Damage

Gaping holes in walls or plaster Drawings, crayon markings, or wallpaper that owner did not approve Seriously damaged or ruined wallpaper Chipped or gouged wood floors Doors ripped off hinges Broken windows Missing fixtures Holes in ceiling from removed fixtures Holes, stains, or burns in carpet Missing or cracked bathroom tiles Chipped and broken enamel in bathtubs and sinks Clogged or damaged toilet from improper use Missing or bent shower rods Torn, stained, or missing lamp and window shades

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Appendix 5D

SAMPLE LIFE EXPECTANCY CHART *

Many major items have a predictable life span. A list of items and their life expectancy are listed below: Hot Water Heaters 10 years

All units

Plush Carpeting 5 years Family 7 years Elderly

Air Conditioning Units 10 years All units

Ranges 20 years All units

Refrigerators 10 years All units

Interior Painting - Enamel 5 years Family 7 years Elderly

Interior Painting – Flat 3 years Family 5 years Elderly

Tiles/Linoleum 5 years Family 7 years Elderly

Window shades, screens, blinds

3 years Family, Elderly

* If these items were in good condition at the time of move in, and it can be shown that damage, above the normal wear and tear has been sustained, then a damage claim can be submitted.

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Waivers Waivers are exceptions to age, income limits, and unit size eligibility requirements. They are effective tools to combat high vacancy rates. Properties that are experiencing continued vacancy issues should refer to HUD Handbook 4350.3, Chapter 3, for guidance. Along with the written request, copies of exhausted waiting lists, proof of advertising during the vacancy period, additional marketing efforts, and demographic and financial documentation should be included. A waiver must be in place for a property to move in an ineligible applicant.

Once the request is received, it is reviewed and a recommendation is forwarded to the property’s HUD project manager at the field office in Louisville, Kentucky. A response to the property is submitted from the HUD field office.

Requests for 202/8 properties must be reviewed by the HUD hub office in Atlanta, Georgia. For these properties, the review process could take an extended period of time and the response to the property is submitted from the HUD Atlanta hub office.

Due to this process, all requests should be submitted in advance of the desired move-in date.

Renewal requests should be submitted at least one month prior to the expiration.

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Property Information

OVERVIEW All properties should have a Property Information Sheet on file (page 89). Whenever there is a change in owner, agent, or property supervisor information, this document must be updated immediately. Also, if TRACS contact or TRACS Mail ID/Password information is changed, this document must be updated.

O/As must submit a completed Direct Deposit Sign-Up Form (page 91) when there is a change in the bank account where housing assistance payments are deposited.

O/As must submit a W-9 (page 93) when a change in property ownership and/or tax identification occurs.

These forms are available on KHC’s Web site, www.kyhousing.org, under Rental Assistance, Project-Based Rental Administration, Housing Assistance Payments (HAP).

87

Property Contact and Information

Property Name: _______________________________________________________________

Property Address: ____________________________________________________________

On-Site Manager: _____________________________________________________________

On-Site Manager Address: ______________________________________________________

Property Phone: __________________________________ Fax: _______________________

Property E-mail Address:________________________________________________________

Property KY#: KY36________________________ Site #: _____________________________

TRACS Contact: ______________________________________________________________

TRACS Contact Phone: ____________________________ Fax: _______________________

TRACS Contact E-mail: ________________________________________________________

TRACS Mail ID#: ____________________________ Password: _______________________

Management Company:_________________________________________________________

Management Agent Contact:_____________________________ Title: ___________________

Management Agent Address: ____________________________________________________

Management Agent Phone: _________________________ Fax: _______________________

Management Agent E-mail: _____________________________________________________

Owner Entity: ________________________________________________________________

Owner Contact: _______________________________________________________________

Owner Address: _______________________________________________________________

Owner Phone: _____________________________________ Fax: ______________________

Owner E-mail: ________________________________________________________________

Name of Person Filling Out Form: ________________________________________________

Phone: _______________________________________________________________________

Please Fax to Phillene Humphrey at (502) 564-9962 or e-mail [email protected]

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INSTRUCTIONS TO PRINTERSFORM W-9, PAGE 1 of 4MARGINS: TOP 13mm (1⁄2 "), CENTER SIDES. PRINTS: HEAD to HEADPAPER: WHITE WRITING, SUB. 20. INK: BLACKFLAT SIZE: 216mm (81⁄2 ") � 279mm (11")PERFORATE: (NONE)

Give form to therequester. Do notsend to the IRS.

Form W-9 Request for TaxpayerIdentification Number and Certification(Rev. November 2005)

Department of the TreasuryInternal Revenue Service

Name (as shown on your income tax return)

List account number(s) here (optional)

Address (number, street, and apt. or suite no.)

