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Minimum Requirements for Lease Application Approval

1. Agency Disclosure

A. Dean & Associates Inc DBA 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. Application Processing Policy

The Broker does not render an approve or decline decision based on the order of when applications are submitted, he renders those decisions based on the order of when they are completed. Properties are not put on hold when an application is submitted. 

3. Identity Verification Required

Fake Drivers Licenses, Pay Stubs, Bank Statements, Utility Bills, and Tax Returns are easily and quickly produced online. It is also easy to create a Synthetic Identity for the purpose of creating a fake Credit Report with a Credit Score. Due to the proliferation of websites that provide fake documentation for lease applications, the Broker now requires all Applicants to positively verify their identity prior to starting the application. The primary method the Broker uses to verify identity is by using a Knowledge-Based Authentication questionnaire. An alternative method for identity verification is for the Applicant to facilitate the transfer of their checking account information through a third party. The former method is only available upon request.

Knowledge-Based authentication is only available for US citizens and US residents with valid social security numbers. In addition, signers must have public records to generate questions and answers. Otherwise, they cannot use Knowledge-Based authentication.

Legal Residents with a TIN and without sufficient public records to generate questions and answers can contact the Broker and request a link to facilitate the transfer of their checking account information through a third party.

If you have power of attorney to represent someone who is interested in a rental property, do not attempt to process the KBA. Contact the Broker during business hours to request a link to facilitate the transfer of the Applicant’s checking account information through a third party.

It is strictly prohibited to request an application with the intent of passing a Knowledge-Based Authentication (KBA) questionnaire for the purpose of delivering the application to another individual. When the Broker receives an application from an individual who did not complete a KBA or whose identity was not verified according to a method used and approved by the Broker, then the Broker will issue a Federal Trade Commission (FTC) Red Flags Notice. The Broker does not acknowledge any right or privilege assumed by an Applicant to ignore the Identity Verification process set forth in this disclosure. The Broker is not an attorney and does not give legal advice. If you have questions or concerns about your rights as an Applicant for rental housing, contact an Attorney.

4. The Broker Acknowledges No Duty or Obligation to Accept Documents from the Applicant or Third Parties Commenting on Information Currently Showing in the Applicant’s Credit and Background Report

The Applicant’s credit report, background report, or credit history (“Credit Report”) may show debts and or other 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 debts and or other 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.

Mortgages will be included in the Debt to Income Calculation prior to closing and the updating of the Applicant’s Credit Report.  The Broker acknowledges no duty to the applicant to assume the sale of a property, a closing will or has taken place and or that a Credit Report Updating will take place.

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 debts and or other 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.

5. The Broker Includes Charged Off Accounts in the Calculation of the Debt to Income Ratio

The calculation of the Debt to Income Ratio includes current and past due monthly obligations and delinquent debt (including charged off accounts) that all totaled together cannot exceed 43% of the Applicant’s income. As two separate categories, within the 43% limit, the total of all monthly past due obligations or the total of all delinquent debt cannot equal or exceed the amount of one month’s rent. An example of delinquent debt would include, but is not limited to: Charged Off Accounts, Judgments, Collections (including Medical), Liens, Child Support, Garnishment, Attachment, Delinquent past or present rental obligations, Delinquency Judgments for Short Sales and or Foreclosures. These rules apply even if you have a high credit score.

6. Rental Customers and or Applicants Who Want to Request an Exception to the Broker’s Published Policies

A. Our policy is to provide real estate leasing services in strict compliance with all applicable laws, rules and regulations, and only to Applicants who can clearly demonstrate that they qualify on the Published Minimum Requirements for Lease Application Approval.

B. Broker is authorized by Owner to deal with Applicant with regard to all aspects of the Property and the application process. To prevent confusion and to preserve the line of communication, Applicants will not have the option to communicate directly with Owner. All communications to Owner are to go through Broker in this capacity, and Broker will relay Applicant’s communications and requests after which Broker will act upon Owner’s responses. In the situation where the Applicant is requesting that the Owner grant an exception to the Broker’s published criteria and the Owner does not reply within 7 calendar days, the answer will be considered to be in the negative and the matter will be closed.

C. In the situation where the Broker forwards a request to the Owner from a Rental Customer to make an exception to published criteria for Lease Application approval, the Broker is not making an implicit or explicit affirmation that Broker will be able to agree to facilitate the exception. Broker’s policies and published criteria are important, have been developed carefully, and are applied uniformly. In the event an exception is requested by Rental Customer and permitted by Owner with which Broker disagrees, Broker reserves the right to withdraw from the relationship among Rental Customer and Owner to allow Rental Customer and Owner to reach agreement between themselves as desired.

