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March 15, 2011: Ninth Circuit Upholds Tenants’ Right to Remain After Owner Opt-Out

In July 2008, the owner of Park Village Apartments, finally gave legally sufficient notice to opt out of the project-based contract. In the federally required notice, the owner certified that he would honor the tenants’ right to remain in their homes with enhanced vouchers after termination of the project-based subsidies. However, when attempting to increase the rent to market-rate, the owner refused to honor his prior certification.

Park Village Apartments, a rental housing community for senior citizens, was developed in 1978 with federal project-based Section 8 rental subsidies. In July 2008, the owner finally gave legally sufficient notice to opt out of the project-based contract, to be effective in July 2009. In the federally required notice, the owner certified that, after termination of the project-based subsidies, he would honor the tenants’ right to remain in their homes with enhanced vouchers. However, when attempting to increase the rent to market-rate, the owner refused to honor his prior certification.

Represented by Bay Area Legal Aid and the National Housing Law Project, the tenants obtained from the district court a preliminary injunction enforcing their federal statutory right to remain with enhanced vouchers, which prevented rent increases and evictions, and required the owner to take the steps necessary to participate in the enhanced voucher program.

On appeal, the Ninth Circuit decision agreed with the district court and held that the tenants have an enforceable statutory right to remain in their homes at their current rent levels. In reaching this conclusion, the court relied on other federal cases on similar issues, the statutory scheme, and the intent of Congress. This ruling aligns the Ninth Circuit with every other court that has considered this question, as they all found a statutory right to remain.

Although affirming the tenants’ right to remain at Section 8 rent levels, the Court vacated the final part of the injunction that required the owner to enter into contracts with the local housing authority, holding that the tenants failed make the necessary showing of irreparable harm required for a mandatory injunction. This part of the ruling prompted a dissent from Judge Fletcher, who would have affirmed the district court’s preliminary injunction in full. It’s worth noting that, in light of the now well-established right to remain, few owners would decline to execute contracts to receive the enhanced voucher subsidy payments.

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