City, state, and ZIP code

Pri

nt o

r ty

pe

See

Sp

ecifi

c In

stru

ctio

ns o

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age

2.

Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. The TIN provided must match the name given on Line 1 to avoidbackup withholding. For individuals, this is your social security number (SSN). However, for a residentalien, sole proprietor, or disregarded entity, see the Part I instructions on page 3. For other entities, it isyour employer identification number (EIN). If you do not have a number, see How to get a TIN on page 3.

Social security number

––or

Requester’s name and address (optional)

Employer identification numberNote. If the account is in more than one name, see the chart on page 4 for guidelines on whosenumber to enter. –

Certification

1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and

I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the InternalRevenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS hasnotified me that I am no longer subject to backup withholding, and

2.

Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backupwithholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply.For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirementarrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the Certification, but you mustprovide your correct TIN. (See the instructions on page 4.)

SignHere

Signature ofU.S. person � Date �

Purpose of Form

Form W-9 (Rev. 11-2005)

Part I

Part II

Business name, if different from above

Cat. No. 10231X

Check appropriate box:

Under penalties of perjury, I certify that:

3I.R.S. SPECIFICATIONS TO BE REMOVED BEFORE PRINTING

DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

TLS, have youtransmitted all Rtext files for thiscycle update?

Date

Action

Revised proofsrequested

Date Signature

O.K. to print

U.S. person. Use Form W-9 only if you are a U.S. person(including a resident alien), to provide your correct TIN to theperson requesting it (the requester) and, when applicable, to:

1. Certify that the TIN you are giving is correct (or you arewaiting for a number to be issued),

2. Certify that you are not subject to backup withholding, or3. Claim exemption from backup withholding if you are a

U.S. exempt payee.

3. I am a U.S. person (including a U.S. resident alien).

A person who is required to file an information return with theIRS, must obtain your correct taxpayer identification number(TIN) to report, for example, income paid to you, real estatetransactions, mortgage interest you paid, acquisition orabandonment of secured property, cancellation of debt, orcontributions you made to an IRA.

Individual/Sole proprietor Corporation Partnership Other �

Exempt from backupwithholding

Note. If a requester gives you a form other than Form W-9 torequest your TIN, you must use the requester’s form if it issubstantially similar to this Form W-9.

● An individual who is a citizen or resident of the UnitedStates,● A partnership, corporation, company, or associationcreated or organized in the United States or under the lawsof the United States, or● Any estate (other than a foreign estate) or trust. SeeRegulations sections 301.7701-6(a) and 7(a) for additionalinformation.

For federal tax purposes, you are considered a person if youare:

In 3 above, if applicable, you are also certifying that as aU.S. person, your allocable share of any partnership incomefrom a U.S. trade or business is not subject to thewithholding tax on foreign partners’ share of effectivelyconnected income.

Special rules for partnerships. Partnerships that conduct atrade or business in the United States are generally requiredto pay a withholding tax on any foreign partners’ share ofincome from such business. Further, in certain cases where aForm W-9 has not been received, a partnership is required topresume that a partner is a foreign person, and pay thewithholding tax. Therefore, if you are a U.S. person that is apartner in a partnership conducting a trade or business in theUnited States, provide Form W-9 to the partnership toestablish your U.S. status and avoid withholding on yourshare of partnership income.

The person who gives Form W-9 to the partnership forpurposes of establishing its U.S. status and avoidingwithholding on its allocable share of net income from thepartnership conducting a trade or business in the UnitedStates is in the following cases:● The U.S. owner of a disregarded entity and not the entity,

93

INSTRUCTIONS TO PRINTERSFORM W-9, PAGE 2 of 4MARGINS: TOP 13 mm (1⁄2"), CENTER SIDES. PRINTS: HEAD to HEADPAPER: WHITE WRITING, SUB. 20. INK: BLACKFLAT SIZE: 216 mm (81⁄2") � 279 mm (11")PERFORATE: (NONE)

Form W-9 (Rev. 11-2005) Page 2

Sole proprietor. Enter your individual name as shown onyour income tax return on the “Name” line. You may enteryour business, trade, or “doing business as (DBA)” name onthe “Business name” line.

3I.R.S. SPECIFICATIONS TO BE REMOVED BEFORE PRINTING


Other entities. Enter your business name as shown onrequired federal tax documents on the “Name” line. Thisname should match the name shown on the charter or otherlegal document creating the entity. You may enter anybusiness, trade, or DBA name on the “Business name” line.

