1. Required First Step in Application
All Rental Customers are required to complete and submit the Lease Application Disclosures Form before proceeding with the next steps of the Application. That form is the first step in the Lease Application process and part of the Application. (Effective 10/16/2020)
2. Agency Disclosure
A. Birmingham Home Leasing, hereinafter referred to as “Broker”, is the Single Agent of the Property Owner. The 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.
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.
3. Policy Regarding Pre-existing Derogatory Information Currently Showing in Your Credit Report and/or Background Report
The Applicant’s credit report, background report, or credit history (“Credit Report”) may show negative information upon which the Broker bases a decision to deny Applicant’s Application. Applicant is responsible for ensuring that Applicant’s Credit Report accurately reflects the information relative to Applicant at the time the Application is submitted. Broker cannot and will not receive or consider information contrary to or challenging negative entries on Applicant’s Credit Report, either prior to or after Broker makes a decision on Applicant’s Application and submits an Adverse Action Notice. Applicant understands that Broker will refer only to the Credit Report in reviewing Applicant’s Application and will not receive or consider documentation outside of the Credit Report. In the event Applicant disagrees with information reflected on Applicant’s Credit Report, Applicant may refer to applicable federal law regarding Applicant’s ability to challenge or correct Applicant’s Credit Report by challenging specific negative information with the Credit Reporting Agencies or prior creditors. Broker is not an attorney, is not offering legal advice, and suggests that Applicant consult with an attorney regarding Applicant’s rights to challenge negative information on the Credit Report. More information may be found here: www.consumer.ftc.gov/articles/disputing-errors-your-credit-reports
4. Explaining the Broker’s Position on Not Granting Exceptions to Published Policy
A. Some Brokers publish Minimum Requirements for Lease Application Approval, but most in the Birmingham area do not. Federal Fair Housing Laws mandate that Brokers who do publish policies, rules, minimum requirements, etc. are required to “demonstrate equitable enforcement”. While it is true that it is legal for a Broker to grant an exception to a published policy for a non-discriminatory reason, it is impossible to prove that the exception granted was for a non-discriminatory purpose. Therefore, the Broker takes the position that he has no affirmative duty to grant an exception, if asked, because doing so would put him at risk of a legal action brought by anyone who has previously been declined on a Lease Application. In addition, some individuals believe that they have the right to demand an exception from the Broker or the Property Owner. The Broker takes the position that no one, including the Property Owner, has the legal capacity to compel him to breach his own published policy. Those who have questions about their rights as an Applicant for a rental property should consult with an Attorney. (Revised 6/25/2020)
5. 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).
6. All Lease Signatories Must Personally View the Property & Approve Its Condition
All Prospective Tenants must personally view the property and approve its condition before the Broker will prepare and present a Lease for signature. This policy applies to all Prospective Tenants, including both spouses of a married couple and individuals moving from out of town or out of state who do not want to travel to the Birmingham area to view rental properties before executing a Lease. Viewing by a third party, including a Real Estate Agent, friend, family member or viewing by video conference, will not be accepted by the Broker in lieu of personal viewing by the Signatories. (Revised 10/9/2020)
7. No Rental Property Showings for Leases with Extended Start Dates
The Broker will not show a property for a Lease to begin in excess of 42 days (6 weeks).
8. How & When the Broker Presents Lease Applications to the Owner for Consideration
The Broker does not have a policy of presenting Lease Applications to the Owner for consideration in the order in which they were started. The Broker will present Lease Applications to the Owner for consideration in the order in which they were completed. Therefore, a Rental Customer cannot “hold” a property by beginning an Application. The Broker will not present an Application to the Owner for consideration until it’s complete. If two or more Applications are completed at approximately the same time on the same day (during business hours), then the Broker may present more than one Application to the Owner for consideration at once. (Revised 4/21/2021)
9. No Pre-Paid Leases
The Broker does not permit the execution of Leases with partial or entire pre-payment of rent.
