How to Encourage Resident Cooperation with Recertification Requirements

IRS regulations don’t require annual certifications for properties that are 100 percent tax credit. However, for mixed-income sites, recertifications serve an important function. Annual certifications ensure affordable housing units are occupied by income-eligible households, and provide a means to ensure compliance with the Next Available Unit Rule and student status.

As the manager of a mixed-income tax credit site, each year you face the requirement of recertifying tax credit households. Some households are slow to do their part, making your job tougher. If households comply at the last minute, you have to scramble to finish the paperwork on time. And if they don’t comply at all, you risk noncompliance with tax credit rules.

One step that well-run tax credit sites take is to use a strict lease clause to make households report for recertification. We’ll tell you how to remind households of their recertification responsibilities, and we’ll give you a Model Lease Clause: Get Households to Cooperate with Recertification Efforts, that you can adapt and use to get them to cooperate.

Recertification Basics

The IRS requires all households at mixed-income sites to recertify annually for income qualification and continued eligibility. You must establish a recertification anniversary date for each household, and you must notify households of their annual recertification responsibilities.

HUD’s rules set out what notices you must give, when you must give them, and what those notices must say. For example, you should send reminder notices to the household 120 days, 90 days, and 60 days before the recertification deadline. And be sure to tell households that all household members age 18 and older must attend a meeting conducted by a staff member. This is because the HUD Handbook requires all adult household members to sign the verification forms [HUD Handbook 4350.3, par. 3-11]. Make copies of any recertification notices that you give the household so you can show that you actually sent them out.

Adding Tough Lease Clause

If a household doesn’t cooperate in the recertification process, you can try to evict it for that reason alone. But judges usually won’t evict a resident who’s paying rent. You can gain additional leverage to get households to cooperate by adding a no-nonsense lease clause as a warning.

A lease clause turns the failure to cooperate with recertification into a material breach of the lease and then enables you to take action to secure the household’s cooperation. A strict lease clause, such as our Model Lease Clause, may also provide ammunition to evict an uncooperative household. And such a lease clause can help prove that you made a good-faith effort to comply with recertification requirements.

What Clause Should Say

Like our Model Lease Clause, your tough lease clause should do the following:

Indicate annual recertification requirements. Tell the household what you expect of it when annual recertification rolls around. Specify the information that the household must give you to complete recertification. Require the household to attend an interview and to give you sources and third-party verification of income and assets for eligibility purposes. Make the household sign a new Income Eligibility form. And inform the household that occupancy of the unit depends on the household’s continued eligibility [Clause, par. A].

Set deadline for recertification. Give the household the recertification deadline, which is the date by which you’re required to complete recertification. But explain that there will be an interview 90 days in advance of the deadline. This will enable you to complete the paperwork on time [Clause, par. B].

Penalize household for noncompliance. Tell the household that its failure to cooperate with recertification is a material breach of the lease. Warn the household that it faces nonrenewal of the lease and, possibly, eviction from the unit for not complying with the recertification requirements [Clause, par. C].