If the account is in joint names, list first, and then circle,the name of the person or entity whose number you enteredin Part I of the form.

Limited liability company (LLC). If you are a single-memberLLC (including a foreign LLC with a domestic owner) that isdisregarded as an entity separate from its owner underTreasury regulations section 301.7701-3, enter the owner’sname on the “Name” line. Enter the LLC’s name on the“Business name” line. Check the appropriate box for yourfiling status (sole proprietor, corporation, etc.), then checkthe box for “Other” and enter “LLC” in the space provided.

Specific InstructionsName

Exempt From Backup Withholding

5. You do not certify to the requester that you are notsubject to backup withholding under 4 above (for reportableinterest and dividend accounts opened after 1983 only).

Certain payees and payments are exempt from backupwithholding. See the instructions below and the separateInstructions for the Requester of Form W-9.

Civil penalty for false information with respect towithholding. If you make a false statement with noreasonable basis that results in no backup withholding, youare subject to a $500 penalty.Criminal penalty for falsifying information. Willfullyfalsifying certifications or affirmations may subject you tocriminal penalties including fines and/or imprisonment.

PenaltiesFailure to furnish TIN. If you fail to furnish your correct TINto a requester, you are subject to a penalty of $50 for eachsuch failure unless your failure is due to reasonable causeand not to willful neglect.

Misuse of TINs. If the requester discloses or uses TINs inviolation of federal law, the requester may be subject to civiland criminal penalties.

If you are an individual, you must generally enter the nameshown on your income tax return. However, if you havechanged your last name, for instance, due to marriagewithout informing the Social Security Administration of thename change, enter your first name, the last name shown onyour social security card, and your new last name.

If you are exempt, enter your name as described above andcheck the appropriate box for your status, then check the“Exempt from backup withholding” box in the line followingthe business name, sign and date the form.

4. The IRS tells you that you are subject to backupwithholding because you did not report all your interest anddividends on your tax return (for reportable interest anddividends only), or

3. The IRS tells the requester that you furnished anincorrect TIN,

2. You do not certify your TIN when required (see the PartII instructions on page 4 for details),

You will not be subject to backup withholding on paymentsyou receive if you give the requester your correct TIN, makethe proper certifications, and report all your taxable interestand dividends on your tax return.

1. You do not furnish your TIN to the requester,

What is backup withholding? Persons making certainpayments to you must under certain conditions withhold andpay to the IRS 28% of such payments (after December 31,2002). This is called “backup withholding.” Payments thatmay be subject to backup withholding include interest,dividends, broker and barter exchange transactions, rents,royalties, nonemployee pay, and certain payments fromfishing boat operators. Real estate transactions are notsubject to backup withholding.

Payments you receive will be subject to backupwithholding if:

If you are a nonresident alien or a foreign entity not subjectto backup withholding, give the requester the appropriatecompleted Form W-8.

Example. Article 20 of the U.S.-China income tax treatyallows an exemption from tax for scholarship incomereceived by a Chinese student temporarily present in theUnited States. Under U.S. law, this student will become aresident alien for tax purposes if his or her stay in the UnitedStates exceeds 5 calendar years. However, paragraph 2 ofthe first Protocol to the U.S.-China treaty (dated April 30,1984) allows the provisions of Article 20 to continue to applyeven after the Chinese student becomes a resident alien ofthe United States. A Chinese student who qualifies for thisexception (under paragraph 2 of the first protocol) and isrelying on this exception to claim an exemption from tax onhis or her scholarship or fellowship income would attach toForm W-9 a statement that includes the informationdescribed above to support that exemption.

Note. You are requested to check the appropriate box foryour status (individual/sole proprietor, corporation, etc.).

4. The type and amount of income that qualifies for theexemption from tax.

5. Sufficient facts to justify the exemption from tax underthe terms of the treaty article.

Nonresident alien who becomes a resident alien.Generally, only a nonresident alien individual may use theterms of a tax treaty to reduce or eliminate U.S. tax oncertain types of income. However, most tax treaties contain aprovision known as a “saving clause.” Exceptions specifiedin the saving clause may permit an exemption from tax tocontinue for certain types of income even after the recipienthas otherwise become a U.S. resident alien for tax purposes.

If you are a U.S. resident alien who is relying on anexception contained in the saving clause of a tax treaty toclaim an exemption from U.S. tax on certain types of income,you must attach a statement to Form W-9 that specifies thefollowing five items:

1. The treaty country. Generally, this must be the sametreaty under which you claimed exemption from tax as anonresident alien.

2. The treaty article addressing the income.3. The article number (or location) in the tax treaty that

contains the saving clause and its exceptions.

