Does your housing cooperative have a member selection policy (TSP)?

By Randall A. Pentiuk, Esq.

Most housing cooperatives have a tenant selection policy, which helps ensure that tenants are selected for occupancy in accordance with either HUD requirements or state, federal and local laws.  If your housing cooperative is regulated by HUD, then there are specific guidelines you must follow in order to continue to receive government assistance.  If your housing cooperative is not regulated by HUD, then you can use these ideas to create your own policies in accordance with applicable state, federal and local laws as well as the cooperative’s established management policies.

For housing cooperatives regulated by HUD, it is important to ensure your policy strictly adheres to the Fair Housing Act and the Civil Rights Act of 1968 as amended by the Fair Housing Amendments Act of 1988.  Having a solid tenant selection policy will protect your cooperative from potential litigation and lawsuits from members or would-be members.

For example, HUD requires that every tenant selection policy should specify who is eligible, which means whether the property is designated for a special population such as the elderly, disabled, or students enrolled at an institution of higher education.  In addition, HUD requires housing cooperatives to describe how various citizenship and immigration requirements are implemented, as well as provisions for providing social security numbers.  Finally, HUD requires a tenant selection policy to specify income limits for potential members, whether the property is very low income or low income.

For housing cooperatives in general, a good tenant selection policy will specifically mention that no applicant shall be discriminated against or denied housing because of race, religion, color, sex, race by association, familial status, national origin, ancestry, or disability.  In addition, there have been updates in the law regarding the sexual orientation of tenants, and this should also be a part of the tenant selection policy.  It should also take into consideration whether there is an elderly restriction or preference in the admission of tenants.  Any preference must also list supporting documentation to prevent allegations of discrimination in the selection of tenants.

For housing cooperatives that are not regulated by HUD, some other qualifying criteria to keep in mind includes:

  • Whether the applicant has an acceptable rental or mortgage history
  • Whether the applicant has an acceptable credit rating or history
  • How many persons will be living in the household in comparison with the member occupancy limit guidelines established by the Cooperative
  • The applicant’s household income is at least four times the monthly carrying charges
  • The applicant’s total household income is below the established HUD income ceiling.
  • Any felony or misdemeanor convictions within a specified period of time
  • Any history of violence, criminal activity, sexual offenses or drug related activity
  • Any current use or abuse of alcohol or drugs
  • Requiring the provision of a social security number and documentation for all household members
  • Preferences for the waiting list, such as those who have been displaced by government action or a presidentially-declared disaster

In the advent that your housing cooperative must reject ineligible applicants, the tenant selection policy must describe the circumstances under which the owner may reject an applicant for occupancy or assistance.  If the cooperative establishes a policy to consider extenuating circumstances then that must also be described in the plan.

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