Section 8 Housing Rules on Overpayment

Through the Section 8 federal housing program, low-income households can qualify for assistance with rental costs. Program eligibility depends on household income earnings, which requires public housing agencies to keep track of household earnings on an ongoing basis. Section 8 overpayments happen when tenants fail to comply with the rules for reporting household income. Property owners can also receive overpayments in cases where contract violations occur.

The Section 8 program uses housing subsidies or vouchers to reduce rental costs for eligible individuals and families. Eligible applicants receive vouchers, which function as discounts on their monthly rental costs. The Section 8 program also subsidizes project-based housing, such as apartment complexes, through housing contracts arranged with property owners. In effect, housing subsidies can pay up to 70 percent of a household’s combined rent and utility costs based on the household’s yearly income, according to NMLegalAid.org. Public housing agencies manage Section 8 programs and issue subsidy payments directly to landlords or property owners.

To qualify for Section 8 assistance, a household must fall within certain income requirements, which vary depending on where a person or family lives. Eligible households must fall within very low, low or moderate income levels based on an area’s median income level. A very low income level equals no more than 50 percent of an area’s median level. A low income level equals no more than 80 percent of an area’s median income, while moderate income levels equal no more than 95 percent of an area’s median income. These income requirements form the basis for the subsidy amounts each household receives. Overpayments—and under-payments—result when tenants and landlords violate income and housing requirements.

Once an applicant becomes eligible for a tenant-based Section 8 program, voucher subsidy amounts correspond to his reported income earnings. A subsidy overpayment occurs in cases where tenants become eligible for another benefit entitlement or receive wage increases and neglect to notify their public housing agency. Rules for overpayments require tenants to pay back overpayment amounts through a repayment plan set up by their housing agency. In some cases, tenants may become ineligible for further assistance for failure to report changes in income. Section 8 rules also allow tenants to dispute overpayment charges through an informal review hearing.

For both tenant- and project-based subsidy programs, landlords and property owners must comply with the terms of the Section 8 contract agreement in order to receive subsidy payments. Landlords must abide by certain housing quality standards, such as having working utilities within a home or meeting building code requirements. Subsidy overpayments can occur when landlords fail to comply with the terms of a contract agreement after being notified of existing violations. Section 8 rules for overpayments to landlord entitle public housing agencies to recover any overpayment amounts. Housing agencies may opt to suspend future subsidy payments, reduce future payments or deduct overpayment amounts from other contract agreements held by a landlord. In some cases, public housing agencies may even terminate a landlord’s housing contract for failure to payback overpayment amounts.