Potential Tenant Can Only Pay Rent With Alimony. What Do I Do?
Scott EverhartPro Member
Investor · Hawthorn Woods, IL · Member since 2015 · 13 posts · 0 votesI have a new property I'm putting on the market to rent. A prospective candidate has come to my property and likes it. She is a woman going through a divorce and will receive alimony. The alimony will be her source of income for rent (No Job). How do I properly get proof of the alimony she will receive AND how do I protect myself from her either not paying or getting her alimony to pay? While she seems like a nice lady, I don't want to be caught in the middle if her X-Husband decides he doesn't want to pay her. What are the proper steps here to cover myself properly?
Alimony alone is 3X rent? All other items in her background and credit check are acceptable to you? Don't let her in until you see a few months of checks in her hand. This could take years before they settle or they could reconcile. Move on to another prospective tenant.
Tell her that you would need to see a year's worth of bank statements to prove the alimony payments were reliable, and since she can't provide that, then you have to deny her.
And in the future, find any possible legal excuse you can to deny anyone going through a divorce or freshly divorced. At minimum, they will move out shortly. And normally, there is a lot of drama with the ex. They're just a hot mess.
I would not accept alimony by itself as income. Why does she not have a job.
I would not accept her unless the ex husband was willing to be a guarantor since her income depends entirely on him paying.
If it were me I would be continuing to look for a working applicant that qualified.
Fair housing laws require that certain forms of income MUST BE considered. Future income from a pending divorce? I don't know.. I would be hesitant.
Fair housing laws require that certain forms of income MUST BE considered. Future income from a pending divorce? I don't know.. I would be hesitant.
This is true in CA - you can't discriminate based on source of income. But, since she can't show it as reliable income right now, I think you could get away with denying her, even in CA.
We also have similar codes that I prefer to ignore rather than place my investments in jeopardy. If her husband for any reason stops paying you would have to put her on the street. If she was a responsible adult and had a job it would be different but she prefers to live off her husband. The reality is you would really be renting to and depending on the husband whom you can not screen.
To be honest I have never had a perfect applicant so it has always been very easy to justify rejecting any applicant for a reason that is not discriminatory or a violation of codes. Codes are easy to work around so Fair housing is never a concern.
I would never accepted any applicant because I am forced to. I only accept the ones I want.
@Account Closed this is federal law...applies to all 50 states.
@Account Closed this is federal law...applies to all 50 states.
Source of income? I respectfully disagree.
It is covered under Federal Fair Housing..states can extend Fair Housing to include source of income. You are probably correct though..maybe not all states have taken that action. Florida has.
@Account Closed this falls under Federal Fair Housing laws...
But source of income is not listed as a protected class under federal fair housing laws. So, you'll have to educate me on where this info is.
From here: http://www.nolo.com/legal-encyclopedia/the-fair-ho...
"The FHA, to date, includes seven protected classes: race, color, religion, national origin, sex, disability, and familial status. This last term refers to the presence of at least one child under 18 years old, and also protects prospects and tenants who are pregnant or in the process of adopting a child. You may legally turn away families with children, however, if your rental property qualifies as senior housing. (Check out the Nolo article, "Senior Housing Basics," for more information.)"
Some states add source of income, like CA. But, maybe you're thinking of another law I don't know about? Not being snarky, I promise. You're very knowledgable and I enjoy learning this stuff. Just confused on what law it would be.
States have followed in line with the "familial status" laws. So they have expanded their guidelines to include source of income. This helps protect a single mom who is receiving child support and the landlord attempts to disqualify her on income. It is an expansion through regulatory mandates. HUD is now pushing this along with the requirement that you cannot refuse to accept section 8 vouchers IF you are set up with them. Some communities now require landlords to accept section 8. Some in Florida do but thank goodness not where I own. It is just another layer of bureaucratic tape. Landlords have a tough enough time as it is. I DO NOT subscribe to discrimination in any form. That is wrong and immoral. However, landlords SHOULD have the right to run their business in the most efficient and lawful manner without more government intervention.
