On July 6 HUD issued important guidance in regards to special claims for vacancy during the COVID-19 pandemic.
Under standard HUD policy for processing special claims for vacancies owners can be compensated for vacancy losses for 60 days. The existing HUD guidance for properties undertaking initial rent-up was applicable only to Section 202 and 811 projects, as in recent years these were the only newly occupied projects being developed with HUD rental assistance. This memo expands the applicability to properties being developed under the Rental Assistance Demonstration ("RAD") program. For properties undergoing initial rent-up the 60 days starts as of the date of the permission to occupy the unit or the effective date of the contract, whichever is later.
In regards to vacancy losses after rent-up (regular vacancy) the 60 days usually start as of the "ready for occupancy" date. In this memo HUD is providing for a different start date to accommodate the circumstances which have arisen because of the pandemic. HUD states that they are aware that impediments resulting from state and local "stay-at-home" orders include, but are not limited to delays in units being prepared for occupancy, staff showing units to prospective residents, or meeting eligible applicants to process move-in documentation. So, through September 30 RAD properties will be eligible for initial rent-up vacancy payments and all properties that receive HUD rental assistance (Section 8, Section 202/811 PRAC and Project Assistance Program (PACs)) will be eligible for vacancy payments for 60 days starting from the prior tenant's move-out date as opposed to the ready for occupancy date.
The process for submitting special claims for vacancies related to COVID-19 are also slightly altered; click here to read the detail.