How to Screen Tenants for Your Rental Property in Canada: A Landlord’s Guide
Identifying the right tenants can be the key to making you a successful landlord. A qualified tenant pays on time, maintains your property, and assists in safeguarding your long-term investment. Conversely, a hasty screening process can result in delayed payments, property damage, and even expensive evictions.
The mortgage professionals at Clover Mortgage describe in this guide all you need to know about the effective screening of tenants in Canada, including the significant regulations, the best practices to follow, and the tools that can assist you in making appropriate decisions.
What laws regulate tenant screening in Canada?
The federal and provincial laws regulating tenant screening in Canada provide a balance between the rights of landlords on the one hand and the rights of tenants to privacy and equality on the other hand.
At the federal level, the Personal Information Protection and Electronic Documents Act (PIPEDA) governs the collection and use of tenant data by landlords. The provincial legislations, which include the Ontario Human Rights Code and the Residential Tenancies legislation, regulate matters concerning discrimination, credit checks, and consent.
There are province variations; each province has its variations such as British Columbia and Alberta have their own tenancy laws, which limit the kind of information that can be requested and the nature in which the information is stored.
“ It’s crucial for landlords to understand that tenant screening isn’t just about finding the best tenant — it’s about doing it legally and fairly,”
Rick Sekhon , Mortgage Agent at Clover Mortgage.
To learn more about provincial tenancy law, go to the housing resources of Canada.ca or find out what your local landlord-tenant board is.
How can landlords perform a tenant background check in Canada?
Background checks are usually conducted on tenants and consist of a credit report, a crime record check, and the history of tenants in rented properties.
The third-party screening services that the landlords may apply involve Equifax Canada, TransUnion, or TenantVerification.com. Such services will create a credit rating, a history of payments, and past problems of evictions or late payments by a tenant.
In a background check, ensure that you:
- Get a written consent from the applicant.
- Check work history and salary (new pay slips or employment documents).
- Get previous landlords to give references.
We also suggest that Clover Mortgage have a look at our article What to Know About Rental Property Mortgages to make sure that your financing is in line with your screening objectives.
What are the best tenant verification services in Canada?
Several platforms offer reliable tenant verification tools:
| Service | Features | Pros | Cons |
|---|---|---|---|
| TenantVerification.com | Credit & background reports | Simple interface, landlord-focused | Small fee per report |
| Naborly | Real-time scoring system | Excellent fraud detection | Higher cost for premium plans |
| Rentify | Income and employment verification | Fast turnaround | Limited in-depth rental history |
In making the selection, give preference to those services that do not violate PIPEDA and provincial tenancy laws in order to ensure the privacy of the applicants.
“ Automated verification tools save landlords time while ensuring consistent and fair screening. ”
Victoria Ishai , Mortgage Broker at Clover Mortgage.
What information can landlords legally ask from prospective tenants?
The landlords are allowed to seek information that is needed to assess creditworthiness as well as reliability, but should be done within the confines of the human rights legislation.
You can legally ask for:
- Full name and contact information
- Working information and salary confirmation
- References (employer and former landlords)
- Credit check authorization
The race, religion, age, marital status, or family composition cannot be questioned as it is considered a violation of anti-discrimination laws.
To dig further into the issue, the Ontario Human Rights Commission has guidelines for the rental applications.
What are the most effective tenant interview questions in Canada?
Through interviews, the landlords can be informed about the reliability and the way of communication of a tenant. There are some powerful questions:
- Why are you moving?
- How long do you plan to stay?
- What’s your ideal move-in date?
- Have you broken a lease or been thrown out?
- Do you own pets or smoke?
Be conversational, not interrogative; you do not want to know all about the person, but you do not want to cross the line.
Pro tip : Summarize responses in writing and compare across applicants for fairness and consistency.
How can you identify red flags during tenant interviews?
Watch for inconsistencies in the tenant's narrative, documents left out, or hesitancy to disclose references. Property managers typically look for similar concerns, including:
- Vagueness about employment or rental history
- Negative or uncheckable references
- Frequent moves in the recent past
- An insistence on moving in quickly, with no paperwork
Signs like the above indicate one of two concerns: instability or potential payment issues. Make sure to do the due diligence and run any of these concerns to ground before you make a decision. Additional concerns can be found in our guide, How to Manage Risk as a Property Investor.
How to compare multiple qualified tenants fairly?
If you have multiple desirable candidates, consider utilizing a tenants' scoring system. Review the data on each of your candidates and rate them on:
- Credit score
- Income-to-rent ratio (30% or less is preferable)
- Reference quality
- Length of rental history
- Interview impressions
This systematic approach minimizes bias and will ensure you remain objective in your decision. Also, documenting your criteria will help establish a defense against future discrimination claims.
What are common mistakes landlords make when screening tenants?
Experienced landlords can certainly make mistakes, too. Here are some of the most common:
- Not obtaining written permission to do background checks
- Ignoring privacy obligations set out in PIPEDA
- Making decisions based on bias rather than facts
- Acting too quickly to fill units
- Not maintaining records for future reference
Avoiding these mistakes protects you legally, but can lead to more successful long-term relationships with tenants as well.
How to document and store tenant information securely?
Landlords need to take the privacy of tenants seriously in accordance with provincial or federal privacy legislation in Canada and keep such information in a digital form within an encrypted folder or in a manually filed system in a secure location. Under no circumstances should personal details about your tenant be shared with unauthorized individuals.
Landlords can use systems that are password-protected and limit system access to only those individuals who require it. For those who own larger properties, consider the security of your data storage is compliant with PIPEDA guidelines and standards.
How can landlords handle discrimination concerns during screening?
Always follow fair housing policies and guidelines. Do not ask questions about family status, religion, ethnicity, gender, etc. If a tenant has a discrimination concern, be prepared to review the screening process publicly and refer to your Human Rights Code of the province.
If unsure, refer to your previous training or for more information. Clover Mortgage partners often have agents or legal expertise who could help with local real estate assistance.
How to maintain good relationships with approved tenants?
Having great relationships with tenants decreases tenant turnover and instills a sense of property care. Provide clear and concise communication, respond to maintenance requests promptly, and paint a positive expectation early on.
A written tenant welcome guide can detail how to pay rent, your contact details, and any rules around the property.
Conclusion: What are the key takeaways for effective tenant screening in Canada?
In simple terms, effective tenant screening is a combination of compliance with law, use of proven screening strategies, and honest intentions in your communications with tenants. Always check your local law, ensure you’re diligent about your strategy, and keep good records.
If interested, related guides, including Clover, can be found here:
- How Do You Get a Mortgage for a Rental Property?
- Rental Property Mortgage
- How to Avoid Mortgage Refinancing Mistakes?
If you are interested in being put in a relationship with the correct financing for your rental properties or help to refinance a property, please reach out to Clover Mortgage. Our experienced representatives, including Rick Sekhon and Victoria Ishai , would guide you in making sound & confident decisions to enhance your real estate investment portfolio.
FAQ
1. Can landlords charge a fee for tenant screening in Canada?
Generally, yes. Landlords can charge for tenant screening, including the cost of credit checks, as long as the fee is reasonable and disclosed upfront.
2. How long should landlords keep tenant records?
Keep records for at least one year after the end of the tenancy, as required under privacy guidelines.
3. What credit score is ideal for tenants?
Scores in excess of 650 usually show good payment patterns, although the whole file matters.
4. Are landlords allowed to reject applicants based on pets?
Each province has its own rules. In Ontario, landlords cannot decline tenants for having pets after the lease has been signed, but can still set limitations to pets before signing the lease.