This is from HUD 10-121 issued June 11, 2010
A familys source of income should never be used as a basis to discriminate against them, said HUD Secretary Shaun Donovan. We are sending a very clear message to those who seek federal funds that we intend to stand up for the cause of civil rights and expect them to do the same.
John Trasvia, HUD Assistant Secretary for Fair Housing and Equal Opportunity (FHEO), added, Prohibiting this form of discrimination provides an essential protection for many Americans, including disabled veterans, seasonal workers, and persons that are using housing choice vouchers to maintain housing for themselves and their children. Racial discrimination is often perpetrated through denials of housing opportunities to Section 8 voucher holders. It is wrong and HUD will now keep systemic violators from applying for HUD funds.
Greg S.
I was wondering did your mother work ? You keep going on about why this lady doesn't work and if she was a good person she should have a job. So I ask you how old you are ? Because I'm 45 and I grew up with a mother who took care of the kids and the house while my father got to get away each day and mingle with his friends at work. Meanwhile the conversations my mother had the most of was with the dryer or washing machine or real intelligent ones with us kids.. Now my parents are still married but imagine if you can that one day my father comes home and declares after 40 years of marriage, that he fell in love with his secretary or one of his buddy's at work ( lol, I just had a image of my dad being gay ..) it has happened to 100's of thousands of women. So now my moms getting divorced but after 40 years of not working a 9-5 job .. Her's was a 24 hr job.. She finds herself relying of the fact that my father makes $150k a year and will be paying her alimony .. But hey maybe she should get out there and waitress because she's not human in your eyes .. I'm sorry this is the first time I have had to school someone on BP , everyone else has shown nothing but respect for their fellow human..
I hope your parents are married and your mother, sister, friend .. Never has to go through that hypothetical situation.
Michael Short
You are somewhat off on the "not human" I said "responsible adult", big difference.
My parents are dead, I am 63and yes my mother worked. All irrelevant. My policy is business before people. Once you are my tenant different story.
What is relevant is the hear and now, today and todays expectations. People that want to rent need to work if they want to rent from me, for the most part. I will rent to qualified applicants that have a job history, are on pension or are over 65. Assuming they meet all other qualifications. If they are on welfare, self employed or not working, regardless of their income, I do not rent to them. Too much risk.
In this case the husband is giving the ex money like a parent supporting a student. It is not a employer that you could evaluate, and there are no guarantees he will continue to pay. If she worked and lost her job she could find another one. Not about what is or is not acceptable it is about whether I am going to get paid. I am not convinced 100% going in that she will be able to pay depending on the husband. It is not secure enough income when a landlord must depend on someone other than a employer. There is always risk but in this case the risk is too high.
This is from HUD 10-121 issued June 11, 2010
A familys source of income should never be used as a basis to discriminate against them, said HUD Secretary Shaun Donovan. We are sending a very clear message to those who seek federal funds that we intend to stand up for the cause of civil rights and expect them to do the same.
John Trasvia, HUD Assistant Secretary for Fair Housing and Equal Opportunity (FHEO), added, Prohibiting this form of discrimination provides an essential protection for many Americans, including disabled veterans, seasonal workers, and persons that are using housing choice vouchers to maintain housing for themselves and their children. Racial discrimination is often perpetrated through denials of housing opportunities to Section 8 voucher holders. It is wrong and HUD will now keep systemic violators from applying for HUD funds.
This is a message to "those who seek federal funds," and "HUD will now keep ... from applying for HUD funds." So, apparently, if you are a Section 8 landlord, you can't discriminate for source of income. Thanks.
But, surely, you can discriminate against someone who has no verifiable source of income, even if you were a Section 8 landlord.
I just don't see where a landlord could get in trouble for denying someone who is "supposed" to get a source of income that hasn't happened yet, may not happen, and may not be reliable if/when she gets it.
Greg S.
