Finding Text
Finding No. 2025-002 - N - Special Tests and Provisions for Uniform Guidance - Significant Deficiency Name of Federal Agency: Department of Housing and Urban Development Federal Program Name: Supportive Housing for the Elderly (Section 202) Assistance Listing Number: 14.157 Federal Award Identification Number and Year: 126EE044, program year is 2024. 126-33044, program year is 2005. Name of Pass-through Entity (if applicable): Not Applicable 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 one tenant that moved out of the project during the year, we noted one 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. Context: One move out tenant of one tested did not have their security deposit refund returned timely. Auditor Noncompliance Code: M-Security deposits for REAC filing Identification as a Repeat Finding: No Questioned Costs: N/A Recommendation: Management should establish procedures and monitor compliance with those procedures to ensure 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 Programs. Finding Resolution Status: Unresolved Views of Responsible Officials and Planned Corrective Actions: REACH has policies in place to return security deposits in a timely manner but was delayed in issuing the security deposit refund for this unit due to staffing issues. In 2026, property management will be outsourced to a third-party management company to address any outstanding compliance issues.