3.6Rural Housing (Section 515)
Rural Housing is “affordable multifamily rental housing for very low-, low-, and moderate-income families, elderly persons, and persons with disabilities.” Rural Rental Housing Loans (Section 515).1 See also 42 USC 1485(a); 7 CFR 3560.1(a). The affordable rental housing is made possible through the Rural Rental Housing Loan Program, which “is primarily a direct housing mortgage program” whose purpose is to generate the availability of affordable rural housing. Rural Rental Housing Loans (Section 515).2
“Section 515 loans can be used to build, acquire and rehabilitate, or improve dwellings in rural areas[; t]he term for loans is tied to the expected useful life of the property[.]” HB 2-3560 MFH Asset Management Handbook (February 2005, revised December 2008), p 1-5 (hereafter referred to as HB 2-3560 Handbook). “Some properties developed through th[e Rural Housing P]rogram received Section 8 rental assistance contracts to make the rental units more affordable to eligible families.” HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Housing Programs (May 2003, revised with CHG-2, effective June 2007, and CHG-3, effective June 2009), p 1-7 (hereafter referred to as Handbook 4350.3). “New Section 515 properties are . . . no longer combined with Section 8 contracts.” Id.
B.Grounds for Eviction/Termination of Lease3
The following reasons for termination reflect the bases for eviction or termination under the Rural Housing Program, both with and without Section 8 assistance.4
A landlord may terminate the lease of a tenant in Rural Housing for any of the following reasons:
•Material noncompliance with the lease provisions or the rules of occupancy. 7 CFR 3560.159(a); Handbook 4350.3, p 8-11. See 7 CFR 3560.159(a)(1) and Handbook 4350.3, p 8-11, for examples of material noncompliance.
•Criminal activity by a covered person that threatens the other residents’ health, safety, or right to peaceful enjoyment. 7 CFR 3560.159(d); 24 CFR 5.859(a)(1); 24 CFR 884.216(b).
If the landlord has determined that a covered person engaged in criminal conduct, a tenant may be evicted for the covered person’s criminal activity without regard to whether the covered person was arrested or convicted for the conduct and without having to meet a criminal standard of proof. 7 CFR 3560.159(d); 24 CFR 5.861; Handbook 4350.3, p 8-16.
•Criminal activity by a covered person that threatens the health, safety, or right to peaceful enjoyment of persons living in the immediate vicinity. 7 CFR 3560.159(d); 24 CFR 5.859(a)(2); 24 CFR 884.216(b).
•Drug-related criminal activity on or near the premises by a covered person. 7 CFR 3560.159(d); 24 CFR 5.858; 24 CFR 884.216(b).
•Illegal drug use or alcohol abuse by a household member, or a pattern of illegal drug use or alcohol abuse, that interferes with the other residents’ health, safety, or right to peaceful enjoyment. 7 CFR 3560.159(d); 24 CFR 5.858 (drugs); 24 CFR 5.860 (alcohol); 24 CFR 884.216(b).
•Tenant’s violation of a condition of probation or parole imposed under federal or state law. 7 CFR 3560.159(d); 24 CFR 5.859(b)(2); 24 CFR 884.216(b).
•Tenant’s flight to avoid prosecution after commission or attempted commission of a felony or to avoid penalties after conviction of a felony or attempted felony. 7 CFR 3560.159(d); 24 CFR 5.859(b)(1); 24 CFR 884.216(b).
•Other good cause. 7 CFR 3560.159(a); Handbook 4350.3, Figure 8-2, p 8-11. See 7 CFR 3560.159(a)(2), Rural Housing without Section 8, for examples of good cause. No examples specifically applicable to Rural Housing with Section 8 assistance appear in Handbook 4350.3.
Where no law or regulation requires the landlord to terminate a tenant’s lease under the circumstances, the landlord has discretion over whether to terminate the tenant’s lease. 24 CFR 5.852(a). 24 CFR 5.852(a) contains a list of considerations for the landlord’s decision-making process.
a.Rural Housing With Section 8 Assistance
The notice of termination must:
•be in writing. Handbook 4350.3, p 8-14. The notice must be in an accessible format for a person with a disability. Id.
•state the specific date of termination. Id.
•provide enough detail about the violations for the tenant to formulate a defense. Id.
•advise the tenant that if he or she remains in the unit on the date scheduled for termination, the owner may start the judicial process of eviction, and that the tenant may defend against the eviction in court. Id.
•inform the tenant that he or she has ten days in which to discuss the termination with the landlord. Id.
•advise the tenant that persons with disabilities are entitled to request reasonable accommodations for the hearing process. Id.
In a judicial proceeding to terminate a tenant’s lease, the landlord may not rely on reasons for termination that were not listed in the notice of termination. Handbook 4350.3, p 8-15. The landlord may, however, rely on grounds about which he or she was unaware at the time the notice was sent. Id.
A tenant may rely on state or local laws governing eviction when the state or local laws afford the tenant additional procedural rights, unless the federal law preempts other law. Handbook 4350.3, p 8-16.
b.Rural Housing Without Section 8 Assistance
The notice of termination must:
•be in writing. 7 CFR 3560.159(a).
•state the specific date of termination. 7 CFR 3560.159(b)(1).
•specifically reference the violations of the lease or occupancy rules that the landlord believes qualify as material noncompliance or as other good cause. 7 CFR 3560.159(b)(2).
•inform the tenant of the conditions under which the landlord may begin the judicial process of eviction. 7 CFR 3560.159(b)(3).
Before a tenant’s lease is terminated, the landlord must “give the tenant an opportunity to correct the violation.” 7 CFR 3560.159(a). Termination cannot occur unless the incidents leading to termination are documented and there is documentation that prior notice was given to the tenant describing the conduct that would result in termination. Id.
No requirements for the manner of service are found in the applicable regulations; therefore, the manner of serving termination notices to persons receiving Rural Housing with and without Section 8 assistance is governed by state and local laws. See HB 2-3560 Handbook, p 6-44; Handbook 4350.3, p 8-15.
•Time requirements for a notice of termination are governed by the terms of the lease and by state law. See HB 2-3560 Handbook, p 6-44; Handbook 4350.3, p 8-14.
1 The link to this resource was created using Perma.cc and directs the reader to an archived record of the page.
2 The link to this resource was created using Perma.cc and directs the reader to an archived record of the page. For more information, see http://www.rurdev.usda.gov/HMF_MFH.html.
3 Effective August 3, 2021, the U.S. Centers for Disease Control and Prevention issued an order temporarily halting residential evictions in counties with substantial or high transmission of COVID-19 to prevent the further spread of COVID-19, which was to remain in effect through October 3, 2021. See 86 Fed Reg 43244 (August 6, 2021). However, on August 26, 2021, the United States Supreme Court held that the CDC exceeded its authority in issuing the order and noted that “[i]f a federally imposed eviction moratorium is to continue, Congress must specifically authorize it.” Alabama Ass’n of Realtors v Dep’t of Health and Human Servs, 594 US ___, ___ (2021). For more information, please see the SCAO Memorandum, Eviction Moratorium, and Michigan Legal Help.
4 The 7 CFR 3560.159 citations apply to Section 515 Rural Housing without Section 8 assistance. Citations to 24 CFR 5.858, 24 CFR 5.859, 24 CFR 5.860, 24 CFR 5.861 apply to Section 515 Rural Housing with and without Section 8 assistance. See 7 CFR 3560.159(d); 24 CFR 884.216(b). Handbook 4350.3 citations apply to Section 515 Rural Housing with Section 8 assistance.