D. The request for an exception to be granted by the Owner must be presented to the Broker in an email, which the Broker can forward to the Owner. This rule is to establish a record of the specific request for an exception and to establish the record that the Broker did convey the request to the Owner.

7. Rental Arbitrage, Sub-leasing, Assignment, etc. is Strictly Prohibited

Tenant shall not sublet, under-lease, sub-rent, sub-lease, offer rooms for rent, or otherwise take on occupants not identified in this Lease. Tenant shall not offer any portion of the premises for a sublease by placing on the same any “to rent”, “furnished room”, “room to rent”, or similar sign or notice or by advertising the same in any newspaper, on any short-term rental website such as VRBO or AirBnB, or any place or manner whatsoever. Any arrangement listed above or any other transfer or assignment of this lease, shall be null and void at the option of the Landlord. Tenant agrees that the breach of this provision shall be considered a material noncompliance with the terms of this lease, entitling Landlord to deliver written notice to terminate this lease pursuant to Alabama law.

8. Lease Terms for Approximately 12 Months Unless Otherwise Stated

The Broker writes Leases for approximate 12 month Lease terms. If the owner makes the property available for a 6 month lease it will be stated in the advertising. Requests for lease terms that exceed 12 months will be considered on a case by case basis, but in no case will a lease extend longer than approximately 18 months.

9. All Lease Signatories Must Personally Visit the Property & Approve Its Condition

All Prospective Tenants must personally visit 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 visit by all Signatories.

10. No Extended Move In Dates

Applications with a move in date of more than 40 calendar days from the day the application is submitted will be automatically rejected. This rule should not be understood to mean that the Owner would necessarily accept any move in date within the 40 day limit. It is the Owner’s sole prerogative to determine their acceptable move in date.

11. Properties may be Temporarily Taken Off the Market in Certain Situations

The time between when an Application is deemed “approvable” by the Broker and the Lease is signed can be several days. In order to avoid receiving Applications while the Lease is pending signature, the Broker may discontinue advertising for a property.

12. No Pre-Paid Leases

The Broker strictly prohibits the execution of a partially or full pre-paid Lease.

13. 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 the advertised minimum required credit score.

14. 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.

15. Authorized User Policy aka “Piggybacking”

When an individual is made an Authorized User on another individual’s credit card or revolving credit account their credit score may be positively affected if the Primary Cardholder has good or excellent credit. Individuals with good credit sell Authorized User access to their credit cards and revolving credit accounts commercially and the practice is sometimes referred to as “piggybacking”. The Broker is aware that piggybacking is legal, but the Broker and other lenders consider this to be a deceptive practice. When a review of the Applicant’s credit report reveals that 50% or more of the Applicant’s total credit card limit and or revolving credit limit is supplied by being an Authorized User on another individual’s credit card(s) and or revolving credit account(s) and that individual is not a spouse, then the Broker will automatically decline the Application and issue an Adverse Action Notice and depending on the circumstances the Broker may also issue a Federal Trade Commission (FTC) “Red Flag” Notice.

16. 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, a permanent resident alien, a non-permanent resident alien, or an illegal alien. If the Applicant declares they are a permanent or non-permanent resident alien, they must provide supporting documents. If the Applicant fails to provide the required proof, then their Application will be declined. If the Applicant declares that they are an illegal alien, then their Application will be declined.

17. Three Bureau Credit Reports Required

Missing Credit Report(s) or Score(s): All Applicants must have a credit report and a credit score with all three Bureaus. There are two exceptions to this rule. (1) When one member of a married couple individually qualifies on the credit and income requirements and the other spouse does not have a report with all three Bureaus, then the Broker will make an exception to this rule. Each Applicant’s credit scores must average to at least the Owner’s prescribed minimum Credit Score Criteria found in the online advertising. (2) When a Foreign National who is an employee of a multinational corporation is transferred to the Birmingham Area and does not have a US Credit File then the Broker will consider leasing to this individual provided the following conditions are met:

  1. The Corporation that employs the Foreign National or a third party, such as a relocation agency, agrees to guarantee the lease.
  2. The Corporation that employs the Foreign National or a third party, such as a relocation agency, must be registered with the Alabama Secretary of State.
  3. The Corporation that employs the Foreign National or a third party, such as a relocation agency, affirms in writing that the subject individual does not have a US Credit File.
  4. The Corporation that employs the Foreign National or a third party, such as a relocation agency, that will guarantee the lease must have a business credit report available to be purchased online by the Broker.
  5. In the sole opinion of the Broker, the business credit report must clearly demonstrate the guarantor’s financial capacity to make all rent payments.
  6. The Broker will hold the Security Deposit.

