Published Minimum Requirements for Lease Application Approval for Properties Listed by Birmingham Home Leasing
Please note that properties listed by other Brokers also appear on BirminghamHomeLeasing.com. Lease Application Approval Standards vary from Broker to Broker, but many require at least a “Fair” Credit Score and documentation of at least 3 times the rent in before tax income. The information below specifically applies to properties listed by Birmingham Home Leasing (Birmingham Home Leasing [“Broker”] is a Registered Trade Name of Dean & Associates Inc) and is only applicable to Personal Lease Applications. If you are interested in submitting a Corporate Lease Application, call the office at (205) 259-1918.
1. Agency Disclosure
A. Birmingham Home Leasing, hereinafter referred to as “Broker”, shall serve as a Transaction Broker for the Rental Customer, assisting the Rental Customer with the Lease Application and the execution of the Lease. The Broker is the Single Agent of the Property Owner.
B. Many of the Property Owner’s interests are reflected in the terms and conditions found below. When the interests of the Rental Customer and the Property Owner do not align, it is the legal duty of the Broker to protect the Property Owner’s interests.
2. Lease Terms for Approximately 12 Months Unless Otherwise Stated
A. The Broker writes Leases for approximate 12 month Lease terms which do not automatically convert to a month-to-month agreement after the initial term. In order for the Tenant to remain in the premises after the expiration of the initial term, the two parties must enter into a new written agreement. The Broker does not write Leases for extended terms (more than approximately 18 months).
3. The Broker Will Not Execute a Lease When All Signing Tenants Have Not Personally Viewed the Property, While Vacant, & Approved Its Condition
A. The Broker will not execute a “sight unseen” Lease. The Broker will not execute a Lease when both spouses of a married couple have not personally viewed the property and approved its condition. The Broker will not execute a Lease when the Rental Customer viewed the property while it was still occupied and has not viewed the property a second time and approved its condition once it has become vacant and been cleaned.
4. No Rental Property Showings for Leases with Extended Start Dates
A. The Broker will not show a property for a Lease to begin in excess of 42 days (6 weeks).
5. No “Hold” is Placed on the Property by Viewing, Applying and/or Having an Application Approved
A. Generally speaking, all properties remain on the market until a Lease is signed and the new Tenant delivers the initial funds. When a Lease Application has been approved by the Landlord and the Broker has sent out a Lease for both parties to review and sign, the Broker will “pause” property showings and receiving Applications from other Rental Customers during the approximately 3 day period that the Prospective Tenant will be given to review and sign the Lease. During the approximately 3 day period that the Prospective Tenant is reviewing the Lease, the MLS status on the property will be changed to “Pending”. When a Lease Application has been approved by the Landlord and the Rental Customer does not request that a prepared Lease be presented for their signature, the property status in the MLS will not indicate “Pending” and the Broker will continue to take Applications and/or present Leases for signature from other Rental Customers.
6. No Pre-Paid Leases
A. The Broker does not permit the execution of Leases with partial or entire pre-payment of rent.
7. Minimum Requirements for Lease Application Approval
If there are any technical clarifications or exceptions to requirements, rules, or policies, they will be indicated with an asterisk* and explained at the bottom of this page. These clarifications and/or exceptions constitute new policy.
A. CITIZEN OR LEGAL RESIDENT: All Applicants must be legal residents of the United States. All Applicants will be asked if they are a United States Citizen. If they answer “no”, they will be asked if they are residing in the United States legally. If they answer “yes” to that question, they will be required to provide proof of legal residency, such as passport, visa, or green card. If the Applicant fails to provide the requested proof, then their Application will be declined. If the Applicant declares that they are not residing in the U.S. legally, then their Application will be declined.
B. CURRENT IRS DOCUMENTS REQUIRED:
i. The Applicant is required to supply either their IRS Form 1040 or IRS Form 4868 for the most recent filing period to complete their Application. When the Applicant submits an Application and does not provide IRS Form 1040 or 4868 from the most recent filing period, then the Broker will automatically decline the Application, on behalf of the Landlord, without presenting the Application to the Landlord.
ii. The Broker does not assure the Applicant that the Landlord will approve an Application with an IRS Form 4868.
iii. The Broker does not assure the Applicant that the Landlord will approve an Application with an IRS Form 1040 or 4868 if the form does not indicate that it was prepared by a tax professional or if the form indicates that it was self-prepared by the Applicant but the Applicant cannot provide a receipt for processing.
