Finding Text
Finding No. 2024-002; Federal Assistance Listing Number 14.157
Criteria
In accordance with HUD Handbook 4350.3, Occupancy Requirements of Subsidized Multifamily
Housing Programs, within 30 days after the move-out date (or shorter time if required by state
and/or local laws), management must either: refund the full security deposit plus accrued interest to
a tenant that does not owe any amounts under the lease; or provide the tenant with an itemized list
of any unpaid rent, damages to the unit, and an estimated cost for repair, along with a statement of
the tenant's rights under state and local laws.
Condition
In connection with the procedures applied to a sample of 1 tenant that moved out of the project
during the year, we noted 1 instance where management failed to refund the tenant security deposit
and/or provide the tenant with an itemized list of charges deducted from the deposit within thirty
days after the move-out date.
Cause
Management's policies with respect to move outs and security deposit refunds were not consistently
followed.
Effect or Potential Effect
Management failed to comply with the HUD occupancy requirement to timely refund the tenant
security deposits or to provide the tenant with a list of charges. The Property owes the tenant
security deposit back to the tenant.
Questioned Costs
N/A
Context
One tenant did not have their security deposit refund returned timely.
Identification as a Repeat Finding
No
Recommendation
Management should establish procedures and monitor compliance with those procedures to insure
that move out inspections are performed timely, security deposits are returned timely and that
tenant lease files are properly maintained in accordance with the requirements of HUD Handbook
4350.3, Occupancy Requirements of Subsidized Multifamily Housing Program.
Auditor Noncompliance Code: M - Security Deposits for REAC
Finding Resolution Status: Unresolved
Views of Responsible Officials and Planned Corrective Actions
REACH has policies in place to ensure security deposits are returned in a timely manner. Staffing
shortages at the property had an impact on the timely return of security deposits. As new staff are
brought onboard training is provided and management will continue to coordinate and provide
assistance to on-site staff to ensure that the security deposits are being returned or an itemized list
of charges is provided and properties are in compliance.