The state has stopped automatically suspending rental subsidies for low-income tenants when landlords allege damage to a property — substantiated or not.

The policy has long been criticized by Hawai'i housing advocates who say tenants are not given a chance to dispute claims and face homelessness and the loss of rental vouchers if they do not pay up.

"The policy was ripe for abuse by landlords who are looking to force tenants into paying for questionable charges," Legal Aid Society of Hawai'i housing attorney Nhi Tran said. She said if a rental voucher — commonly known as a "Section 8" voucher — is suspended, the tenant is entitled to a hearing.

"The policy was depriving tenants of that right," she said.

Under the new state practice, landlords must pursue a claim against a tenant in court. If a judgment is made against a tenant, the state can withdraw a voucher.

"We'd rather have the landlord go through the court system," said Mike Isobe, Section 8 supervisor at the Hawai'i Public Housing Authority. The state administers about 2,000 vouchers.

Gavin Thornton, head housing attorney for Legal Aid, said he has seen at least eight cases on O'ahu in the last six months of Section 8 voucher holders being accused of damage they dispute.

He said the tight housing market gave more leverage to landlords and put more pressure on tenants to resolve disputes. Vouchers expire if they are not used within six months. The state was counting the days that a voucher was on hold against tenants.

"One of our big concerns and one of the reasons we're so excited about the policy change is that I don't think a lot of people understand what their due- process rights are," Thornton said. "One of the more egregious things about the policy is that it ... could eventually result in your voucher being terminated. The whole issue here is that they're entitled to a hearing."

However, city officials say they will continue putting Section 8 vouchers on hold while a landlord's damage claims are investigated. The city administers 4,400 vouchers.

Gary Iwai, administrator of the city's Community Assistance Division, said when a landlord brings a claim against a tenant, a city examiner investigates and makes a determination.

"As part of our regular process, when there's a dispute between the landlord and the tenant, we try to determine the facts in the case and make a decision based on that," Iwai said, adding that if a determination cannot be reached, the landlord must pursue the case in court.

Citing a case in which an erroneous claim deemed valid by an examiner left a family of six homeless, Iwai acknowledged that the city's procedure is not flawless.

In February, an $1,800-a-month rental subsidy for Patrick Williams, his wife and four children was put on hold when a landlord alleged that $450 was owed for yard maintenance.

Williams said the allegations were bogus, but the city told him he would have to resolve them to get his voucher back. The claims were dismissed in June, after discussions between the city and Legal Aid officials representing the family.

While their voucher was on hold, the Williams family lived in a van. Some nights, they pitched tents on the beach and set up fishing poles — so it would appear they weren't homeless.

"We couldn't find a place because we didn't have a voucher," Williams said. "It's like a legal extortion."

Williams and his wife, Anna, who get disability assistance, both suffer from physical ailments. Their four children range in age from 2 to 16. Just weeks before their voucher was set to expire, they got the go-ahead to use it and found an apartment in Pearl City.

Iwai said the case forced a careful look at the city's program. He said city examiners were reminded that investigations of landlords' claims need to be pursued thoroughly.

But Iwai also stressed that some claims are warranted. "We cannot issue a new voucher unless we're certain that the tenant would prevail," he said. "There is a fairness issue here. We need both parties to comply with the rules so that the program can exist."

Reach Mary Vorsino at mvorsino@honoluluadvertiser.com.