C. CREDIT SCORE: Applicants must have a U.S. Credit File with a 3 Bureau FICO Credit Score Average of at least 650 (more specifically, a 650 on TransUnion FICO® Classic (04), Experian Fair Isaac (Ver. 2), and Equifax FICO® Classic V5 FACTA). Applicants who do not have a U.S. Credit File with a Qualifying 3 Bureau Average Credit Score will receive a Adverse Action Notice if they submit an Application.
D. FINANCIAL CAPACITY: The Applicant is required to declare and document financial capacity to make rent payments. This may be accomplished by declaring and documenting employment income or liquid assets sufficient to qualify on the Rent to Income and Debt to Income Ratios (see below).
E. RENT TO INCOME RATIO: All Applicants must document a Gross Income to Rent Ratio of at least 3 to 1 (or 33.3%).
F. DEBT TO INCOME RATIO: All Applicants must document a Debt to Income Ratio of no more than 43%. Total debt is added up (including the new rent payment) and divided into total income to calculate the Debt to Income Ratio. An alternate method of reducing total debt with income before dividing debt into income shall not be used.
G. SPECIAL CONDITIONS FOR RENT TO INCOME & DEBT TO INCOME RATIOS: When an Applicant documents a Rent to Income Ratio between 33.1% and 33.9% or a Debt to Income Ratio between 43.1% and 43.9%, the decision to accept or decline the Lease Application based on those ratios will be made by the Landlord, not the Broker.
H. DOUBLE SECURITY DEPOSIT MAY BE REQUIRED IN ANY OF THE FOLLOWING SITUATIONS:
i. The Applicant’s 3 Bureau Credit Score Average is between 650 and 699.
ii. The Applicant provides an IRS Form 4868 for the most recent tax filing period.
iii. The Applicant provides IRS Forms that do not show indications that they were processed (i.e. prepared by a professional tax preparer or electronic filing receipt, etc.).
iv. The Applicant provides IRS 1040 for the most recent tax filing period indicating a tax liability in excess of 10% of the Adjusted Gross Income and the Applicant does not provide proof that the tax liability has been paid.
v. The Applicant has less than 3 Bureaus reporting a score or Bureau reports with limited data.
vi. The Applicant’s Rent to Income Ratio is between 30.0 and 33.9%.
vii. The Applicant’s Debt to Income Ratio is between 40.0% and 43.9%.
viii. The Applicant’s Credit Report indicates that they are an Authorized User on a credit card where the primary credit card holder is not their spouse.
ix. The Applicant has been employed for less than 12 months with their current employer.
I. ACTIVE ACCOUNT DELINQUENCIES: All Applicants must not have Active Account Delinquencies* that total more than the amount of one month’s rent for the subject property. Active Account Delinquencies include but are not limited to: Active Past Due Accounts; Charged Off Accounts (NOTE: It is commonly assumed that “Charged Off” Accounts are settled issues. This is not the case. All Charged Off Accounts remain collectible and subject to Judgment until notified of release by Creditor or Collection Agent.); Unpaid Collections; Unsettled Judgments; Active Liens; Unsettled Deficiency Judgments on Short Sales or Foreclosures, etc.
J. WHO IS REQUIRED TO PRESENT A JOINT APPLICATION: Both Spouses of married couples must apply. The Broker has a duty in the Rental Listing Agreement with the Landlord to check credit scores, check for account delinquencies, and calculate “Joint” Rent to Income Ratios and “Joint” Debt to Income Ratios. This cannot be accomplished without the Broker seeing the credit report of both spouses. When one spouse of a married couple submits an Application and the second spouse does not complete the Application, the Broker will issue a “NOTICE OF CONDITIONAL APPROVAL”. The Notice will specify that the second spouse must submit their credit report before the Broker and/or the Landlord will be required to render a final decision on the Applications.
K. NO COMBINED INCOME QUALIFICATION FOR UNMARRIED COUPLES OR UNMARRIED FAMILY MEMBERS: Unmarried couples and unmarried family members cannot qualify collectively on the income requirement the same as a married couple can when they present a Joint Application.
L. APPLICATION WHEN A DIVORCE IS PENDING: Married couples finances are legally connected until a Legal Separation is affected by State statute or Court adjudication, Court Order, or a Divorce is decreed. The Broker may require an email from the Rental Customer’s Attorney confirming status. When a Rental Customer applies to lease a property while a Legal Separation or Divorce is pending, the Broker shall require a Joint Application by both spouses and shall also require that both spouses sign the Lease.
