Example – Admission of Market — HUD Handbook 4350.3 REV-1

Brookside Gardens is a 100-unit Section 236 project. Currently 92 tenants pay basic rent, 5 tenants pay market rent, and 3 units are vacant. The owner may fill the 3 vacant units with tenants paying market rent if there are no income-eligible applicants available and the owner has taken all reasonable steps to attract eligible families.
Shady Grove is a 100-unit Section 236 project where 88 current tenants pay basic rent and 10 tenants pay market rent. The owner must fill the 2 current vacancies with income-eligible tenants.

The owner must obtain HUD's approval to admit over-income applicants who pay market rent if at least 10% of the units authorized under the interest reduction subsidy are already occupied by tenants paying market rent.
For determining the 10% of units described in subparagraphs 2 and 3 above, a unit is defined as follows:
- a. For properties with Rent Supplement or RAP, “units” include only those units covered by the RAP or Rent Supplement contract.
- b. For Section 236 properties, “units” include all units in the project.
Before admitting any ineligible applicants, the owner must take the following steps:
- a. Admit all available eligible applicants, unless there is good cause for denying assistance.

HUD Occupancy Handbook Chapter 3: Eligibility for Assistance and Occupancy

06/07

3-16

Section 1: Program Eligibility

4350.3 REV-1

b. Take all reasonable steps to attract eligible families, including using marketing activities most likely to attract eligible applicants and marketing outside the community or immediate area.
c. Place in the file of any ineligible tenant who is admitted, a written certification indicating that the requirements in subparagraphs a and b above have been completed.