Hidden Meadows Townhomes v. Ross , 2012 Ohio 6017 ( 2012 )

[Cite as Hidden Meadows Townhomes v. Ross, 2012-Ohio-6017.]
IN THE COURT OF APPEALS
FIRST APPELLATE DISTRICT OF OHIO
HAMILTON COUNTY, OHIO
HIDDEN MEADOWS TOWNHOMES, : APPEAL NO. C-120045
TRIAL NO. 11CV-14876
Plaintiff-Appellee, :
vs. : O P I N I O N.
SHAREE ROSS, :
Defendant-Appellant. :
Civil Appeal From: Hamilton County Municipal Court
Judgment Appealed from is: Reversed and Cause Remanded with Instructions
Date of Judgment Entry on Appeal: December 21, 2012
David Donnett, for Plaintiff-Appellee,
Legal Aid Society of Southwest Ohio, LLC, Jessica Powell, Noel Morgan, and Molly
Russell, for Defendant-Appellant.
Please note: This case has been removed from the accelerated calendar.
OHIO FIRST DISTRICT COURT OF APPEALS
C UNNINGHAM , Judge.
{¶1} Defendant-appellant Sharee Ross appeals from the judgment of the
Hamilton County Municipal Court granting a writ of restitution and money damages
to plaintiff-appellee Hidden Meadows Townhomes (“Hidden Meadows”). Because
Hidden Meadows improperly removed Ross’s subsidy and charged her market rent,
we determine that the eviction based on her failure to pay the market rent was
improper and that the judgment in favor of Hidden Meadows must be reversed.
Background Information
{¶2} Hidden Meadows, owner/landlord of the Hidden Meadows
Apartments, contracted with the Department of Housing and Urban Development
(HUD) to participate in federally subsidized, project-based section 8 housing for
eligible tenants. Under this program, eligible tenants pay no more than 30 percent
of their income in rent (“tenant rent”), and HUD pays the balance (“the assistance
payment”) of the market/contract rent owed directly to Hidden Meadows.
{¶3} In April 2009, Ross entered into an agreement to rent a unit at
Hidden Meadows Apartments. The agreement, based on the HUD model lease,
required Ross to pay rent on the first day of each month, but because of her financial
and familial situation, HUD made assistance payments on her behalf for the entire
amount of rent owed.
{¶4} Because the goal of subsidized housing is to ensure that assisted
tenants pay rents equal to their ability to pay, HUD required Hidden Meadows, with
Ross’s cooperation, to conduct a recertification of Ross’s family income and
composition at least once a year.
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{¶5} The recertification process involves nine steps that are set forth in
Chapter 7 of the HUD Multifamily Occupancy Handbook (“the handbook”).
According to the handbook, the owner/landlord and tenant should complete the
annual recertification by the tenant’s recertification anniversary date, which is the
first day of the month in which the tenant moved into the property. HUD will
terminate assistance payments if a new recertification is not submitted within 15
months of the certification anniversary date.
{¶6} As set forth in Chapter 7 of the handbook, an owner/landlord
participating in a project-based section 8 housing program must give a participating
tenant a series of written notices informing her of her obligation to report to the
property’s management office for a recertification interview. During the interview,
the tenant must provide requested information and then sign consent forms so that
the owner/landlord can verify the tenant’s information. These notices must also
state the applicable reporting deadlines and the consequences for missing the
deadlines.
{¶7} For example, in the “First Reminder Notice,” the owner/landlord
must inform the tenant that if she does not participate in the recertification interview
by the 10th day of the 11th month after the last annual recertification, the
owner/landlord will process the recertification but the owner/landlord will not
provide the tenant with 30 days notice of any resulting tenant rent increase, which is
otherwise required under the HUD model lease. The owner/landlord must also
remind the tenant that her failure to participate in the recertification interview
before her recertification anniversary date will result in the loss of assistance and the
responsibility to pay the full market/contract rent.
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{¶8} The second and third reminder notices, if needed, must include the
same information as the first reminder notice. The third reminder notice must also
(1) specify the amount of rent the tenant will be required to pay if she fails to provide
the “required recertification information” by the recertification anniversary date and
(2) notify the tenant that “this rent increase will be made without additional notice.”
{¶9} The owner/landlord’s duty to provide this series of reminder notices
and the tenant’s duty to comply with them is set forth in paragraph 15 of the HUD
model lease.
{¶10} After the recertification interview takes place (step 4), the
owner/landlord must verify the tenant’s information (step 5) and enter the required
data into a computer program designed to calculate the tenant total payment (utility
payments plus rent), tenant rent, and the HUD assistance payment (step 6).
