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. 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)

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. 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)

6. 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).

7. Rental Customers Cannot Place a “Hold” on a Property

Rental Customers cannot place a “hold” on a property and take it off the market by viewing, applying, having an Application approved or placing a deposit. (Revised 10/9/2020)

8. No Pre-Paid Leases

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 their IRS Form 1040 for the most recent filing period, with evidence of processing, to complete their Application. The Broker will not forward an Application to be approved by the Property Owner unless IRS Form 1040, from the most recent filing period and with evidence of processing, is received. To read what specific actions the Broker will take when the above requirements are not met, please see below. (Revised 11/10/2020)

  1. If the Applicant does not provide IRS Form 1040 from the most recent filing period, then the Broker will issue a Notice of Incomplete Application. The Broker will wait 72 hours to allow the Applicant to complete the Application and if the Applicant does not complete the Application, then the Broker will issue a refund and will not process the credit report. In this situation, the Law does not require that the Broker issue a FCRA Compliant Notice and none will be issued.
  2. If the Applicant provides IRS Form 1040 from the most recent filing period but does not include evidence of processing, then the Broker will process the credit report and issue a Conditional Approval or Adverse Action Notice, whichever is appropriate. If a Conditional Approval is issued, the condition will be that the Applicant provides evidence of processing or consent to processing IRS Form 4506-T, which will require additional fees and time.
  3. When an Applicant has previously pre-qualified for a showing and presented one of their three Bureau credit reports and does not complete their Application, then the Broker will process the other two Bureau credit reports and issue a Conditional Approval or Adverse Action Notice, whichever is appropriate.

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. 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. (Revised 10/22/2020)

D. REQUIRED RENT TO INCOME RATIO: The Applicant is required to declare and document financial capacity to pay the rent. The income requirement for Lease Application approval is a ratio of 3 times the rent in gross income. Individuals who are not employed but have the financial capacity to make rent payments can document this by providing account statements for liquid assets (savings accounts, retirement accounts, stocks, etc.). All Applicants declaring income provide documentation by consenting to provide bank statement information transferred through a third party (see below). (Revised 10/16/2020)

E. BANK STATEMENT INFORMATION REQUIRED TO DOCUMENT INCOME: Applicants required to document income agree to consent to send bank statement information to the Broker via The Closing Docs, which is a fully encrypted and secure service. (Effective 10/14/2020)

F. DEBT TO INCOME RATIO: All Applicants must document a Debt to Gross Income Ratio of no more than 43%. Total debt is added up (including the new rent payment) and divided into total gross 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. (Revised 10/14/2020)

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. (Revised 10/14/2020)

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 Gross Income Ratio is between 30.0% and 33.3%.

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

v. When more than 50% of the Applicant’s maximum available credit is provided by being an Authorized User on another individual’s credit card (who is not their spouse), then the Landlord reserves the right to approve (an otherwise qualifying Application) by requiring a Double Security Deposit. (Revised 10/22/2020)

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: (Revised 11/10/2020)

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

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

v. 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%.

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. (Revised 10/2/2020)

K. 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)

L. 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.

M. 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:

  1. NON-OCCUPYING SPOUSE COSIGNING LEASE: See Section 9.K. above.
  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. Incomplete Applications

(Revised 10/7/2020)
This disclosure explains the action that the Broker will take when an Applicant submits an Incomplete Application. There are at least three ways that an Applicant can present an Incomplete Application, which include, but are not limited to:
i. Failure to include all required documentation
ii. Providing password-protected documents without providing the password
iii. Consenting to allow the Broker to pull the Applicant’s credit report when the Applicant has their credit reports locked or frozen.

Upon receipt of an Incomplete Application, the Broker will issue a Notice of Incomplete Application if no credit report was previously pulled for Pre-Qualification for self-showing privileges. If a credit report was previously pulled for Pre-Qualification for self-showing privileges, then the Broker will process the Lease Application and issue the appropriate FCRA Compliant Notice, which will either be an Adverse Action Notice or a Conditional Approval Notice.

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: 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.

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.

11/10/2020