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Tenant Verification Services: How to conduct a background check for tenants

Tenant verification services, or how to conduct a background check for tenants, is the process landlords and property managers use to evaluate prospective tenants. A thorough tenant screening process provides information key to assessing the likelihood your tenant will honor their lease agreement and take good care of your property.

The Tenant Screening Process

Once you’ve shown your property to a potential tenant who is interested in moving in, the tenant screening process begins and includes:

  • Completing a rental application
  • Completing a comprehensive background check (criminal record, Landlord and Tenant Board appearances, social media profiles, public records)
  • Verifying employment and landlord history
  • Verifying identification (verified government ID and face matching technology)

If it sounds involved – it is!

What are the advantages of a tenant verification process?

All new businesses have a learning curve, and real estate investing/property management is no different.

As a landlord, you have two options; take the time on the front end to do the tenant screening and bypass problem tenants, or skip the tenant verification and deal with evictions, a destroyed property, court dates, and potential bankruptcy on the back end. Doesn’t it make more sense to take the time to do a thorough background check for renters from the beginning?

That said, approximately 68% of rental properties in Canada are owned by private landlords working in full-time jobs and don’t have the time to juggle all aspects of work, family, real estate investing, and property management or have the budget to hire staff. To bridge the gap, over the past decade, there has been an outgrowth of tenant screening companies that offer reasonably priced, user-friendly, digital tenant verification services to accommodate do-it-yourself landlords.

Tenant screening and the law

But that’s not all.

In Canada, housing falls under the Human Rights Act

In 2017, the Liberal Party declared its intention to make housing a human right under Canadian law. Prime Minister Justin Trudeau declared, “Housing rights are human rights, and everyone deserves a safe and affordable place to call home.”

How does that impact you as the landlord? You must treat all applicants equally and respectfully throughout your advertising for tenants, the tenant application, and completing your tenant screening process. You are responsible for making sure every applicant follows the same process and that your rental business is a discrimination and harassment-free environment.

You cannot refuse housing based on any of the following grounds:

  • Race, colour, or ethnic background
  • Religious beliefs or practices
  • Ancestry, including Aboriginal descent
  • Place of origin
  • Citizenship
  • Sex, including pregnancy and gender identity
  • Family status
  • Marital status, including people with same-sex partners
  • Disability
  • Sexual orientation
  • Age, including people aged 16 or 17 no longer living with their parents
  • Receipt of public assistance
  • Being a friend or relative of someone with any of the above attributes

What if the background check for renters shows a criminal history?

If your rental houses vulnerable people or is in a neighbourhood with a vulnerable population, you may require a background check. This begs the question, do you have the right to deny an application based on a person’s criminal history? The short answer is yes. However, you must appear fair. The landlord can request a background check but the potential tenant can refuse, and the denial cannot be solely based on the criminal record check. To appear fair, consider the following questions:

  • Does your tenant verification policy have a discriminatory effect?
  • Are you using the same criminal history criteria for every applicant?
  • Does your criminal history policy legitimately protect other tenants and the property?
  • Is the criminal behaviour history threatening to the safety of the tenants?
  • Does the criminal history make differentiate between arrests vs. convictions?
  • Have you included specific requirements for the history of criminal activity, type of crime, rehabilitation efforts, and duration since the criminal activity?

Tenant verification services: rental history & employment history

You can ask for rental history and employment history on an application form and cross-reference it with the credit check report. Do note you must receive a signed/dated permission from the tenants before running a landlord credit report which can provide a wealth of information on landlord and employment history as well as a credit score.

Verifying identification with tenant screening

Verifying identification has become the norm; landlords can request government-issued identification with a picture, such as a driver’s license or a passport. But how do you know it’s legit?

Tenant Verification service tools and resources

Here are some of the smartest, most affordable, do-it-yourself tenant verification services around:

Frontlobby’s rental credit check services support both housing providers and tenants. Frontlobby helps landlords through a rental reporting system (tenant credit check) that links paid and unpaid rent to Canada’s credit bureaus. Previously, unpaid rent was not reported to the credit bureaus, and it did not affect a tenant’s credit rating. Through Frontlobby’s reporting structure, landlords can be alerted to tenants with histories of nonpayment of rent and bad tenant’s credit scores are impacted. On the flip side, good tenants who pay on time every month can rebuild their credit and be added to a preferred tenant record for landlords Canada—wide to access.

Tenantcube offers a bundled software system for small to medium-sized landlords. With Tenantcube’s very affordable property management software, landlords can manage property information, including pictures, amenities, and documents, and advertise properties from one device. They can also schedule viewings, send tenant rental applications online, run tenant credit check reports, store leases, receive digital lease signatures, and be notified of lease expiry dates. Automatic rent collection, expense tracking, and work order management are some new features added to simplify landlord operations.

Rent Panda makes the rental arena a nicer place for do-it-yourself landlords, investment-only landlords, and tenants. Currently centered in eastern Canada with plans to expand across Canada, Rent Panda’s platform offers landlords; unlimited rental posting, move-in/move-out inspections, access to tenant profiles, one-click reposting, scheduled online showings, served notices to tenants, the ability to build and store leases, and receive tenant repair requests.

However, if tenant screening is all you want/need, Rent Panda has a full suite of tenant background screening tools for a modest price, including instant tenant credit checks, comprehensive background checks (criminal record, social media profile, and public record checks) as well as a new tech tool that takes the guesswork out of income/employment verification through Verifast. Verifast’s landlord credit check scans potential tenants’ bank statements, accesses their pay stubs, and measures their expenses directly from the bank. The Rent Panda screening tool suite also includes ID verification with face- matching technology that ensures the identification matches the actual tenant who applied.

What are your favourite tenant verification services? I’d love to know email me [email protected]

To take advantage of helpful tips, tools, and educational resources for DIY landlords, sign up for a membership for Landlord Fundamentals 101. To save even more time and money, combine Landlord Fundamentals 101 with one-on-one coaching to qualify for the Canada Alberta Job Grant.

To have access to all the resources in one place – buy my book!  Canadian Landlords Handbook.

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