{¶11} Next, the owner/landlord is to notify the tenant of any change in the
tenant total payment or tenant rent resulting from the recertification (step 7). Under
the terms of the lease, the owner/landlord must provide this notice 30 days before
any increase can take effect, unless the tenant participates in the recertification
interview beyond the 10th day of the 11th month after the last recertification.
{¶12} Exhibit 7-6 of the handbook is a “sample model form” titled
“Notification of Rent Increase Resulting from Recertification Processing.” The
owner/landlord is to give the tenant a similar notice that includes any increase in the
tenant rent.
{¶13} Step 8 of the recertification process involves the document at issue in
this case, the HUD-50059. This is a form the owner/landlord generates after
verifying the tenant’s information and entering that data into software designed to
calculate the tenant rent payment and the HUD assistance payment. The HUD
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handbook specifies that the owner/landlord must “[o]btain the original signature” of
the tenant on the HUD-50059. By signing the form, the tenant certifies that the
information on the form is accurate.
{¶14} The handbook does not provide a sample form exclusively for step 8,
but the sample model form for step 7, Exhibit 7-6, includes the following relevant
language: “Please visit the site office within 7 days of receipt of this notice to sign
and receive a copy of the **HUD-50059**.”
{¶15} The owner/landlord must also certify the accuracy of the information
on the HUD-50059 and that it complied with HUD’s procedures before transmitting
an electronic file containing the recalculations to the contract administrator or HUD.
After transmitting the file, the owner/landlord must provide the tenant with the
initial notice for the following year’s annual recertification and obtain the tenant’s
signature on that form. (step 9 and step 1 of the following year’s recertification
process.)
{¶16} Recognizing that delays may occur in the recertification process,
Chapter 7, Section 8 of the HUD handbook specifies the timing of changes in the
tenant rent and assistance payment (as well as the tenant total payment, which is not
at issue here) when the recertification process is delayed by certain acts or omissions
by the owner/landlord or tenant. One of these provisions allows that “[i]n all cases
where the tenant reports for recertification after the 10th day of the 11th month after
the last annual recertification but before the recertification anniversary date * * *, all
adjustments in assistance payments and the tenant’s rent are made retroactive to the
recertification anniversary date.”
{¶17} None of the provisions in Chapter 7, Section 8 specifically address the
issue in this case: a delay or omission related to the signing of the HUD-50059.
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2011 Recertification and Eviction Action
{¶18} Hidden Meadows gave Ross the necessary reminder notices described
in steps 1 through 4 of the recertification process. The third reminder notice
instructed Ross to meet with Greg Ward, Hidden Meadows’s property manager, to
supply the information required for Hidden Meadows to complete a review of her
“income and family composition.” Then it provided:
If you meet with Greg Ward and supply all required
information, we will not terminate your assistance unless your
income shows you are no longer eligible for assistance. If you report
to the Rental Office after 02/10/2011, we will process your
recertification but you will not receive a 30 days notice of any
resulting rent increase per HUD regulations.
If you do not respond before 04/01/2011, paragraph 15
of your lease gives us the right to terminate your assistance
and charge you the contract/market rate effective
04/01/2011.
Please remember, if you do not respond to this final notice,
your Section 8 assistance will be terminated and your rent increased
to $773.00. (Emphasis in original).
{¶19} Ross responded to the reminder notices by attending her
recertification interview and providing all the information and signatures that
Hidden Meadows required to calculate her rent as set forth in steps 5 and 6. She did
not respond by February 10, in time to ensure that her rent payment would not
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OHIO FIRST DISTRICT COURT OF APPEALS
increase without at least 30 days notice from her owner/landlord, but she did
respond before the end of February, well before her April 1 anniversary date.
{¶20} On March 29, 2011, Ward sent Ross a typed letter, captioned “Lease
Amendment,” which informed Ross that she owed rent of $0, effective April 1, 2011
(her recertification anniversary date), based upon the recently completed review of
her income and family composition, and that she was not due for recertification until
April 1, 2012. Ward also informed her that he had attached a copy of the “Form
50059 Owner’s Certification of Compliance with HUD’s Tenant Eligibility and Rent
Procedures and applicable worksheet(s)” and that she “should substitute these forms
in place of the previous 50059 and worksheet(s), which are attached to your lease.”
{¶21} Finally, in this letter Ward again informed Ross that she would next
recertify on 04/01/2012, that she would receive a reminder notice 120 days before
then, that if she did not respond to the reminder notice by 02/10/2012, then the
owner/landlord could raise her rent without giving 30 days notice, as provided in the
lease, and that she was to sign on the bottom of the notice to acknowledge her receipt
of this information. Underneath this text was a line for Ross’s signature, but the
signature line was crossed out.
