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Landlord can only terminate lease where tenant, not third party, makes misrepresentation regarding housing subsidy

The court held that the district court erred in concluding that the defendant-tenant violated ¶ 8 of her lease where there was no factual finding that she was the individual making the misrepresentation about where her grandchildren resided, and that the district court erred in relying on § 5.233. Thus, it reversed the circuit court's order affirming the district court's judgment awarding possession of the premises to the plaintiff-housing commission. Defendant entered into a lease with plaintiff for subsidized housing (a three-bedroom unit), listing three residents, defendant and her two grandchildren. Plaintiff served defendant a notice to quit, asserting that she violated ¶ 8 of her lease, which provided that a resident's "intentional misrepresentation [of] or willful failure" to notify management of certain information is grounds to terminate the lease. Plaintiff "sought to evict defendant because she 'was receiving a double subsidy.'" It asserted that she received a subsidy from plaintiff for her grandchildren, of whom she had legal guardianship, and her daughter (T) received a subsidy from another city's housing commission for the same children. Plaintiff alleged that this violated defendant's lease and HUD's multi-subsidy regulation, § 5.233. In ruling for plaintiff, "the district court stated only that there was 'some misrepresentation' that constituted a violation of the lease." It was undisputed that both defendant and T represented that the children resided with them. "Thus, the district court's finding that 'some misrepresentation' existed was supported by the evidence." However, there was no "factual finding that defendant was the individual making that misrepresentation. Plaintiff could only terminate the lease" pursuant to ¶ 8 "if defendant made an intentional misrepresentation to plaintiff. Without a finding that defendant made the misrepresentation," the district court could not find she violated ¶ 8. Further, any finding that she misrepresented where the children resided would have been clearly erroneous. There was no record evidence as to where they were actually living. The court also noted that the lease did not require defendant to notify plaintiff that T or anyone else was receiving a duplicate subsidy and thus, her failure to do so did not give rise to a right to terminate under ¶ 8. Finally, as § 5.233 "imposed no duty on defendant to report anything to plaintiff, and certainly no duty to investigate whether duplicate subsidies existed," there was "no conceivable way for defendant to violate the regulation, and to the extent the district court suggested defendant violated this rule," it erred.

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