Full-Time Student Household Does Not Qualify for LIHTC Assistance

July 20, 2010
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According to the IRS, low-income housing tax credit (LIHTC) units comprised of full-time students (no one of whom can file a joint return) do not qualify as low-income units. If a property manager learns that one of his residents just became a full-time student, and every member in that household is also a full-time student, he can send the resident a letter of termination and ask the household to vacate the LIHTC unit.

That is what happened in a recent court case in which a LIHTC resident claimed that a site’s owners and management company discriminated against her right to housing because of her alleged disability, even though she did not specify what her disability was. The threats, she said, including threatening to evict her several times, failing to take action against another resident who allegedly assaulted her, and failing to take action against other residents whose children allegedly vandalized her car.

Although the assault took place in 2006, the resident failed to notify the property manager until a year and a half later, when she spoke to someone at the management firm about the incident. After the resident reported the neighbors’ children vandalized her car, the property manager requested her to provide a copy of the police report and arranged a meeting between the children’s parents and the resident, which the resident did not attend.

Regarding the eviction notices, the first was for failure to pay rent. The second occurred after the property management firm learned that the resident became a full-time student, which made all of the members of her household full-time students and ineligible to reside in the unit. The resident was sent a letter explaining that under LIHTC regulations:

… if a single applicant (or present tenant) or all applicants (or present tenants in a unit) are full-time students and not married, then that household is usually not eligible to resident in an LIHTC unit, unless it meets one or more of the student exemptions.

The resident did not qualify for any of the exemptions, but since she was more than 24 years old, she could qualify for Section 8 assistance. The manager met with the resident to discuss the termination notice, several options that would allow her to remain eligible for housing assistance, and set a deadline date by when she had to find a non-student roommate. After the resident failed to meet the deadline, she was sent a second notice to quit. In response, the resident filed another complaint with HUD.

The court ruled in favor of the owner and property manager because the resident could not prove that she suffered from a disability and the property manager had no knowledge of her alleged disability. In addition, the court concluded that the property management company did not interfere with the resident’s tenancy rights, even though she was served with notices to quit. The court concluded that there was no proof to support the resident’s claim of disability discrimination under the FHA, and granted a motion for summary judgment for the defendant [Herlandos McCree v. Lexington Village Apartments (3/11/2010)].

PRACTICAL POINT: There are several exemptions to the full-time student rule: at least one member of the household must receive assistance under Title IV of the Social Security Act; at least one member must be enrolled in a job training program receiving assistance under the Work Force Investment Act or another similar federal, state, or local program; the household must include at least one single parent with minor children; all members are the household are married and can file joint tax returns; or at least one member of the household has exited the foster care system.