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.
- The Broker is the Agent of the Property Owner (hereafter referred to as the “Landlord”) and functions as the Transaction Broker for the Rental Customer (hereafter referred to as the “Applicant”).
- The Broker has a responsibility to assist the Applicant with the transaction (Lease). In addition, the Broker has a responsibility to answer the Applicant’s questions completely and accurately.
Lease Terms for Approximately 12 Months Unless Otherwise Stated
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).
The Broker’s Policy on Executing Sight Unseen Leases
The Broker will not allow a Tenant to sign a Lease when he has actual knowledge that the Tenant has not personally viewed the premises and approved its condition, unless the Landlord agrees in writing, in the Lease, to refund the Tenant’s initial funds (on the first day of the Lease), if requested. It should be noted that this is rarely granted by Landlords. (Viewing by a third party, photographs online or remotely by Skyping, etc. does not meet the Broker’s requirements for personally viewing the premises.)
If Both Spouses Cannot View the Property
The Broker will not allow the execution of a Lease when both spouses of a married couple do not personally view the property before signing the Lease, unless the Landlord agrees in writing, in the Lease, to refund the Tenant’s initial funds, if requested. When both spouses cannot personally view the premises and approve its condition, the Lease is effectively contingent on the inspection and approval of the non-viewing spouse. It should be noted that this is rarely granted by Landlords.
No Extended Lease Start Dates
The Broker will not execute a Lease with an occupancy date to begin in more than approximately 40 days.
No “Hold” is Placed on the Property by Applying
and/or Having an Application Approved
You are not placing a “hold” on the property by submitting an Application or having an Application approved. By submitting an Application or having an Application approved, you are not temporarily preventing the Landlord from considering subsequent Applications. The Landlord has the option of considering multiple offers at the same time. The property remains on the market until a Lease is signed and the new Tenant delivers the initial funds.
No Pre-Paid Leases
The Broker does not permit the execution of Leases with partial or entire pre-payment of rent.
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.
- 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.
- 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 FCRA Compliant Adverse Action Notice if they submit an Application.
- DOUBLE SECURITY DEPOSIT MAY BE REQUIRED IN ANY OF THE FOLLOWING SITUATIONS:
- The Applicant’s 3 Bureau Credit Score Average is between 650 and 699.
- The Applicant has a “thin file” or less than 3 Bureaus reporting a score.
- The Applicant’s Debt to Income Ratio is between 40.0% and 43.9%.
- 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.
- The Applicant has been employed for less than 12 months with their current employer.
- RENT TO INCOME RATIO: All Applicants must document a Rent to Income Ratio of no more than 31.9% to be approved for Pre-Application by the Broker and qualify for a rental showing. (Rent to Income Ratios calculated between 31.1% and 31.9% will be considered and approved or declined by the Landlord only on completed Applications).
- DEBT TO INCOME RATIO: All Applicants must document a Debt to Income Ratio of no more than 43.9% to be approved for Pre-Application by the Broker and qualify for a rental showing. (Debt to Income Ratios calculated between 43.1% and 43.9% will be considered and approved or declined by the Landlord only on completed Applications). 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.
- 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.
- NO JOINT APPLICATION FROM MARRIED COUPLES – NO LEASE: 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.
- APPLICATION WHEN A DIVORCE IS PENDING: Married couples finances are legally connected until a legal separation is effected by state statute, a Court Order is issued, a Legal Separation is adjudicated or a Divorce is finalized. The Broker may require an email from the Applicant’s Attorney confirming status. The Broker has a duty to check the credit score, check for account delinquencies, and calculate Rent to Income and Debt to Income Ratios for both spouses of a married couple until the two spouses’ assets and liabilities are legally separated. When one spouse of a married couple who is going through a Divorce applies (and it is unclear whether or not the two spouses’ assets and liabilities have been legally separated) and the second spouse refuses to apply, then 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.
- NO COSIGNERS: All Applicants must be able to qualify without the assistance of a Cosigner*.
- NO COMBINED INCOME QUALIFICATION FOR UNMARRIED COUPLES: Unmarried couples cannot qualify collectively on income the same as a married couple (Joint Application). Each individual signing the Lease as a “Tenant” must individually qualify on credit and income without a Cosigner. A member of an unmarried couple can be named on the Lease as an Occupant, after submitting to a Background Review, if the other member can qualify for the Lease on Credit, Ratios, etc.
- 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.
- 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.
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:
- 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.
- 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.
- 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.
- 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.
- IRS DOCUMENTS: The Broker will request the Applicant’s most recent IRS filings. Any evaluation about the authenticity of the Applicant’s presented IRS documents or whether or not the Applicant has a Tax Liability that could adversely affect the Application is the sole prerogative of the Landlord.
- 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.
- BACKGROUND INVESTIGATION: The Landlord instructs the Broker to conduct a Background Investigation on the Applicant and all adult occupants 19 and older. The Landlord prescribes no objective criteria to the Broker for the purpose of evaluating the information in the Background Report including but not limited to: felonies, evictions, unlawful detainer, etc. The final decision on the Applicant’s/Occupant’s Background Report(s) is the sole prerogative of the Landlord.
- 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 #3 in the “Minimum Requirements for Lease Application Approval”.
About Self-Employed Individuals Documenting Financial Capacity to Make Rent Payments
This disclosure concerns self-employed individuals or individuals who are effectively self-employed because they are stockholders of a small to medium corporation of which they are a principal executive (i.e. S Corporations, LLC’s, etc.).
The Broker acknowledges no affirmative duty to accept the premise that self-employed individuals with good or excellent credit scores have already demonstrated financial capacity to make rent payments. These individuals have the same burden of responsibility as employed individuals to document financial capacity to pay rent. This is usually done by providing a 2017 IRS Form 1040 indicating an Adjusted Gross Income that is sufficient to qualify for the no more than 31% Rent to Income Ratio and the no more than 43% Debt to Income Ratio. There may be other documents that can be used for this purpose, but the Broker will not accept bank statements to document income for employed or self-employed individuals.
Technical Exceptions & Clarifications to Stated Rules & Requirements
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.
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.
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.
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.
PENDING DIVORCE: In the situation where a divorce is pending and the occupying spouse cannot qualify on income until the divorce is finalized, the other spouse may be required to sign the Lease in order to allow the occupying spouse to qualify. Since the non-occupying spouse will not occupy the premises, technically this is cosigning.
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 Approval.
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.
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.
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.
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.