As a landlord, renting out your property involves more than just handing over the keys. A critical part of the process is conducting background checks on prospective tenants, a process that's as much about protecting your investment as it is about ensuring a harmonious landlord-tenant relationship. However, it's essential to know how to conduct these checks within the framework of Canadian law. This blog post explores the legal aspects of tenant background checks in Canada, shedding light on what landlords and property managers should be aware of.
Elements of Tenant Background Checks
In Canada, it's legal and recommended for landlords to conduct background checks on potential tenants. A comprehensive background check generally includes the following elements:
- ID Verification. To ensure your applicant is who they say they are.
- Criminal Records Check. To determine whether the prospective tenant has any issues with the legal system.
- Credit Checks. To assess the prospective tenant's financial health and payment history.
- Employment and Income Verification. To ensure the tenant has a stable income and can afford the rent.
- Reference Checks. To gather insights about the tenant's character and previous rental experiences.
However, before you conduct a tenant background check, remember that you must obtain written consent from the potential renter. The Personal Information Protection and Electronic Documents Act (PIPEDA) mandates this. PIPEDA is a federal privacy law that applies to how personal information is collected, used, and disclosed during commercial activities across Canada. Under PIPEDA, landlords must obtain written consent from prospective tenants to collect their personal information. The collected information should only be used for the purposes outlined in the consent and should not be shared without further consent from the individual.
The information you collect should be necessary for the tenant selection process. Collecting unnecessary personal information could be considered a violation of PIPEDA. For instance, you may need a tenant's social insurance number (SIN) to conduct a credit check, but you should not keep this information after the check has been completed.
Provincial Legislation and Tenant Background Checks
In addition to PIPEDA, it's important to note that provincial laws also govern tenant background checks. For example, in Ontario, the Residential Tenancies Act (RTA) and the Human Rights Code both apply. The RTA prohibits landlords from refusing a rental application for reasons like the receipt of public assistance or having children. The Human Rights Code makes it illegal to discriminate based on grounds such as race, religion, gender identity, disability, and family status. It's crucial to be aware of these legal stipulations when reviewing rental applications.
Using Tenant Screening Services
There are various tenant screening services available that can help landlords carry out background checks lawfully. Tenantcube offers a robust background check to protect your property. Using our all-in-one property management platform, you can send professional online rental applications used by qualified property managers to your prospective tenants and collect all the information and documents required to make the right decision. In addition, one-click credit reporting is available within the application section when you need it. In addition, you can obtain a credit report to understand your tenant’s financial situation, rental and employment history of the applicant, and a social media scan and public court record check
Tenant Background Checks - Final Thoughts
While tenant background checks are an essential part of the rental process, it's equally crucial to adhere to Canadian privacy laws and provincial legislation. Remember, the intent of a background check is to ensure your prospective tenant is reliable and can fulfil the lease obligations, not to discriminate or invade privacy. Conducting legal and respectful background checks helps cultivate a successful, long-lasting landlord-tenant relationship, fostering mutual respect and understanding.
Keep abreast of the current laws, conduct your checks ethically, and when in doubt, seek legal counsel to ensure you're on the right side of the law. This approach will not only protect your property but also your reputation as a responsible landlord in the Canadian rental market.