Finding Text
Federal Program: Supportive Housing for the Elderly (AL #14.157) Federal Award: Section 202 Capital Advance / Project Rental Assistance Payments Federal Agency: U.S. Department of Housing and Urban Development Criteria: In accordance with HUD Handbook 4350.3 Rev-1, Chapter 6, Owners of HUD multifamily assistance housing properties must return tenant security deposits within 30 days after the move-out date or shorter time if required by state and/or local laws. According to New York law, tenant security deposits must be returned within 14 days of the move-out date. Condition: During the review of tenant files for the year ended September 30, 2025, the tenant security deposit for the one move-out testing selection was not returned within 14 days as required by New York State law. Cause: Staff turnover contributed to the delay in the return of the security deposit. Effect: The noncompliance may expose the Project to tenant claims, statutory penalties and legal costs and could result in liabilities requiring recognition or disclosure in the financial statements. Additionally, it may lead to regulatory consequences affecting operations. Recommendation: Management should establish and implement procedures to ensure timely return of tenant security deposits in the event of staff turnover. Management’s Views and Corrective Action Plan: Management agrees with the finding and will implement procedures to ensure timely return of tenant security deposits.