HUD grants vacancy claims flexibility for COVID-19

Regulation | July 08, 2020 | by Juliana Bilowich, Juliana Bilowich

HUD will compensate owners for delayed unit-readiness during the health crisis; LeadingAge welcomes the ability for providers to prioritize health and safety while moving residents in to HUD-assisted housing.

In response to requests by LeadingAge members and other housing providers across the country, HUD has issued new flexibility for turning over units in affordable housing communities during the health crisis. The temporary and retroactive flexibility allows owners of senior housing communities, as well as Section 8 and 811 properties, to prioritize the health of residents and staff over financial losses by delaying unit readiness if necessary.

Prioritizing Health of Staff and Residents

The HUD memo, titled “Processing of Special Claims for Vacancy During the COVID-19 Pandemic,” temporarily modifies the start date for vacancy claims filed by a HUD-assisted multifamily housing community to accommodate for delays in turning vacant units as a result of COVID-19. Specifically, housing providers can file a vacancy claim starting from a resident’s move-out date, as opposed to the ready-for-occupancy date of that unit.

Instances where preparation of the unit for occupancy was prevented to due COVID-19 include, but are not limited to, state and local “stay-at-home” orders that may prevent staff from showing units to prospective residents and meeting eligible applicants to process move-in documentation. Marketing requiring remain intact for HUD-assisted housing communities making use of the unit readiness compensation flexibility.

Temporary and Retroactive Special Claims Flexibility

Issued on July 6th, the memo provides instructions for properties affected by COVID-19 from the period of March 27th, 2020 through September 30, 2020; the flexibility applies to regular vacancy claims and claims for properties undergoing a RAD conversion.

Using the additional window now eligible for vacancy compensation, housing providers can avoid unnecessary health risks while preparing the unit for a new tenant. The agency will continue to accept vacancy claims for only a total of 60 days, including the additional window of time between move-out and unit readiness. Properties for whom a claim has already been processed for the covered period can submit a supplemental vacancy claim for the gap period of days added, but the total coverage period still cannot exceed 60 days, and no overlap in days can be claimed.

Justifying COVID-19 Impact

In order to make use of the new flexibility, owners can use the special claims forms for regular vacancies but will use the day after the prior tenant move-out date to calculate the loss payment, for no longer than 60 days. The memo asks owners to mark the top of the form “COVID-19” so that field office staff can appropriately apply the new flexibility.

For supporting documentation, owners will not need to submit documents related to unit readiness; however, owners will have to certify that COVID-19 has impeded efforts to fill the vacancy and provide justification for each unit explaining the vacancy as a result of COVID-19. Owners will also continue to certify that property marketing is compliant under the Affirmative Fair Housing Marketing Plan.

The CARES Act of March 27th, 2020 provided relief funds for HUD communities experiencing financial hardship resulting from COVID-19, including decreases in tenant rent contributions and extended vacancy periods. LeadingAge has asked HUD for additional clarification on the level of justification needed to explain the vacancy resulting from COVID-19.