I was wondering did your mother work ? You keep going on about why this lady doesn't work and if she was a good person she should have a job. So I ask you how old you are ? Because I'm 45 and I grew up with a mother who took care of the kids and the house while my father got to get away each day and mingle with his friends at work. Meanwhile the conversations my mother had the most of was with the dryer or washing machine or real intelligent ones with us kids.. Now my parents are still married but imagine if you can that one day my father comes home and declares after 40 years of marriage, that he fell in love with his secretary or one of his buddy's at work ( lol, I just had a image of my dad being gay ..) it has happened to 100's of thousands of women. So now my moms getting divorced but after 40 years of not working a 9-5 job .. Her's was a 24 hr job.. She finds herself relying of the fact that my father makes $150k a year and will be paying her alimony .. But hey maybe she should get out there and waitress because she's not human in your eyes .. I'm sorry this is the first time I have had to school someone on BP , everyone else has shown nothing but respect for their fellow human..
I hope your parents are married and your mother, sister, friend .. Never has to go through that hypothetical situation.
Michael Short
Don't get me started on how women get short-changed if they are stay at home moms, starting with Social Security benefits....
But, if your Mom came to me, as a landlord, saying she's in the middle of a divorce and she should be getting alimony - but doesn't have it yet, may not get what she thinks she'll get, and there is no proof of regular deposits in a bank account to show me it would be reliable - I'd have to deny her. Even if I admired her and felt bad for her.
As someone else said, it would be like an applicant saying they were "going to" be getting a paycheck from a job they don't have yet.
You guys are all over-thinking this, I think.
Fannie Mae and the mortgage industry follows the same federal fair housing laws that everyone else does, and she wouldn't be doing business in any state where her guidelines break the local laws. Fannie Mae does business in all 50 states.
What Fannie Mae would ask for:
A person "going through" a divorce has NO IDEA if they will receive alimony! They can't speak for the judge. Neither can OP landlord. Neither can the other spouse, for that matter. Hell, for all we know (granted, this is unlikely) the judge will snort a line of some hard drug and decree that this tenant applicant will be the one who owes alimony!
Hello and welcome to BP! This is a difficcult situation. I have read the comments above and you have gotten a bunch of opinions. What I recommend is that you check on the legal decisions and go by them. My first inclination says do not accept anyone without a verifiable job as a prospective tenant. I am 59 years old and my father and mother got divorced when I was In the 5th grade and I think my father was married about 4 times and he is now divorced.
Even though they now have a good relationship (my origami mother and the 4th wife) but his latest marriage sent him to jail because he did not pay alimony. I knew about that because he lived with me then. He was self employed and could not make the payments at that time. He moved to Las Vegas and did pretty good as a real estate man and moved back to Granbury Texas (about an hour from Dallas) where his brother lived.
I would not to make such a decision but you have to do what is legal or only accept verifiable employment because you just do not know the liability you are under. Even though my father has always been involved with my life you never know what may happen in the future. I would not rely on the alimony unless the X is talked and supplies you with his expectations.
I would try to treat this as a business decision that can be emotional. Do try to not let emotion get the best of your business decisions. The law may take the decisions that are not agreeable.Good. luck to you!
I agree. And as the OP stated, their agreement is not formalized.
Hey Scott, working as a property manager in multifamily with tax credit and conventional units, we have many cases where people have other sources of income, whether alimony, social security, etc. My opinion the most important thing is for the renter to provide sufficient enough documentation that collaborates with what she is saying. This could be an alimony that is court ordered, which in that case my past renters were able to provide documentation with full details regarding start and ending dates, rate of payments (monthly/bi-weekly), and amounts awarded. If she can't provide this information than it would be a judgement call on your part, but in my experience without providing this info, the best a renter could do would be to get a notarized letter from the husband stating agreement to the alimony, how much they're paying and for how long. And provide what her current income status is if she has no job, than provide a bank statement that shows she has enough money in her account for a rainy day, should the alimony stop coming for whatever reason. Hope this helps a little bit and keep us updated on your final results please and thank you
Sue Kelly,
I completly agree , I would suggest a co signer on the lease also . And if she or anyone in that situation couldn't help her then I would have to deny her also. It's a business not a charity after all. But what I wouldn't do is berate them ( even if no names were used ) on a public forum.
"Will receive alimony" my foot. Alimony is never guaranteed in divorce proceedings, and is temporally limited at best. There are any number of times where alimony can be cut off, leaving her with insufficient income to cover rent. Talk with a local attorney.
I wouldn't jump the gun on this one.