Real Estate Investor · Member since 2017 · 10 posts · 3 votes
I am in California and have applicants putting "unemployment" as income down on their applications. Unemployment is said to have already run out. How to respond? I contacted an attorney, and even she was hesitant to go on records because the situation is always evolving.
@John Michaels find another tenant and then tell this person that it is rented. I'm also going to guess their unemployment isn't 3x the rent and therefore doesn't meet your criteria for applicants.
@John Michaels In California it is illegal for a landlord to discriminate based on source of income. Basically, you have to count any legal/verifiable income paid to the tenant. This would include unemployment insurance benefits.
Now, that being said, I would not be thrilled with a solo applicant whose ONLY source of income was unemployment. But if perhaps you had a co-applicant who had sufficient income to meet your criteria and this person just had additional income that happened to be from unemployment and they planned to go back to work soon, then I don’t see a problem with that. Lots of variables to consider.
Obviously two working people would be better than one non-working person though. We don’t know much about your particular scenario though.
Lastly, I’ll just point out that it’s not all unemployment that’s “run out”. Just the big boost people were getting from the federal CARES Act (i.e. the extra $600/week). So if they’re claiming that, they won’t be getting that anymore (at least not unless some new federal act is passed).
They could still be getting State unemployment benefits though. However, those will likely be far less as the most someone can get is $450/week and many people don’t even get that much.
Ultimately, whatever you decide, just don’t communicate to someone that you’re denying them solely because of the fact that their income comes from unemployment, as that could be considered discrimination based on source of income and contrary to California law.
I am in TN so its a different world from CA. I had an applicant with over $5k in income that was all unemployment. They were moving from another state. I rejected them because they did not have continuous income at a level of 3 times the rent, even though they were at almost 6 times the rent at the time they submitted it. I knew that when they moved to the rural town here they would never get a job in their 'area' and the high unemployment $ was ending, and would likely not be much money after they moved. TN is much lower as a base rate than where they were moving from. Plus their income was not constant or full time before the unemployment.
They had a bunch of kids and were moving from a mom and pop funded property, no rent or utilities in their name could be verified, except by mom--who may very well want them to leave. Their bank records did not show the supposed rent amount ever coming out, and no utility payments. So I had that as another reason.
I wouldn't allow them to count federal unemployment boost because that's not verified income. But otherwise I would be fine with it, I might even allow them to credit $300 federal boost, because it seems likely, especially if their credit rating was 680, which is pretty good depending on your property class. I'd be very thorough about checking their references.