M. APPLICATION AFTER RECENTLY DIVORCED: A divorced individual is not relieved from qualifying on the Debt to Income Ratio when the Credit Report indicates joint responsibility on a Mortgage, even if the Divorce Decree assigns Mortgage payment responsibility to the ex-spouse.
N. NO COSIGNERS: All Rental Customers must be able to qualify without the assistance of a Cosigner. The only exception to this rule shall be in the situation where a Rental Customer applies to lease a property while a divorce is pending. In this situation, the “non-occupying spouse” shall be required to sign a Cosigner Agreement.
O. ROOMMATES: For the purpose of this disclosure, “roommates” does not refer to unmarried couples. The Broker and the Landlord retain the right of freedom of contract to lease with whomever we want as long as it is not for a discriminatory reason against a protected class. Roommates are not a protected class. It shall be the Broker’s policy not to rent to roommates.
P. NO MORE THAN ONE FAMILY PER HOME: For the purpose of this disclosure, a “family” shall be defined as a group residing together and consisting of parents, children, and other relatives by blood or marriage. The Broker and the Landlord retain the right of freedom of contract to lease with whomever we want as long as it is not for a discriminatory reason against a protected class. Two or more families residing in one home are not a protected class. It shall be the Broker’s policy not to rent to more than one family per residence.
8. Subjective Issues to be Decided by the Landlord, Not the Broker
There are some issues that are difficult to define objectively. For that reason, subjective issues are left to the discretion of the Landlord. The Landlord’s discretion may not be absolute. It may be limited by applicable Law or the liability concerns of the Broker. These issues include but are not limited to:
A. VALID DRIVER’S LICENSE REQUIRED IN MOST CASES: The Broker does not assure the Applicant that the Landlord will approve a Lease Application when the Applicant cannot provide a valid Driver’s License.
B. IRS FORMS THAT ARE SELF-PREPARED & DO NOT CONTAIN PROOF OF FILING: When the Applicant provides IRS documents that indicate they were self-prepared by the Applicant and do not contain any proof of filing, the Broker will inform the Landlord. It will be the Landlord’s decision to decide whether or not the documents are satisfactory.
C. DOCUMENTATION OF EMPLOYMENT: The Broker will request proof of employment from the Applicant, however the Landlord does not prescribe objective criteria to the Broker for the purpose of evaluating the material. The usual documents used for proof of employment are: pay stubs, employment letters, tax documents, etc. The Broker has no duty under the Rental Listing Agreement to “authenticate” employment documents provided by the Applicant. The documents presented by the Applicant are available to the Landlord from the Broker upon request. The final decision about the Applicant’s current or future employment is the sole prerogative of the Landlord. It should be noted that checking account bank statements will not be accepted as proof of current income.
D. APPLICANT’S DECLARED INCOME VS DOCUMENTED INCOME: The Lease Application Form asks the Applicant to declare their annual income and then document their annual income. Often there is a difference between the declared and documented income. It is the sole responsibility of the Landlord to decide whether to accept the calculation of Rent to Income Ratios and Debt to Income Ratios on either declared or documented income.
E. DOCUMENTATION OF ADDITIONAL INCOME, LIQUID ASSETS, ETC.: The Lease Application allows for the declaration and documentation of additional income and/or liquid assets if the Applicant needs to use this to qualify on Rent to Income or Debt to Income Ratios. Landlord will use their discretion to determine whether or not they want to rely on certain types of additional income.
F. DOCUMENTATION OF INCOME FROM LEASED PROPERTY: The Landlord is not obligated to accept the Applicant’s additional income from Leases at “face value”. It’s not reasonable to assume that Leased property will have no rental loss due to vacancies in between Tenants or will not have maintenance and repair costs.
G. RESOLVING “RED FLAGS”: The Broker’s only duty concerning “red flags” is to report possible “red flags” to the Landlord. The final decision about how a possible reported “red flag” affects the Applicant’s Application is the sole prerogative of the Landlord.
H. POLICY REGARDING APPLICANTS WITH CRIMINAL HISTORY: In the Rental Listing Agreement between the Broker and the Landlord, the Landlord authorizes the Broker to automatically decline Applications that do not meet the Objective Criteria provided by the Landlord (without presenting the Application to the Landlord). The Broker and the Landlord do not have a policy that mandates an automatic rejection for Applicants with a felony conviction in their Background Report. The Landlord evaluates Applicants with felony convictions on a case by case basis.