{¶22} Ward testified that he wrote a note on the top right corner of the
notice that provided: “Please come to the office to sign your annual recertification
paperwork.” Ward sent a second copy of the letter on April 12, 2011, after Ross
failed to respond to the earlier letter. Nothing in either letter expressly informed
Ross that the recertification was incomplete without her signature on the HUD-
50059 or that her rent would increase to $7101 on May 1, 2011. To the contrary, the
two notices informed her that her portion of the rent would remain at $0. And the
1 Apparently the contract/market rent for the unit was reduced to $710 from $783.
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OHIO FIRST DISTRICT COURT OF APPEALS
only reference to the HUD-50059 was that a copy had been enclosed for Ross to
“substitute” in place of the “previous [year’s] 50059 * * * attached to [her] lease.”
{¶23} Ross testified at trial that the March 29 and April 12 letters were
confusing but she believed that her recertification was completed.
{¶24} On May 6, Hidden Meadows notified Ross that her tenancy was being
terminated for material noncompliance with the lease. Hidden Meadows explained:
“Tenant has failed to complete the annual recertification process. Rental assistance
was terminated on 4/30/11. Resident now owes market rent, $710 effective 5/1/11.
Resident has failed to pay May rent $710.”
{¶25} After receiving the notice, Ross immediately contacted Hidden
Meadows. She signed the HUD-50059 and became recertified on May 20, with her
anniversary date remaining on April 1. Ross’s tenant rent contribution remained at
$0.
{¶26} Ross did not vacate or pay $710 to Hidden Meadows. The record does
not demonstrate whether HUD paid or offered to pay the rental assistance on her
behalf.
{¶27} On May 27, 2011, Hidden Meadows pursued a forcible entry and
detainer action seeking possession of the premises for failure to pay rent and
damages for back rent.
{¶28} At trial, Ross argued that Hidden Meadows’s termination of her
subsidy and her tenancy was in violation of the HUD model lease and handbook.
{¶29} The trial court found that Ross, who had completed the recertification
process multiple years, became liable for market rent in May 2011 and failed to pay
it. After entering judgment for Hidden Meadows, which included issuing a writ of
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OHIO FIRST DISTRICT COURT OF APPEALS
restitution and awarding $710 in damages, the court then stayed its judgment
pending this appeal.
Assignments of Error
{¶30} On appeal, Ross asserts in three related assignments of error that the
trial court erred in granting Hidden Meadows a writ of restitution because Hidden
Meadows did not comply with the applicable rules in processing her recertification
and in terminating her subsidy.
{¶31} Ross identifies several alleged defects in Hidden Meadows’s
processing of her recertification. First, citing Exhibit 7-6, she contends that Hidden
Meadows did not provide her the HUD required notice to obtain her signature on the
HUD-50059. Next, she argues that in terminating her subsidy, Hidden Meadows
failed to provide her with the required notice that her rent would be raised to the
market rate on May 1, 2011. Relatedly, she argues that the penalties in paragraph 15
of the lease, which allowed her owner/landlord to terminate her assistance and
charge her the market rent on April 1, 2011, did not apply because she submitted her
recertification information before the April 1, 2011 deadline set forth in the reminder
notices that she received.
{¶32} Alternatively, she argues that even if Hidden Meadows had
administered the recertification process properly and increased the rent to the
market rate effective May 1 with adequate notice, the HUD handbook does not
authorize eviction once the tenant has reported for recertification.
{¶33} Hidden Meadows argues on appeal, as it did before the trial court,
that it provided Ross all necessary notices including her need to sign the HUD-
50059. It also broadly argues that Ross is attempting to apply rules and regulations
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OHIO FIRST DISTRICT COURT OF APPEALS
that concern other types of subsidized housing, but Hidden Meadows has not
provided any support for that argument.
Analysis
{¶34} In an action for forcible detainer and entry, the owner/landlord must
establish a prima facie case for restitution of the premises. See R.C. 1923.02;
Cincinnati Metro. Hous. Auth. v. Green, 41 Ohio App.3d 365, 370, 536 N.E.2d 1 (1st
Dist.1987). The burden then shifts to the tenant to establish an affirmative defense.
Green at 370.
Standard of Review
{¶35} Ross primarily contends that the trial court misinterpreted the
handbook requirements in entering judgment for Hidden Meadows. This is an issue
of law subject to plenary review. See Ohio Bell Tel. Co. v. Pub. Util. Comm., 64 Ohio
St.3d 145, 147, 593 N.E.2d 286 (1992).
