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
In connection with our lease file testing one out of one move-out tenant files tested did not
maintain a move out inspection on file nor provide written notice of any deductions from the
tenant's security deposit timely.
Identification as a Repeat Finding
Yes: 2023-003
Recommendation
Management should change its policies and procedures related to refunding of tenant security
deposits to comply with the thirty-day timeline required by HUD regulations.
Auditor Noncompliance Code: M - Security Deposits for REAC
Finding Resolution Status: Resolved
Views of Responsible Officials and Planned Corrective Actions:
REACH has policies in place to ensure that the return of tenant security deposits are done in a
timely manner. Staffing shortages at the Property had an impact on the timeliness of the return
of security deposits. As new staff are brought onboard training is provided and training is
provided to on-site staff to ensure that the return of security deposits are being completed and
properties are in compliance. Management will continue to coordinate and provide assistance to
on-site staff to ensure that the properties are in compliance.