Victory for Subsidized Housing Vouchers in Arizona

In September 2018, the subsidized housing community in Arizona began to experience an exodus of landlord participation in housing voucher assistance programs (commonly called Section 8 programs) following an appellate ruling that called into question a landlord’s ability to enforce some provisions of the lease and Housing Assistance Provider (HAP) Agreement.  PART C of HAP Contract: Tenancy Addendum specifically states in subsection 5 that “The family is responsible for paying the owner any portion of rent to owner that is not covered by the PHA housing assistance payment.” Further, Sub-section 8 addresses when and how a landlord may terminate the tenancy and states that “other good cause for termination of tenancy must be something the family did or failed to do.”

At issue was the interpretation of the Arizona legislature’s intent when it drafted and passed what is commonly known as the Partial Payment Rule.  ARS§ 33-1371, part of the Arizona Residential Landlord and Tenant Act, states that a landlord waives their right to evict a tenant during any month that the landlord accepts a portion of the rent from the tenant without the execution of a non-waiver agreement.  That agreement is usually called a Promise to Pay/Partial Payment Non-Waiver and must include an acknowledgement by the tenant that the landlord is not waiving their right to file an eviction if the tenant does not fully perform the terms of the payment agreement.   Also at issue and based upon a similar ruling by that same appellate judge, was whether the landlord lost their right to evict the tenant for all breaches of the lease after the landlord accepts any money from the HAP provider.

For decades, the general consensus of the governmental agencies that issue the HAP agreements and the landlords that agree to participate in this program was that there was no conflict between the HAP language and ARS§ 33-1371.  This commonly held believe was based on the fact that because the landlord did not have the right to demand any portion of the HAP payment from the tenant and the partial payment statute only envisioned acceptance of rent money from the tenant that differs from that tenant’s obligations, the landlord was not waiving their rights to demand the tenant pay their portion or otherwise perform all duties under the lease even when they accepted the payment made by the subsidizing agency.

Many landlords began to opt out of participating in the voucher program because they had no way to reject the auto-deposit made by the HAP provider and therefore, based upon that new ruling, were essentially agreeing to rent the premises for an amount substantially less and couldn’t evict for other breaches of the lease.  It is common knowledge that Arizona already suffers from a shortage of affordable housing options and one way to combat that issue was taken by the state legislature when they courageously took up a bill to erase any question about the intent of the language in ARS§ 33-1371.  House bill 2358, signed into law by the Governor, clarified the legislative intent behind this law and now includes specific language that the acceptance of any housing assistance payment did not constitute a waiver of the landlord’s right to evict the tenant for any breach of the lease.  It is the hope of this author that this clarification of the law will increase affordable housing options in Arizona.

Denise Holiday is an attorney with the law firm of Hull, Holliday & Holliday, PLC, engaged in landlord/tenant practice since 1996. Ms. Holiday serves as Justice of the Peace Judge Pro Tem and Superior Court Judge Pro Tem, in addition to being a certified instructor for the Arizona Department of Real Estate. The phone number to reach Ms. Holiday is (602) 230-0088.