Welcome to Landlord’s Self-Help Centre’s module on tenant screening. The information offered in this presentation is intended as general information, it is not legal advice. If you need more information, please contact a legal service provider.
Residential Tenancies Act, 2006
In Ontario, the Residential Tenancies Act is the provincial law that governs most residential rental agreements. It defines the rights and responsibilities of both landlords and tenants and outlines appropriate reasons for giving a notice of termination. It also identifies a prescribed class which requires a specific tenancy agreement form.
Ontario Human Rights Code
Landlords must also be in compliance with the Ontario Human Rights Code. The Code is a provincial law which assures equal rights and opportunities for all people. It allows landlords to request credit references, and rental history information from prospective tenants, but it restricts how this information is used.
What can a landlord ask a prospective tenant (applicant)?
When looking for a prospective tenant, landlords can ask for specific information in a rental application. This information can include, personal contact information, income, employment, rental history, banking information, credit references and/or guarantors.
Landlord’s Obligation to Protect Information
PIPEDA, or the Personal Information Protection and Electronic Documents Act requires confidentiality of personal information provided for business purposes.
Landlords of residential rental units are considered to be engaging in business activities, and are therefore required to comply with PIPEDA requirements. Landlords cannot reveal personal information about a tenant or applicant, unless they receive prior approval from the individual, or it is required by law.
What is a rental application?
Remember, renting is a business and it is important for small-scale landlords to adopt this mindset.
Landlords are strongly encouraged to use rental applications because they are very valuable screening tools. Rental applications are very valuable because as the first step in the tenant screening process, they outline what a tenancy agreement requires from both the landlord and prospective tenant.
Why use a rental application?
Rental applications are used to assess the level of risk. They help landlords determine which potential tenant will be the best fit for their rental unit. It’s important to use the same rental application for all prospective tenants. This will ensure the same information is requested and collected, and it may help avoid claims of discrimination.
Contents of a Rental Application
Among other things, typical rental applications should ask for things like:
- Name and contact information of applicants,
- Rental history information,
- Employment information,
- Identification, and
Contents of a Rental Application Continued
Rental applications may also contain information about the tenancy agreement that is to be signed once an applicant is approved. It contains notes about the last month’s rent deposit, and ultimately outlines how a binding agreement between the landlord and tenant will be created.
A deposit may be required from an applicant when submitting a rental application as a sign of their good faith. If they are approved as a tenant for the rental unit, the deposit then becomes the last month’s rent deposit. This deposit cannot be used for damages as damage deposits are not allowed in Ontario. If an applicant is rejected, the deposit they provided with their application must be refunded.
Important Clauses in the Rental Application
When looking for or creating a rental application, there are certain clauses that should be added such as:
- The deposit may be applied as rent, provided the unit has not been re-rented, if the applicant fails to either sign a lease or refuses to move into the unit once their application has been approved by the landlord;
- The application must provide written consent for the landlord to use the information provided on the rental application to conduct credit and reference checks; and
- That the applicant certifies that the information provided on the rental application is current and complete.
Verify the Information Provided
The screening process is ineffective unless the landlord takes the necessary steps to verify that the information provided on the application is accurate.
It is not enough for the landlord to only collect information from prospective tenants, but it is extremely important that the landlords verify the information provided on the application before signing a lease and providing access to the rental unit.
Verify the Information Provided Continued
In order to verify the information provided on a rental application, landlords can do this by double-checking names against government issued I.D., and contacting the references provided.
If you are provided with the information necessary to do a credit and/or reference check, this must be done before the tenancy is entered into. If a landlord performs the checks after the tenant is approved and given possession of the rental unit, and discovers that incorrect reference or credit information was provided in the rental application, this is not a valid reason to terminate the tenancy.
It’s also important to remember that no credit history is not the same as bad credit history.
Selecting a Tenant
Landlords should not base their decision solely on income information. The landlord can proceed to use the income information to determine eligibility, only if an applicant does not provide all the information requested on the rental application, and rental history and credit references are not provided.
A Human Rights claim may be filed against you if a prospective tenant is suspicious that you are refusing to rent to them because you don’t think they can afford to rent your unit.
Selecting a Tenant Continued
Remember, income information cannot be used as the sole reason to decline an application. Landlords may only request income information if rental history, credit references and authorization to perform a credit check are also requested.
Once an applicant is approved, landlords should complete a written tenancy agreement with the tenant(s). The rental application should not be used in place of a tenancy agreement. Make sure to use the Ontario Residential Tenancy Agreement, also known as the Standard Form Lease, which can be found on our website at www.landlordselfhelp.com
Review: Do’s & Don’ts
Here are a list of some do’s and don’ts when it comes to tenant screening. If you have questions that are not addressed in this presentation or if you require further explanation, contact a legal service provider.
LSHC Membership Benefits
Landlord’s Self-Help Centre has a membership program. When you become a member, you are supporting the work of the organization!
If you are already a member, Thank You!
For those who are not, there are many benefits to becoming a member, such as access to downloadable documents including rental applications and Standard Form Lease additional clauses. For more information, or to sign up, please visit www.landlordselfhelp.com
Thank you for watching this module about tenant screening. The information offered in this presentation is intended as general information, it is not legal advice. If you have a specific issue or situation, please contact a legal service provider.