I. DOUBLE SECURITY DEPOSIT: The Landlord has sole discretion on whether or not to require a Double Security Deposit for any of the situations listed in Section H. in the “Minimum Requirements for Lease Application Approval”.
9. Technical Exceptions & Clarifications to Stated Rules & Requirements
A. SPOUSES WHO HAVE A CREDIT FILE WITH NO CREDIT SCORE: In some cases, one spouse of a married couple may have a Qualifying Credit Score while the other spouse may not have a Credit File or a Credit File with a Credit Score. The decision on whether to accept a Joint Application from a married couple when one spouse does not have a Credit File or a Credit File with a Credit Score is the decision of the Landlord.
B. APPLICANTS WHO MAY NOT HAVE A CREDIT SCORE WITH ALL 3 BUREAUS: In some situations where an individual is beginning to build a credit history, they may not have a Credit Score with all 3 Bureaus. In addition, they may not have many Creditors reporting to the Bureaus, this is sometimes referred to as a “thin file”. In this situation, the 650 Average rule still applies. The absence of 1 or 2 Credit Scores will not automatically disqualify the Application, but the Landlord may require a Double Security Deposit.
C. APPLICANTS WHO HAVE “LOCKED” THEIR CREDIT FILES WITH THE BUREAUS: When a Rental Customer submits an Application and the Broker discovers they have “locked” their credit files with the Credit Bureau(s), then the Broker will request, one time only, that they unlock their files. If the Broker finds the files still locked when he attempts to pull the report the second time, this shall be cause for declining a Lease Application.
D. MEDICAL ACCOUNT DELINQUENCIES: In some cases, Medical Account Delinquencies are treated differently than Account Delinquencies that are not related to Medical Services. These issues will be decided by the Landlord.
E. PERSONAL GUARANTEE OF A BUSINESS ENTITY OR CORPORATE LEASE: When a Principal of a Business requests that a Residential Lease indicate their Business or Corporation as the “Tenant”, but the Business or Corporation cannot reasonably document gross receipts and/or net worth to make Lease payments, then the Principal of the Business or Corporation may personally guarantee the Lease if they can qualify on the Published Minimum Requirements for Lease Application Approval.
F. BUSINESS ENTITY OR CORPORATION GUARANTEEING LEASE: When an individual cannot qualify for a Lease Application based on the Published Minimum Requirements for Lease Approval, but the individual is an Employee or Principal of a Business or Corporation that can demonstrate or document reasonable Financial Capacity to make Lease payments, then the Business or Corporation may guarantee the Residential Lease for the Employee or Principal.
G. APPLICANTS REPORTING THAT THEY DO NOT HAVE A SOCIAL SECURITY NUMBER OR INDIVIDUAL TAXPAYER IDENTIFICATION NUMBER: It is beyond the scope of the Broker’s duty and responsibility to determine whether or not an individual has or does not have a SSN or ITIN number. Therefore when an Applicant reports that they do not have a SSN or ITIN, the Landlord will decide whether or not to accept the Application.
H. DISCREPANCIES BETWEEN THE RENTAL LISTING AGREEMENT & THE PUBLISHED MINIMUM REQUIREMENTS FOR LEASE APPLICATION APPROVAL: The date of the last revision of this published policy can be found at the bottom of the page. Rental Listing Agreements with the Landlord executed before that date may not be completely up to date. From time to time, the Broker may update the Published Minimum Requirements for Lease Application Approval in order to comply with Law or comply with the Broker’s duty to provide reasonable skill and care. In cases where there is a discrepancy between the Rental Listing Agreement and the Published Minimum Requirements for Lease Application Approval, the current Published Minimum Requirements for Lease Application Approval shall govern.
I. VARYING STANDARDS ON MINIMUM CREDIT SCORE REQUIRED FOR LEASE RENEWAL: On August 7, 2018, the Broker raised the Minimum Average Credit Score Required for Lease Application Approval from 620 to 640. On October 10, 2018, the Broker raised the Minimum Average Credit Score Required for Lease Application Approval from 640 to 650. Tenants requesting Lease Renewal will not be required to meet a higher Average Credit Score Requirement than what was required at the time the original Lease was executed, unless it is so specified in a subsequent Renewal Lease.
LEGAL DISCLAIMER: The Broker is not an Attorney. None of the Broker’s Agents are Attorneys. The Broker or his Agents do not provide legal services or legal advice. If you have questions about your rights and responsibilities as a Rental Customer, Applicant, or Tenant, please consult with an Attorney.