Locked and or Frozen Credit Report(s): All Applicants are responsible for being sure that all three bureau reports are unlocked and or unfrozen before they submit a Lease Application. If the Broker “pulls” the three bureau credit reports and one or more bureau reports are locked or frozen, then the Broker will issue an Adverse Action Notice to the Applicant, citing the reason for declining as presenting an “incomplete application”.

18. Minimum Credit Score, Ration Requirements & Maximum Delinquencies

Effective January 29, 2024 the minimum credit score and ratio requirements are as follows:

  • The Broker and Owner will agree on a minimum credit score requirement
  • Gross Income to Rent ratio must be at least 3 to 1
  • Debt to income ratio cannot exceed 43%

For debt to income ratios that are slightly over 43.0% the rounding rule shall be any percentage equal to or less than 43.4% shall be rounded down and considered qualifying.

19. Student Loan Debt to Income Calculation

When an Applicant has deferred student loans or loans in forbearance and the monthly payment amount is not disclosed on the credit report then the Broker will use the Fannie Mae guideline of 1% of the outstanding student loan balance as the monthly payment to use for the calculation of the Applicant’s Debt to Income Ratio.

20. Demonstrating Financial Capacity to Pay Rent

The demonstration of financial capacity to pay rent is based on the declaration and documentation of recurring income. For the purposes of this disclosure, recurring income is defined as including but not limited to: employment income, self-employment income, Social Security Benefits, Disability Benefits, required distributions from Retirement Accounts, Dividends, Alimony, Child Support, etc. Voluntary withdrawals from Retirement Accounts are NOT considered recurring income.

21. Documentation Requirements for Employed Applicants

For the purposes of this disclosure, Employed Applicants shall be defined as individuals who receive a W-2.

 

A. Minimum Requirements for Lease Application Approval include but are not limited to:

  1. Single Applicants and or Joint Applicants must declare qualifying recurring income or the Broker will reject the application without pulling the credit report.
  2. Single Applicants and or Joint Applicants must document qualifying recurring income or the Broker will reject the application without pulling the credit report.
  3. Employment income must be stable, consistent and ongoing. The Applicant will provide verifiable documentation of income for the previous 12 months and employment income should seem likely to continue for at least 1 year after lease execution.
  4. Employed Applicants must provide tax returns for the most recent filing period and previous filing period. Tax filing extensions will not be accepted. If the Applicant uploads a copy of their tax returns, they must also upload proof of filing the tax returns. Alternatively, the Applicant can obtain a transcript of their tax returns from IRS.gov and upload the transcripts.
  5. Employed Applicants must provide their most recent pay stub showing their year to date gross income and itemized deductions.
  6. All income information provided by the Applicant must be verifiable through 3 months of checking account bank statements.
  7. Applicants who are taking new employment must also provide their Letter of Employment stating their new annual salary.

 

B. Conditions that can Cause Your Lease Application to be Declined include but are not limited to:

 If your employment is inconsistent and or irregular it may cause your Application to be declined.

  1. Gaps in your employment history may cause your Application to be declined.
  2. If you have had 3 or more Employers within the previous 12 months it may cause your Application to be declined.
  3. If your employment is classified or offered as “Temporary” it may cause your Application to be declined.
  4. A history of income in a declining industry may cause your application to be declined.
  5. Providing a pay stub or any payment documentation that does not include year to date gross income and itemized deductions may cause your Application to be declined.
  6. The Broker will not accept employment income information from mobile payment services such as Google Pay, Cash App, Venmo, Apple Pay, etc.

22. Documentation Requirements for Self-Employed Applicants

For the purposes of this disclosure, a self-employed individual or an effectively self-employed individual shall be defined as a person who has recurring income but is not a W-2 employee.