Also see Special rules regarding partnerships on page 1.

Foreign person. If you are a foreign person, do not useForm W-9. Instead, use the appropriate Form W-8 (seePublication 515, Withholding of Tax on Nonresident Aliensand Foreign Entities).

● The U.S. grantor or other owner of a grantor trust and notthe trust, and

● The U.S. trust (other than a grantor trust) and not thebeneficiaries of the trust.

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I.R.S. SPECIFICATIONS TO BE REMOVED BEFORE PRINTING



3

Part I. Taxpayer IdentificationNumber (TIN)Enter your TIN in the appropriate box. If you are a residentalien and you do not have and are not eligible to get an SSN,your TIN is your IRS individual taxpayer identification number(ITIN). Enter it in the social security number box. If you donot have an ITIN, see How to get a TIN below.

How to get a TIN. If you do not have a TIN, apply for oneimmediately. To apply for an SSN, get Form SS-5,Application for a Social Security Card, from your local SocialSecurity Administration office or get this form online atwww.socialsecurity.gov. You may also get this form bycalling 1-800-772-1213. Use Form W-7, Application for IRSIndividual Taxpayer Identification Number, to apply for anITIN, or Form SS-4, Application for Employer IdentificationNumber, to apply for an EIN. You can apply for an EIN onlineby accessing the IRS website at www.irs.gov/businesses andclicking on Employer ID Numbers under Related Topics. Youcan get Forms W-7 and SS-4 from the IRS by visitingwww.irs.gov or by calling 1-800-TAX-FORM(1-800-829-3676).

If you are asked to complete Form W-9 but do not have aTIN, write “Applied For” in the space for the TIN, sign anddate the form, and give it to the requester. For interest anddividend payments, and certain payments made with respectto readily tradable instruments, generally you will have 60days to get a TIN and give it to the requester before you aresubject to backup withholding on payments. The 60-day ruledoes not apply to other types of payments. You will besubject to backup withholding on all such payments until youprovide your TIN to the requester.

If you are a sole proprietor and you have an EIN, you mayenter either your SSN or EIN. However, the IRS prefers thatyou use your SSN.

If you are a single-owner LLC that is disregarded as anentity separate from its owner (see Limited liability company(LLC) on page 2), enter your SSN (or EIN, if you have one). Ifthe LLC is a corporation, partnership, etc., enter the entity’sEIN.Note. See the chart on page 4 for further clarification ofname and TIN combinations.

Note. Writing “Applied For” means that you have alreadyapplied for a TIN or that you intend to apply for one soon.Caution: A disregarded domestic entity that has a foreignowner must use the appropr iate Form W-8.

9. A futures commission merchant registered with theCommodity Futures Trading Commission,

10. A real estate investment trust,11. An entity registered at all times during the tax year

under the Investment Company Act of 1940,12. A common trust fund operated by a bank under

section 584(a),13. A financial institution,14. A middleman known in the investment community as a

nominee or custodian, or15. A trust exempt from tax under section 664 or

described in section 4947.

THEN the payment is exemptfor . . .

IF the payment is for . . .

All exempt recipients except for 9

Interest and dividend payments

Exempt recipients 1 through 13.Also, a person registered underthe Investment Advisers Act of1940 who regularly acts as abroker

Broker transactions

Exempt recipients 1 through 5Barter exchange transactionsand patronage dividends

Generally, exempt recipients1 through 7

Payments over $600 requiredto be reported and directsales over $5,000 1

See Form 1099-MISC, Miscellaneous Income, and its instructions.

However, the following payments made to a corporation (including grossproceeds paid to an attorney under section 6045(f), even if the attorney is acorporation) and reportable on Form 1099-MISC are not exempt frombackup withholding: medical and health care payments, attorneys’ fees; andpayments for services paid by a federal executive agency.

The chart below shows types of payments that may beexempt from backup withholding. The chart applies to theexempt recipients listed above, 1 through 15.

1

2

7. A foreign central bank of issue,8. A dealer in securities or commodities required to register

in the United States, the District of Columbia, or apossession of the United States,

2

Exempt payees. Backup withholding is not required on anypayments made to the following payees:

1. An organization exempt from tax under section 501(a),any IRA, or a custodial account under section 403(b)(7) if theaccount satisfies the requirements of section 401(f)(2),

2. The United States or any of its agencies orinstrumentalities,

3. A state, the District of Columbia, a possession of theUnited States, or any of their political subdivisions orinstrumentalities,

4. A foreign government or any of its political subdivisions,agencies, or instrumentalities, or

5. An international organization or any of its agencies orinstrumentalities.

Other payees that may be exempt from backupwithholding include:

6. A corporation,

Generally, individuals (including sole proprietors) are notexempt from backup withholding. Corporations are exemptfrom backup withholding for certain payments, such asinterest and dividends.Note. If you are exempt from backup withholding, youshould still complete this form to avoid possible erroneousbackup withholding.

