Published Minimum Requirements for Lease Application Approval for Properties Listed by Birmingham Home Leasing

1. 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.

2. Incomplete Applications

When an Applicant does not provide all the information required to complete the Lease Application, then the Broker will issue a “Notice of Incomplete Application” and detail the information that the Applicant needs to supply. The Broker will not “pull” the Applicant’s credit reports and background report until the Applicant completes the Application. The Broker will notify the Applicant that they have 72 hours to complete the Application. If the Applicant does not complete the Application within 72 hours after receiving the notice, then the Broker will refund the Application Fee. The Broker will not approve or decline an Incomplete Application. (Effective 8/24/2020)

3. 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)

4. 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).

5. 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.

6. 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).

7. 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 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 will not indicate “Pending” and the Broker will continue to take Applications and/or present Leases for signature from other Rental Customers. (Revised 8/14/2020)

8. No Pre-Paid Leases

A. The Broker does not permit the execution of Leases with partial or entire pre-payment of rent.

9. 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 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 issue a notice informing the Applicant that the Application is incomplete. (Revised 8/20/2020)

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 “Mortgage Model” Credit Scores, specifically, TransUnion FICO® Classic (04), Experian Fair Isaac (Ver. 2), and Equifax FICO® Classic V5 FACTA. The Broker will calculate the Applicant’s 3 Bureau Credit Score Average. Applicants applying to lease properties advertised to rent for up to $2,999 per month must have at least a 650 FICO Credit Score Average and Applicants applying for properties that lease for $3,000 or more per month must have at least a 700 FICO Credit Score Average. 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.

D. DOCUMENTING FINANCIAL CAPACITY TO PAY RENT: If you view a property and decide to apply, you will need to document a Gross Income to Rent Ratio of at least 3 to 1. All Applicants must provide IRS Form 1040 from the most recent filing period. Additional documentation for employed Applicants is accomplished by providing copies of the two most recent pay stubs. Individuals transferring to the area for new employment can provide a Letter of Employment or equivalent. Applicants who are not employed, such as individuals who are (but not limited to) self-employed, members of a LLC, etc., must provide bank statements sufficient to support their claim of declared income since the last tax filing period. Non-employed Applicants must also have an Adjusted Gross Income on their IRS Form 1040 of at least 3 times the annual rent. Retired individuals or individuals who can demonstrate financial capacity without employment or self-employment income can provide statements documenting liquid assets in an amount to qualify on the 3 to 1 Income to Rent Ratio requirement. (Revised 9/14/2020)

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. DEFINING CONDITIONS THAT CAN EXIST ON AN APPLICATION THAT MEETS THE MINIMUM PUBLISHED OBJECTIVE CRITERIA FOR APPROVAL, BUT THE LANDLORD RESERVES THE RIGHT TO APPROVE ON THE CONDITION THAT THE APPLICANT PROVIDE A DOUBLE SECURITY DEPOSIT: There are some Applications that technically meet the prescribed objective criteria for approval, but contain conditions that the Landlord may consider presents additional risk. When one or more of the conditions specified below exists in an Application, the Landlord reserves the right to approve the Application with the stipulation that the Applicant provide a Double Security Deposit.

i. For Applicants applying to lease properties advertised to rent for up to $2,999 per month, if the Applicant’s 3 Bureau FICO® Credit Score Average is between 650 and 699.

ii. The Applicant has less than 3 Bureaus reporting a score or Bureau reports with limited data.

iii. The Applicant’s Rent to Income Ratio is between 30.0% and 33.3%.

iv. The Applicant’s Debt to Income Ratio is between 40.0% and 43.0%.

H. 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 APPROVE ON THE CONDITION THAT THE APPLICANT PROVIDE A DOUBLE SECURITY DEPOSIT OR DECLINE THE APPLICATION:

i. The Applicant’s Rent to Income Ratio is between 33.4% and 33.9%.

ii. The Applicant’s Debt to Income Ratio is between 43.1% and 43.9%.

iii. The Applicant provides an IRS Form 4868 for the most recent tax filing period.

iv. 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.).

v. 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.

vi. The Applicant has been employed for less than 12 months with their current employer.

vii. 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 Debt to Income Ratio in excess of 43.9%.

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 Incomplete Application” (see Section 2 above). (Revised 8/24/2020)

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. NO COSIGNERS: (Revised 8/4/2020) Generally speaking, all Prospective Tenants must be able to qualify without the assistance of a Cosigner. There are three exceptions to this rule:

  1. APPLICATION WHEN DIVORCE IS PENDING: When a Prospective Tenant applies to lease a property while a divorce is pending, the “non-occupying spouse” shall be required to sign a Cosigner Agreement.
  2. 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.
  3. 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.

N. 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.

O. 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.

10. The Broker’s Policy on Applicants Who are Authorized Users on Another Person’s Credit Card (Revised 8/19/2020)

The Broker acknowledges that being an Authorized User on another person’s credit card that is not their spouse is legal, but since its intended use is to artificially inflate the Applicant’s credit score and credit worthiness, the Broker considers it a “deceptive practice”. There are two types of Authorized Users other than on a spouse’s account. The so-called “Traditional” Authorized User scenario is when a relative or friend with good credit adds an individual as an Authorized User. Since 2007, it is possible to purchase or “rent” tradelines from a company that sells this service. The Broker considers all Authorized Users (except for on a spouse’s account) to be a deceptive practice. Therefore, the Broker reserves the right to issue an Adverse Impact Notice to individuals submitting a Lease Application when a review of the Applicant’s credit report indicates they are an Authorized User on someone else’s credit card who is not their spouse and the aggregate of the credit limits on those Authorized User tradelines are in excess of 33% of the Applicant’s total open credit limit.

11. 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: 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.

12. 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 or 700 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.

13. Documentation of Past Published Policy Changes

A. Roommate Policy Changes:  Prior to May 26, 2018, leasing to roommates was allowed by the Broker with the condition that at least one member of the roommate group could individually qualify on credit and income requirements.  From May 26, 2018 through October 16, 2019, the Broker published a policy prohibiting leasing to roommates. On October 17, 2019, the Broker changed the roommate policy to allow renting to groups of roommates governed by the applicable local jurisdictional zoning code.  On March 3, 2020, the Broker changed the roommate policy to no roommates unless “required by law” (see above).

B. On November 4, 2019, the minimum rental rate for listing a property with Birmingham Home Leasing was raised from $1,100 per month to $1,500 per month.  On April 21, 2020, the minimum rental rate for listing a property with Birmingham Home Leasing was raised from $1,500 per month to $2,000 per month.  All previous Landlords that have listed properties with Birmingham Home Leasing for $1,999 or less retain the right to continue listing those properties with Birmingham Home Leasing.

C. On June 28, 2020, the Broker discontinued policy originally indicated as Section 9.H.vi. which said the following: “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 OR APPROVE ON THE CONDITION THAT THE APPLICANT PROVIDE A DOUBLE SECURITY DEPOSIT: 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 above policy was modified to authorize the Broker to make the decision on this issue and can be found at Section 10 above.

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.

9/14/2020