Can Mother Get Section 8 if Daughter Owns her Apartment?

 In Special Needs Planning
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Photo by Zachary Keimig on Unsplash

Question:

My understanding is that a Section 8 tenant can’t rent an apartment where the landlord is a relative. Is there a way around this? Here’s our fact pattern:

  • Dad and Mom never married (and thus have different last names); and lived separate lives.
  • They had daughter.
  • Dad owned a 2-family house. Daughter lives in one unit; and Mom lives in the other unit.
  • Mom has a Section 8 voucher and rented (using voucher) from Dad. This wasn’t an issue because Mom and Dad never married, and because they had different names (which might trigger a red flag).
  • Dad was dying; and wanted daughter to inherit house, BUT was afraid Mom would be ineligible for Section 8 if daughter inherited the house (since the landlord would then be a relative of the voucher holder, her mom), so Dad gave house to Dad’s sister. Dad’s sister (and her husband) placed the house into a simple trust naming daughter as the beneficiary in case they died.
  • Now, sister and her husband want to give it to daughter, but the same issue emerges: if they give it to daughter, then Mom will be ineligible to use the voucher with this house.

Any ideas on how the sister and her husband can pass the house on to the daughter without Mom losing her Section 8 voucher?

Response:

I looked into the US Department of Housing and Urban Development (HUD) Section 8 scenario that you present. I was able to confirm what you say that, generally, Section 8 does not allow for family members to be both the tenant and landlord of a Section 8 household. Based on the HUD definition, family members are relatives defined by blood or marriage. Specific examples of family members listed were parent, child, grandparent, grandchild, sister, and brother.

There are, however, exceptions to this rule. The housing authority overseeing this matter may approve the unit for lease if it determines that the  unit would provide reasonable accommodation for a family member with disabilities. So, you could check with the housing authority that serves the area where the daughter and her mother live whether they might approve an exception.

That said, I wonder what’s wrong with using the trust. Depending on how it’s drafted, it might provide the daughter with creditor protections, allow for the mother to continue to live in the house if something happened to the daughter, and even permit the daughter to act as trustee. The existing trust may be a bit too “simple,” but if the daughter and her aunt and uncle consult with a local special needs planning attorney, I’m sure they can come up with a trust that satisfies their goals.

You can find a qualified special needs planning attorney at the website for the Academy of Special Needs Planners.

 

Related Articles:

Special Needs Trusts and Subsidized Housing

Section 8 and SNTs – Stretching Out the Dollars for Housing

New Guide Helps in Navigating the Section 8 Maze

How Special Needs Trusts Affect Eligibility for Housing Assistance

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