Notice to Sign the HUD-50059
{¶36} Hidden Meadows maintains that it provided Ross sufficient notice to
sign the HUD-50059 and that it was justified in terminating her assistance for failing
to sign it by the end of April, because it provided her with the required notices
concerning the recertification interview as set forth in the handbook. We disagree.
{¶37} As the operator of federally subsidized housing, Hidden Meadows
had to comply with federal regulations governing the program,2 HUD’s multi-family
occupancy handbook, and HUD’s model lease.
{¶38} The HUD handbook required Hidden Valley to “obtain” Ross’s
signature on the HUD-50059 as step 8 in the recertification process. “Obtain”
2 The parties did not cite any specific federal regulations in the trial court or on appeal.
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OHIO FIRST DISTRICT COURT OF APPEALS
means “[t]o get hold of by effort.” Webster’s New International Dictionary 1682
(1959). Admittedly, the handbook and the lease do not focus the same attention on
this step of the recertification process as they do on the recertification interview. But
clearly the handbook contemplates that the owner/landlord notify the tenant of her
obligation to sign the form when it is available.
{¶39} We reject Hidden Meadows’s argument that Ross was not entitled to a
notification about the HUD-5009 similar to the one found in Exhibit 7-6 because
that particular form was intended only for a tenant who was entitled to 30 days
notice of a rent increase. We note that Ross waived her right to be notified 30 days
in advance for any rent increases occurring on April 1, 2011, as a result of her
participation in the interview after February 10. But nothing in the handbook or
lease suggests that she also waived her right to proper notification that her signature
was required on the HUD-50059 form.
{¶40} The model language in Exhibit 7-6 that Ross cites is an appropriate
way to obtain a tenant’s outstanding signature: it clearly informs the tenant of the
need to go to the rental office to sign the HUD-50059 within 7 days. In contrast,
Hidden Meadows’s notice informed her that her recertification was complete, and it
never mentioned that she needed to sign the HUD-50059, only that it was included
and that she should substitute it for the previous year’s form. Hidden Meadows
provided no evidence that the letter it sent to Ross on March 29 and April 1 was
based on a HUD model form, and nothing in the handbook suggests that it was.
{¶41} We hold that, as a matter of law, Hidden Meadows’s notice did not
properly inform Ross of her obligation to sign the HUD-50059 and, therefore,
Hidden Meadows did not satisfy its obligation to obtain Ross’s signature on the form.
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Notice to Terminate Assistance
{¶42} Relatedly, Hidden Meadows did not inform Ross that her failure to
sign the HUD-50059 before the end of April would result in the termination of her
assistance and the commencement of her obligation to pay $710 in rent effective May
1, 2011. Hidden Meadows argues that the three reminder notices it sent to Ross
satisfied the notice requirements of the lease and handbook. But those reminder
notices only referenced Ross’s obligation to attend her recertification interview
before her April 1 recertification anniversary date, and that her portion of the rent
would rise to the market rate on April 1, 2011, without additional notice, if she did
not fulfill her obligation with respect to the interview before then. It is undisputed
that Ross fulfilled these obligations.
{¶43} Thus, because Hidden Meadows did not provide Ross with adequate
notice to terminate her assistance effective May 1, 2011, for failure to sign the HUD-
50059, we conclude that it could not terminate her tenancy for failure to pay market
rent.
{¶44} Ross also argues that even if the increase in rent was appropriate, the
eviction was prohibited by section 7-8(D)(3)(f) of the handbook. This section
provides that “[t]he owner may not evict the tenant for failure to pay market rent
after the tenant reports for the [recertification] interview and the owner is processing
the certification.” We do not need to reach this issue, because we have determined
that Hidden Meadows’s increase in Ross’s “tenant rent” was not authorized.
Conclusion
{¶45} Hidden Meadows lacked the authority under the lease and the
handbook to raise Ross’s tenant rent contribution from $0 to $710 effective May 1,
2011, and to terminate her tenancy due to her failure to pay that rent, where Hidden
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OHIO FIRST DISTRICT COURT OF APPEALS
Meadows failed to properly notify her that she needed to sign the HUD-50059 and
that her failure to sign the form in April would result in the termination of her
assistance effective May 1, 2011. Thus, Hidden Meadows failed to demonstrate its
right to evict Ross, who subsequently recertified at her prior rate. Therefore, the trial
court erred by entering judgment in favor of Hidden Meadows in the action for
forcible entry and detainer and damages. Accordingly, we sustain the assignments of
error. We reverse the trial court’s judgment, and we remand for the trial court to
enter judgment in Ross’s favor.
Judgment reversed and cause remanded with instructions.
SUNDERMANN, P.J., and DINKELACKER, J., concur.
Please note:
The court has recorded its own entry on the date of the release of this opinion.
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