10. About Pending, Active and/or Recently Discharged Bankruptcies
Applicants presenting an Application while a Chapter 7 Bankruptcy is pending will be automatically declined. Applicants presenting an Application with an active Chapter 13 Bankruptcy will be automatically declined. Applicants presenting an Application who have recently had a Chapter 7 or a Chapter 13 discharged will not automatically be declined, but must meet the minimum Lease Application approval requirements, including having a FICO® Score 8 credit score of at least 700 (average of all three bureaus). (Revised 7/3/2021)
11. About Evictions & Repossessions
Applicants applying with evictions and/or repossessions in their history will be automatically declined by the Broker. The term “eviction” shall refer to, but not be limited to unlawful detainer, ejectment, forcible entry, etc. (Revised 7/10/2021)
12. Authorized User Policy
When a review of the Applicant’s credit report reveals that 50% or more of the Applicant’s total credit limit is supplied by being an Authorized User on another individual’s credit card(s) and that individual is not a spouse, then the Broker will automatically decline the Application and issue an Adverse Action Notice. (Effective 2/24/2021)
13. 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: The Applicant is required to supply their IRS Form 1040 for the most recent filing period, with evidence of processing, to complete their Application. When the Broker receives an Application without IRS Form 1040 from the most recent filing period and/or without evidence of processing, then the Broker will process the Application and, assuming that the Application is otherwise qualifying, the Broker will issue a “Conditional Approval” with the condition being that the Applicant provide the required documentation. The Broker will not forward an Incomplete Application to the Property Owner. (Revised 2/13/2021)
C. CREDIT SCORE: The Broker will “pull” credit reports on the Applicant from all 3 Credit Bureaus. The specific Credit Scores that the Broker will use to evaluate the Applicant will be FICO® Score 8 for TransUnion, Experian and Equifax. The Broker will calculate the Applicant’s 3 Bureau Credit Score Average. The minimum FICO® Score 8 average credit score required is 700. Applicants who do not have a U.S. Credit File with a Qualifying 3 Bureau Average Credit Score will receive an Adverse Action Notice if they submit an Application. (Revised 4/30/2021)
D. REQUIRED RATIOS TO DEMONSTRATE FINANCIAL CAPACITY TO PAY RENT: It is possible to demonstrate financial capacity to pay rent if you are employed and meet certain income and debt ratios or if you are non-employed and can meet certain asset and debt ratios.
i. EMPLOYED INDIVIDUALS QUALIFYING ON RECURRING INCOME: For employed individuals who are qualifying on recurring income, the Applicant must declare and document gross (before tax) income of at least 4 times the rent. For employed individuals, this figure is found on Line 1 of IRS Form 1040. They must also document continued employment with their current employer for at least the last 12 months. (Revised 7/31/2021)
ii. SELF-EMPLOYED INDIVIDUALS QUALIFYING ON RECURRING INCOME: For employed individuals who are qualifying on recurring income, the Applicant must declare and document gross (before tax) income of at least 4 times the rent. For self-employed individuals and individuals who are a single owner of a LLC, this figure is found on Line 31 of IRS Form Schedule C. Self-employed individuals and individuals who are a single owner of a LLC must document qualifying income for at least the last two tax filing cycles. Individuals must not have a debt to gross income ratio that exceeds 43%. Monthly debt is calculated by adding the monthly debt obligations in the Applicant’s credit report plus the rent. (Revised 7/31/2021)
iii. INDIVIDUALS QUALIFYING ON NON-RECURRING INCOME AND/OR LIQUID ASSETS: Individuals who would like to demonstrate financial capacity to pay rent (without recurring income) must declare and document non-recurring income and/or liquid assets of at least 20 times the amount of their annual debt load. Annual debt load is calculated by adding the monthly debt obligations in the Applicant’s credit report, plus the rent and multiplying that figure by 12. Liquid assets are defined as savings accounts, retirement accounts, stocks, etc. and any asset that is easily converted to cash. For the purposes of declaring and documenting assets for a Lease Application with Birmingham Home Leasing, real estate and cryptocurrency are not considered a liquid asset. Personal Financial Statements, including CPA prepared and/or audited Financial Statements, will not be accepted as documentation for liquid assets. (Revised 7/29/2021)
iv. INDIVIDUALS QUALIFYING WITH A COMBINATION OF RECURRING & NON-RECURRING INCOME AND/OR LIQUID ASSETS: If you are attempting to apply to lease a property with a combination of recurring and non-recurring income and/or assets, then contact the office at (205) 259-1918 for more details. The formula for calculating this is too complicated to explain here, but we will be happy to explain it to you if you call. (Effective 5/19/2021)
E. BANK STATEMENT INFORMATION REQUIRED: Applicants must consent to send bank statement information to the Broker via The Closing Docs, which is a fully encrypted and secure service. (Revised 4/30/2021)
F. DEFINING CONDITIONS CONDITIONS THAT CAN EXIST ON AN APPLICATION THAT MEETS THE MINIMUM PUBLISHED OBJECTIVE CRITERIA FOR APPROVAL, BUT THE LANDLORD RESERVES THE RIGHT TO DECLINE THE APPLICATION: (Revised 6/24/2021)
i. The Applicant’s Rent to Gross Income Ratio is between 25.1% and 25.9%.
