A Substantial Increase in Income at the First Annual Certification

Written by Wil Whalen, Spectrum Enterprises

The process of verifying income for a household at the first annual certification actually begins at move-in. When verifying income at the initial occupancy it’s important that you document all anticipated changes in a tenant’s income. Explore all possibilities by asking questions and making sure all third party verifications are complete. Do more research and follow up if needed. This way, if a tenant goes over the income limit at first move-in, you can show you performed your due diligence.

The most common reason for a tenant to go over the income limit at the first annual certification is because of a change in circumstances at their place of employment. Changes such as an increase in hours or pay, a raise, a bonus, a commission or tips, etc. This is why it’s important to perform your due diligence when verifying employment income at move in. When you receive the employment verification from the employer, review it carefully. Make sure the verification is complete. Also make sure that all the questions are answered and detailed enough to give you not only a picture of the tenant’s current income, but a picture of what their income will be for the next 12 months. If you have any questions at all regarding the information provided by the employer give them a call. Document this conversation and put it in the file. Feel free to request paystubs from the tenant if you are dealing with an uncooperative or unavailable employer. Make sure the pay stubs and the employment verification paint the same picture of the tenant’s income.

Often the employer leaves blanks or writes down vague information on the verification. This is where a telephone conversation comes in handy. Discussing the questions on the verification with the employer often leads to more detailed and direct information. The employer may write “N/A” on the verification in the space where it asks them to list any anticipated change in the employee’s rate of pay within the next 12 months. “N/A” doesn’t answer the question. Call the employer. The employer may tell you that the tenant is not going to receive a raise because at the time of your conversation with them it does not seem likely. However, a few months later, circumstances may change and the company may give the employee a raise. You performed your due diligence and can show that this was not anticipated at move in. Remember, this applies to every field on the employment verification, not just the anticipated raise. Year to date, tips, etc., can all result in an increase in an employee’s income. Also, pay attention to the hire date on the employment verification. If the tenant starts working one month after move in, but the hire date is just a few days after move in, chances are the tenant was aware of the job and did not report it.

When filling out the interview checklist with the tenant, stress to them that by signing it they are making the statement that everything they reported to you is true and that any misinformation or withheld information can result in tenant fraud which is punishable by law.

Remember, due diligence doesn’t end at move-in.

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