 

A. Minimum Requirements for Lease Application Approval include but are not limited to:

  1. Single Applicants and or Joint Applicants must declare qualifying recurring income or the Broker will reject the application without pulling the credit report.
  2. Single Applicants and or Joint Applicants must document qualifying recurring income or the Broker will reject the application without pulling the credit report.
  3. Self-employment income must be stable, consistent, and ongoing and should seem likely to continue for at least 1 year after lease execution.
  4. Applicants must have had a qualifying income for the subject property in the previous 12 months.
  5. The trend of year to date income since the previous tax filing must be equal to or greater than the last tax filing.
  6. When applicable, the Broker will use the Applicant’s adjusted gross income from their tax return and add back non-cash expenses such as scheduled depreciation for assets.
  7. The Broker requires documentation of ongoing Self-Employment income after the last tax filing year with a Business Profit & Loss Statement and Business Checking Account Statements. The information in a Profit & Loss Statement includes but is not limited to: Net Profit and Loss = [(Total Revenue + Additional Income) – (Cost of Products and Services + Operating Costs)] – (Interests + Taxes + Depreciation + Amortization). If you do not provide a Profit & Loss Statement for your Self-Employment Business, the Broker will not approve your Application. If you do not have a Business Checking Account for your Self-Employment Business and the Deposits in your Personal Checking Account from your Business do not indicate clear and obvious attribution to your Self-Employment Business then the Broker will not approve your Application.
  8. Self-employed Applicants must provide personal tax returns for the most recent filing period and previous filing period. For self-employed Applicants with at least 25% ownership in a corporation, “S” corporation, or partnership, they must also provide signed copies of Federal business income tax returns for the most recent filing period and previous filing period, with all applicable tax schedules, which could include a Schedule C, Form 1120S or K-1, depending on your business structure. Tax filing extensions will not be accepted. If the Applicant uploads a copy of their tax returns, they must also upload proof of filing the tax returns. Alternatively, the Applicant can obtain a transcript of their tax returns from IRS.gov and upload the transcripts.

 

B. Conditions that can Cause Your Lease Application to be Declined include but are not limited to:

  1.  Gaps in your employment history may cause your Application to be declined.
  2. A history of income in a declining industry may cause your application to be declined.
  3. The Broker will not accept self-employment income information from mobile payment services such as Google Pay, Cash App, Venmo, Apple Pay, etc.

23. Documentation of Assets are Not Accepted to Demonstrate Financial Capacity to Pay Rent

The verification of documentation of assets including, but not limited to: real property, stocks, bonds, etc, is not a real estate service provided by the Broker. Financial capacity to pay rent is documented on recurring income only. In addition, the Broker does not consider the documentation of cash on hand, including, but not limited to: cash in checking accounts, savings accounts, money market accounts, CDs, etc.

24. IRS Letters Required in Certain Situations

In the situation where an Applicant(s) only recurring income is Social Security and the Applicant is not required to file income tax returns, then the Broker will require a Verification of Non-Filing Letter from the IRS.

25. Current IRS Tax Transcrips Required in Certain Situations

In the situation where an Applicant(s) only recurring income is Social Security and the Applicant is not required to file income tax returns, then the Broker will require a Verification of Non-Filing Letter from the IRS.

26. Who is Required to Present a Joint Application

Both spouses of married couples must submit a Lease Application. It is strongly recommended that both spouses submit their lease applications simultaneously. When the Broker receives an Application from one spouse and not the other, the Broker will process the first Application promptly. If the Application is not “approvable” the Broker will issue an Adverse Action Notice. The Broker will not notify the first applicant if the application is approvable, but will wait until the end of business next day to receive the second spouses application. Joint Applications that are not completed within the time period described above will be rejected as Incomplete.

27. 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.

28. No Roomates

It is the Broker’s understanding that Federal Fair Housing Laws do not specify roommates as a protected class. Therefore, the Broker acknowledges no affirmative duty to accommodate roommates.

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 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.

29. 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.

30. No Corporate or Business Entity Leases

For the purpose of this disclosure, a corporate lease shall refer to the situation where a business entity is asking to sign the lease as guarantor for one of their employees. Sole proprietors and part or sole Owners of corporations or other business entities shall present a personal application to lease a property they intend to occupy. There is one exception to this rule that applies to Foreign National employees of multinational corporations transferred to the area (see Section 17. (2))

31. No Co-Signers or Guarantors

The Broker does not accept a Co-signer or a Guarantor in lieu of the Applicant qualifying on the advertised or published minimum requirements for lease application approval.

There are two exceptions to this rule: (1) In the situation where one member of a married couple applies when a divorce is pending but not yet finalized, then the non-occupying spouse is required to apply and co-sign the lease. (2) See Section 17. (2).

32. Background Reports

In addition to the Broker pulling Applicants’ credit reports, the Broker will also pull background reports, including but not limited to, nationwide criminal history reports, on all Applicants and on all occupants age 19 and older. Occupants 19+ years old who are not Applicants will be required to sign a consent form and pay a $50 fee.

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.