ii. The Applicant’s Debt to Gross Income Ratio is between 43.1% and 43.9%.
iii. 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.
iv. In the situation where a Divorce Decree assigns mortgage payment responsibility to an ex-spouse and the Credit Report still indicates “joint responsibility” and the inclusion of the mortgage payment would make the Applicant’s Gross Debt to Gross Income Ratio in excess of 43.9%.G. TOTAL OF ALL PAST DUE ACCOUNTS: If the total of all past due accounts showing in the Applicant’s credit report exceed the amount of one month’s rent, the Broker will decline the Application and issue an Adverse Action Notice. (Revised 7/9/2021)
H. 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. (Revised 10/2/2020)
I. RENTAL CUSTOMERS APPLYING WHEN A DIVORCE IS PENDING: When a Rental Customer presents a Lease Application while a divorce is pending, the non-occupying spouse will be required to present an Application and sign a Cosigner Agreement. (Effective 10/2/2020)
J. 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.
K. NO COSIGNERS: (Revised 10/2/2020) Generally speaking, all Prospective Tenants must be able to qualify without the assistance of a Cosigner. There are three exceptions to this rule:
- NON-OCCUPYING SPOUSE COSIGNING LEASE: See Section 13.I. above.
- 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 document financial capacity to make Lease payments and the Principal will occupy the premises, 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.
- BUSINESS ENTITY OR CORPORATION GUARANTEEING LEASE: Business entities or Corporations that can demonstrate financial capacity to pay rent can lease property for their Employees in certain cases. Landlords are not required by law to consider Corporate Leases, so the Landlord would have to agree to consider a Corporate Lease offer.
L. NO ROOMMATES: The Broker will not lease to roommates unless required by law (see below).
This disclosure is not set forth as legal advice. The Broker is not an Attorney and is not issuing legal advice in this disclosure. To obtain legal advice on this subject, please consult with an Attorney.
For the purpose of this disclosure, the term “roommates” shall not apply to two individuals presenting as an “unmarried couple”. The term “roommates” shall apply to unrelated individuals occupying a single family property.
This policy becomes effective March 3, 2020 and changes the previous policy (effective October 16, 2019) which allowed for leasing to roommates limited to the applicable local jurisdictional zoning code. It is the Broker’s understanding that most municipalities in the Birmingham Metro Area limit the number of roommates to no more than two. The Broker is aware of one exception, being Homewood, which allows no more than three.
It is the Broker’s observation that Federal Fair Housing Laws do not specify roommates as a protected class. Therefore, the Broker acknowledges no affirmative duty to accommodate roommates.
It is the Broker’s understanding that according to some online sources, HUD defines a family as “simply one or more individuals who live together”. It is also the Broker’s understanding that the HUD guidelines apply to individuals seeking to qualify for Section 8 government assistance with housing.
Therefore, it shall be the Broker’s policy that he will not lease to roommates unless the HUD guidelines apply because the Applicant has obtained Section 8 assistance and the specific Property Owner has also qualified with HUD to receive such assistance. In that case, the number of roommates would be limited by the applicable local jurisdictional zoning code.
Roommate Applicants with Section 8 assistance can contact the office at (205) 259-1918 Monday through Friday between 8:30 AM and 5:30 PM to check and see if any particular property listed by the Broker has an Owner qualified to receive Section 8 vouchers.
M. 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.
14. Other Issues for which the Broker may Decline the Application
There are other issues not included above in Sections 1 through 13 for which the Broker may decline an Application depending on the issue’s status. When delinquencies remain unsatisfied and are in an amount equal to or greater than one month’s rent, the Broker will decline the Application. These delinquencies include, but are not limited to:
- Charged Off Accounts
- Child Support
- Delinquent past or present rental obligations
- Delinquency Judgments for Short Sales and/or Foreclosures
It should also be noted that any debt in an amount equal to or greater than one month’s rent that has been reorganized with a creditor on a new payment schedule will be deemed an account delinquency for which the Broker will decline the Application, irregardless of whether or not the Applicant is current with their payments on the new agreement. The only exception to this rule would be when applicable law prevents the Broker from deeming specific debts as being delinquent after being reorganized, such as student loans, etc.
15. Issues to be Decided by the Landlord, Not the Broker
A. 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.
B. 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.
C. POLICY REGARDING APPLICANTS WITH CRIMINAL HISTORY: 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.
16. 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 700 average score 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.
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.