Opinion ID: 2191578
Heading Depth: 1
Heading Rank: 4

Heading: HUD Regulations

Text: Wittrock argues that the mandatory monthly charges for cable television and garage are categorical violations of HUD's Section 8 New Construction program, and HUD had never authorized the charges. Trial court found that Company had proven by a preponderance of the evidence that it had complied with the federal regulations regarding Wittrock's lease and received the necessary approval. Trial court's specific finding regarding this issue is as follows: Defendant's income was such that she was eligible for subsidized housing through the Department of Housing and Urban Development. Therefore, the lease agreement signed by the Defendant in this matter was approved by the Department of Housing and Urban Development and by Sioux Falls Housing and Redevelopment Commission. We therefore look to the record to determine whether the evidence supports this finding. Tramp, supra . Company argues that the form of the lease it used contained the garage and cable charges and was approved by HUD, thus, it complied with federal regulations. The HUD Handbook sets out various administrative requirements to ensure conformity with federal law. The HUD Handbook specifically states: Fees for parking spaces, connection to a community television antenna, and other services must be optional, and the type and amount of the fee must be approved in writing by HUD. (Emphasis added.) HUD Handbook 4350.3, page 4-6, ¶ 4-12. The evidence presented at trial reflects that the lease as drafted in 1984 was approved by HUD. This lease was merely a form lease and thus contained many blanks where specifics were filled in later. While this lease contained a blank for Parking, no amount was reflected for the monthly parking charge. Thus, Company added the $80 per month garage charge and the $14 monthly cable charge sometime after 1984, and there was no evidence in the record disclosing a written approval from HUD or SFH of the garage or cable television charges contained in the lease. The record is nebulous as to whether approval of the lease had to come from HUD or SFH through its contractual arrangement with HUD. A witness from Sioux Falls Housing and the attorney who drafted the lease both testified that, while they believed written approval was given, neither of them had any record of such approval from either HUD or SFH in their files. Further, the record contains a June 26, 1991, letter from a HUD section chief asking specifically that SFH: Please ensure that the owner/manager [of Eagles Nest] revises the lease to conform with the model lease.... Any reference to garage charge or garage rental must be optional, not mandatory. (Emphasis in original.) Thus, since HUD informed SFH that the lease was not in compliance with its regulations, it can logically be concluded that HUD did not approve this mandatory charge in Company's lease. It is also clear from a review of the lease that the charges were mandatory, not optional, and therefore in direct violation of HUD rules. Accordingly, in our view, the evidence does not tend to support trial court's finding that the lease was approved and is, therefore, clearly erroneous. Tramp, supra ; Bachand, supra . Even in the unlikely event the lease was approved, we conclude the additional charges in the lease violate federal law and are therefore void. When Congress passed the United States Housing Act of 1937, it specifically limited the tenant's contribution to monthly rent as follows: Except as provided in paragraph (2), a family shall pay as rent for a dwelling unit assisted under this Act (other than a family assisted under section 8( o ) [42 USCS § 1437f( o )]) the highest of the following amounts, rounded to the nearest dollar: (A) 30 per centum of the family's monthly adjusted income; (B) 10 per centum of the family's monthly income; or (C) if the family is receiving payments for welfare assistance from a public agency and a part of such payments, adjusted in accordance with the family's actual housing costs, is specifically designated by such agency to meet the family's housing costs, the portion of such payments which is so designated. 42 U.S.C.A. § 1437a(a)(1). While Congress failed to specifically define what constitutes rent, HUD provides its own definition for Fair Market Rents to assist in its rent determinations in various housing market areas. HUD defines Fair Market Rent as follows: HUD's determination of the rents, including utilities (except telephone), ranges and refrigerators, parking, and all maintenance, management and other essential housing services, which would be required to obtain, in a particular market area, privately developed and owned, newly constructed rental housing of modest design with suitable amenities. (Emphasis added.) 24 CFR §§ 880.201, 880.203. Thus it is clear HUD's definition of rent is broad and would include charges such as the garage and cable charges, which Company imposed upon Wittrock in addition to her apartment rent. Applying the federal statutes and regulations then, Wittrock's rent payment, as calculated by HUD, was accurate pursuant to 42 U.S.C.A. § 1437a(a)(1)(B); Ten percent of her monthly income ($330/month) for a rent payment of $33 per month. When considering the garage and cable television payments on top of the $33 per month apartment rent, Wittrock was actually paying roughly 38% of her monthly income to live in Eagles Nest, which clearly violates 42 U.S.C.A. § 1437a(a)(1), and the federal regulations. Such a result is not justified by the evidence or the law. Congress has declared it the policy of the United States to promote the general welfare of the Nation by employing its funds and credit ... to assist the several States and their political subdivisions to remedy the unsafe and unsanitary housing conditions and the acute shortage of decent, safe, and sanitary dwellings for families of lower income[.] 42 U.S.C.A. § 1437. It is indeed unfortunate that some individuals would ignore this policy and place those who are least able to help themselves in a position to be taken advantage of. In light of the amount of federal support in this housing program and the clear policy underlying the law, we cannot deem it an appropriate judicial determination to evict this mother and her three small children onto the streets. Wittrock additionally makes a claim for damages, claiming she should be repaid for all the illegal garage and television charges which Company forced her to pay. We conclude, however, that since Wittrock used both the garage and cable television until June, 1991, she is not entitled to repayment for those charges. She accepted the benefit of these services, and is not entitled to receive them free of charge. Ward v. Melby, 82 S.D. 132, 142 N.W.2d 526 (1966); Hofer v. Bon Homme Hutterian Brethren, Inc., 79 S.D. 150, 109 N.W.2d 258 (1961). In light of this conclusion, the trial court will not be required to review this damage claim on remand.