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I.R.S. SPECIFICATIONS TO BE REMOVED BEFORE PRINTING


What Name and Number To Give theRequester

Give name and SSN of:For this type of account:

The individual1. Individual

The actual owner of the accountor, if combined funds, the firstindividual on the account 1

2. Two or more individuals (jointaccount)

The minor 23. Custodian account of a minor(Uniform Gift to Minors Act)

The grantor-trustee 14. a. The usual revocablesavings trust (grantor isalso trustee)

1. Interest, dividend, and barter exchange accountsopened before 1984 and broker accounts consideredactive during 1983. You must give your correct TIN, but youdo not have to sign the certification.

The actual owner 1b. So-called trust accountthat is not a legal or validtrust under state law2. Interest, dividend, broker, and barter exchange

accounts opened after 1983 and broker accountsconsidered inactive during 1983. You must sign thecertification or backup withholding will apply. If you aresubject to backup withholding and you are merely providingyour correct TIN to the requester, you must cross out item 2in the certification before signing the form.

The owner 35. Sole proprietorship orsingle-owner LLC

Give name and EIN of:For this type of account:

3. Real estate transactions. You must sign thecertification. You may cross out item 2 of the certification.

A valid trust, estate, orpension trust

6.

Legal entity 4

4. Other payments. You must give your correct TIN, butyou do not have to sign the certification unless you havebeen notified that you have previously given an incorrect TIN.“Other payments” include payments made in the course ofthe requester’s trade or business for rents, royalties, goods(other than bills for merchandise), medical and health careservices (including payments to corporations), payments to anonemployee for services, payments to certain fishing boatcrew members and fishermen, and gross proceeds paid toattorneys (including payments to corporations).

The corporationCorporate or LLC electingcorporate status on Form8832

7.

The organizationAssociation, club, religious,charitable, educational, orother tax-exempt organization

8.

5. Mortgage interest paid by you, acquisition orabandonment of secured property, cancellation of debt,qualified tuition program payments (under section 529),IRA, Coverdell ESA, Archer MSA or HSA contributions ordistributions, and pension distributions. You must giveyour correct TIN, but you do not have to sign thecertification.

The partnershipPartnership or multi-memberLLC

9.

The broker or nomineeA broker or registerednominee

10.

The public entityAccount with the Departmentof Agriculture in the name ofa public entity (such as astate or local government,school district, or prison) thatreceives agricultural programpayments

11.

Privacy Act Notice

List first and circle the name of the person whose number you furnish. Ifonly one person on a joint account has an SSN, that person’s number mustbe furnished.

Circle the minor’s name and furnish the minor’s SSN.

You must show your individual name and you may also enter your businessor “DBA” name on the second name line. You may use either your SSN orEIN (if you have one). If you are a sole proprietor, IRS encourages you touse your SSN.List first and circle the name of the legal trust, estate, or pension trust. (Donot furnish the TIN of the personal representative or trustee unless the legalentity itself is not designated in the account title.) Also see Special rulesregarding partnerships on page 1.

Note. If no name is circled when more than one name islisted, the number will be considered to be that of the firstname listed.

Sole proprietorship orsingle-owner LLC

The owner 3

12.

Part II. Certification

For a joint account, only the person whose TIN is shown inPart I should sign (when required). Exempt recipients, seeExempt From Backup Withholding on page 2.

3

You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 28% of taxableinterest, dividend, and certain other payments to a payee who does not give a TIN to a payer. Certain penalties may also apply.

To establish to the withholding agent that you are a U.S.person, or resident alien, sign Form W-9. You may berequested to sign by the withholding agent even if items 1, 4,and 5 below indicate otherwise.

Section 6109 of the Internal Revenue Code requires you to provide your correct TIN to persons who must file information returnswith the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition orabandonment of secured property, cancellation of debt, or contributions you made to an IRA, or Archer MSA or HSA. The IRSuses the numbers for identification purposes and to help verify the accuracy of your tax return. The IRS may also provide thisinformation to the Department of Justice for civil and criminal litigation, and to cities, states, the District of Columbia, and U.S.possessions to carry out their tax laws. We may also disclose this information to other countries under a tax treaty, to federaland state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combatterrorism.

Signature requirements. Complete the certification asindicated in 1 through 5 below.

1

2

3

4

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