This month’s topic is on how we process an ownership change. Before we get to that, we hope you’re enjoying this monthly blog series for landlords. So far, we’ve provided a primer on our Permanent Supportive Housing and Rapid Rehousing programs, how to process move-outs and damage claims in the programs, the benefits of direct deposit and the launch of Padmission, our new web-based housing search platform. Be sure to catch up on the series if you’ve missed any and share them with your team and colleagues.
Changes in Ownership
According to CBRE, Maricopa County saw 130 multifamily property sales in 2018 totaling a whopping $5.8 billion. In 2017, we saw 136 sales for $4.2 billion. We’ve had a tough time keeping up since the start of the recovery in 2011.
Why do we care about changes in ownership? Mostly because we need to make sure we’re paying the right entity, but also because we need to get the 1099 right at the end of the tax year. Changes in ownership also trigger some steps around the Housing Assistance Payments (HAP) Contracts or Rental Assistance Agreements that we have with owners.
Notifying HOM of Changes in Ownership
Owners must notify HOM when their properties are in the process of being sold. We need advance notice so that we can perform the following steps:
- Approve the new owner, including obtaining ownership and payment information like a new W-9, ACH authorization and any changes in management
- We will match the taxpayer name and taxpayer ID provided on the W-9 with the IRS On-Line Taxpayer Identification Number (TIN) Matching Program
- It’s also critical that the appropriate box for federal tax classification is completed on the W-9
- If there is a change in management company, we will also need a copy of the new property management agreement
- Transfer units under contract in our programs to the new ownership entity in HDS, our housing management software
- Approve the assignment of the HAP Contract or Rental Assistance Agreement to the new owner, which requires a written amendment to the contract or agreement
- Start paying the new owner or management company
How to Notify Us of a Change
We’ve made this part simple. We have an electronic form on our web site on the Forms Central page that you can quickly complete and submit. It asks for the current and new owner or management company information. This gets us started and a member of our Ownership Support Team will contact you to obtain additional information and begin gathering the required documentation to process the change.
Often new owners or managers will have questions about the programs or plan to do remodeling and re-marketing of the property. Sometimes this spells trouble for our programs and residents as new owners may decide to opt out of rental assistance programs. We appreciate the opportunity to meet with new owners and managers to communicate the economic and societal value of these programs. We can provide financial and other data to the new owner to assist them in evaluating their options.
Often, we find out about changes in ownership after the fact. This is not ideal, and can cause delays in payments or worse, payments made to the wrong entity and trouble at 1099 time. If we find ourselves chasing down a new owner’s documentation when the rent is due, we will hold payment until the change is processed. This isn’t good for anyone. Please help us by communicating changes to us timely.
If you have questions or need support, please reach out. You can always find emails and phone numbers for anyone on our team on our Team page. We’re here to serve you.