The Top 10 Things You Need to Know About Screening for Good Tenants
If you are a landlord, you probably have dealt with less than ideal tenants. We have all heard the horror stories of the tenants from hell who ruin our furniture and destroy our property. Having bad tenants can be a never ending emotional and financial drain. Luckily, as landlords, there are steps you can take to lower your chances of dealing with a nightmare tenant. While it is important to ask your tenants proper questions, keep in mind that there are provincial human rights legislations and municipal bylaws in place that protect tenants’ rights. Keep reading to find out what questions you should be asking applicants.
1. What Is the Human Rights Legislation in Alberta?
In Alberta, the governing law is the Alberta Human Rights Act (the AHRA). The purpose of this Act is to shield tenants from discrimination and to make sure they have an equal opportunity when it comes to renting a place to live in. The AHRA has 14 protected grounds including:
- Place of birth;
- Religious beliefs;
- Physical/mental disability;
- Marital status;
- Family status;
- Income source; and
- Sexual orientation;
Note that age is not a protected ground under the AHRA. Take for instance a landlord who advertises that they are only looking to rent a condo to adult tenants because the building only allows individuals over the age of 21 to live there. An 18 year old tenant cannot make a human rights complaint against the landlord on the grounds of age discrimination.
2. What Questions Should I Ask my Tenant In a Background Check?
There are certain key questions you should ask future tenants when conducting a background check. These include:
- When do you plan on moving in?
- Can you afford to pay the rent?
- Can I get a credit report?
- Do you have a budget on rent?
- Do you own any pets?
- Is there anyone else that you will be living with?
- Have you given notice to your current landlord that you will be leaving?
Make sure to have a set of questions prepared so that, when prospective tenants call, you can screen the good from the bad tenants immediately without having to waste time scheduling viewings with individuals who are a bad fit. Ensure that you are asking the same questions to each applicant to avoid being subject to an AHRA complaint.
3. Ask Your Tenant Why They Are Moving
This is a good question to ask as it can reveal a lot about a tenant. Make sure the reason why your tenant is moving is a legitimate one. Good reasons include tenants who wish to move closer to their work or school or those who want more space.
Bad reasons for moving include when tenants are evicted for violating their lease agreement, or individuals who have a bad relationship with their current or previous landlord. Be cautious of renting to tenants that have a history of arguing with their landlord or neighbours as this can help you avoid headaches in the future.
4. What If a Potential Tenant Wants To Move In Right Away?
If a prospective tenant wants to move in immediately or in a week, this can raise red flags. Legally, in Alberta, the Residential Tenancies Act requires that tenants give at least 30 days’ notice before ending a lease. Generally, responsible tenants will begin looking for a new place to live at least one month in advance of the date they plan to move in. You do not want to be the landlord who receives last minute notice and has to scramble to find a new tenant.
5. Find Out How Many People Will Be Living At Your Rental Property
A good rule of thumb is for a maximum of two people to share each bedroom. The less people living there, the less your property will experience wear and tear. Overcrowding on your property can pose a huge health and safety risk. Make sure to follow the local municipal bylaws where your property is located in as that can limit the number of individuals that can legally reside in your property.
Also, you can ask whether an applicant will have any pets living with them. If you have a “no pets” policy, this allows you to efficiently disqualify those who do.
Tip: You can limit the number of people living at your property by including this information in your lease agreement.
6. What is Your Potential Tenant’s Monthly Income?
You CAN ask potential tenants how much monthly income they make. This allows you to know if they will make enough to be able to pay for rent and utilities. Note that your tenant’s income may not tell the entire story. Requesting a credit check can help you figure out how much debt the individual owes, which may impact his or her ability to pay rent.
You should AVOID asking about the source of an individual’s income. In the past, human rights tribunals have found that discrimination exists when a landlord refused to rent to a tenant after learning that they received rental subsidies, AISH (Assured Income for the Severely Handicapped), or other benefits.
7. Know the Applicant’s Rent-To-Income Ratio
You should ensure that a prospective tenant has income that is at least 2.5 – 3 times the rent amount. The ideal way of validating finances is through a credit report. You should also confirm that they have enough money to pay the first month’s rent and security deposit upon signing the lease.
Be cautious of tenants who request to pay security deposits in installments as this could be a sign that they will want to pay their rent in installments in future.
8. What Is the Applicant’s Credit History?
A more reliable indicator of financial risk is a client’s credit score. You SHOULD ask tenants for their credit history which can help predict whether they will pay rent on time. A credit check can tell you revealing information about the tenant such as: Do they owe anyone else money? Are they or have they been in debt? Are they actually employed where they say they are? BUT, keep in mind that certain tenants will have no credit history, such as those who have newly immigrated to Canada and those who receive social assistance.
You CANNOT use information on credit history to discriminate against individuals or you could be at risk of dealing with a human rights compliant. If you decide to ask for a credit check, make sure to hold each applicant to the same standard. You should disqualify those who refuse a credit check as this often means that they have poor credit or that they have something to hide.
9. I Want My Tenant to Have a Co-signor or Guarantor
You CAN ask potential tenants to provide a co-signor or guarantor. This is especially useful when a potential tenant has poor references from landlords or unsatisfactory credit history.
You CANNOT request a co-signor or guarantor exclusively from individuals who are part of a particular group. For example, if a landlord only requires individuals who are on social assistance to get a co-signor, that amounts to discrimination.
10. Ask for References from Former Landlords and Employers
You should ask potential tenants for the contact information from previous landlords or employers. Unless an applicant has a good reason for not having references (such as those who have newly immigrated to Canada), be wary of tenants who fail to provide references.
You should ask an applicant’s reference things like: Was rent paid on time? Did they cause damage to the property and respect the neighbours? Why are they moving out?
Tip: Instead of asking a potential tenant’s current landlord (who may say anything to get rid of a bad tenant), ask their previous landlord who will likely answer your questions honestly.
Need Legal Help With Landlord Tenant Matters?
When leasing your property, whether it be commercial or residential, the chances of getting a problematic tenant can be reduced if the right screening questions are asked at the first point of contact. If you fail to take these precautions, it could mean dealing with a six month eviction nightmare. When issues come up, the amount of money involved and complexity of leasing agreements may require the attention of skilled and experienced litigators. The skilled real estate team at Kahane Law Office in Calgary is pleased to provide you with a range of services to meet your needs, including:
- Completing standardized leasing agreement forms
- Reviewing your situation to determine your legal options
- Helping landlords with debt collection when a tenant defaults on their rental payment