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, click here for more information.

 

 

Agency Disclosure

 

  1. 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”).
  2. 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.

 

 

Valid vs Voidable Leases

 

The Broker has a responsibility to the Landlord and the Tenant to produce a Valid Lease.  A Valid Lease is a Lease which is enforceable in a Court of Law.  The Broker does not have a responsibility to produce a Lease which is Voidable at the will of the Tenant and Unenforceable by the Landlord.

Some examples of the types of Leases that the Broker will not assist the Applicant with include, but are not limited to:

  • Sight Unseen Leases (where all Signing Tenants or both spouses of married couples do not view the property and approve its condition before signing the Lease)
  • Corporate Leases signed by anyone other than an Authorized Signer
  • Applicants requesting exemptions from the requirement to have a U.S. Credit File with a Qualifying Credit Score and requesting to be approved solely on the basis of other criteria including but not limited to: documentation of employment, income, liquid assets, Housing Allowance, and/or Rental History

 

 

Other Practices Not Allowed

 

  • Pursuant with the Broker’s duty to produce a Valid Lease, the Broker will not “hold” a property with a Deposit or Application and will not execute a Lease with an occupancy date to begin in more than approximately 40 days.
  • In addition, the Broker does not list any property that is available for a “short term” Lease that automatically converts to a month to month agreement after the initial term.

 

 

You May Not Demand that the Broker Contact the Landlord to Request an Exception to the Broker’s Published Policy

 

Real Estate Brokers have a duty to enforce published policies equitably and, therefore, cannot grant exceptions, if requested.  In order for the Broker to demonstrate compliance with Fair Housing Laws, the Broker does not allow the Landlord to grant exceptions to the Broker’s published policies.

Real Estate Brokers have the legal authority to draft Listing Agreements with Absolute Power of Attorney, Very Limited Power of Attorney, or Varying Powers of Attorney as they deem needed.  It is the Broker’s understanding that the Rental Listing Agreement with the Landlord is worded in such a way that the Broker has no duty to consult with the Landlord about granting possible exceptions to the Broker’s published policy.

If you have questions or concerns about your rights as a Rental Customer or Applicant, please consult with an Attorney.

 

 

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.

 

  1. 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.
  2. CREDIT SCORE:  All Applicants must have a U.S. Credit Report with a 3 Bureau FICO Credit Score Average of at least 620 (Models TransUnion FICO® Classic (04), Experian Fair Isaac (Ver. 2), and Equifax FICO® Classic V5 FACTA)*.
  3. DOUBLE SECURITY DEPOSIT MAY BE REQUIRED FOR BELOW AVERAGE CREDIT SCORE:  Landlords reserve the right to require a Double Security Deposit for Applicants whose 3 Bureau Credit Score Average is between 620 and 699.  A Security Deposit is an amount equal to one month’s rent.  A Double Security Deposit would be twice that amount.  The decision on requiring a Double Security Deposit is at the discretion of the Landlord, not the Broker.
  4. RENT TO INCOME RATIO:  All Applicants must document a Rent to Income Ratio of no more than 31%.  (Rent to Income Ratios calculated between 31.1% and 31.9% will be considered and approved or declined by the Landlord only).
  5. DEBT TO INCOME RATIO:  All Applicants must document a Debt to Income Ratio of no more than 43%.  (Debt to Income Ratios calculated between 43.1% and 43.9% will be considered and approved or declined by the Landlord only).
  6. 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.
  7. JOINT APPLICATIONS:  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.
  8. 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 an “ADVERSE IMPACT NOTICE”.
  9. NO COSIGNERS:  All Applicants must be able to qualify without the assistance of a Cosigner*.
  10. UNMARRIED COUPLES:  Both members of unmarried couples must individually qualify on the Rent to Income Ratio and the Debt to Income Ratio in order to both sign as a Tenant.  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.
  11. ROOMMATES:  Roommates must individually qualify on Credit, Ratios, etc. in order to sign the Lease as a Tenant.  Unqualified Roommates can be named on the Lease as an Occupant after submitting to a Background Review.

 

 

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.

 

 

Technical Clarifications & Exceptions 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 this situation, the 620 Average rule still applies.  The absence of 1 or 2 Credit Scores will not disqualify the Application unless the Broker’s Credit Report Vendor informs the Broker that the Applicant has “locked” 1 or 2 of their Bureau Reports.  Locking Credit Bureau Reports 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.

 

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.

 

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.

 

5/18/2018