Tag Archives: tenants

What to Look Out for When Screening Tenants

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Renting out your property is a great way to bring in income. However, finding the right tenant can be a tricky process. Whether you are handling the process on your own or delegating the task to an agent, here are the seven main things to look out for when screening potential tenants.

Proof of Income

The first thing you need to check is whether your future tenants will afford to pay rent. Ideally, their monthly income should be at least three times the rent. Pay stubs, tax returns and even bank statements would confirm whether the figures add up. But if it looks like your tenant will be spending more than 30% of their income on rent, they may encounter difficulties making payments later on.

Credit Score

A tenant’s credit score is like a business card for their financial responsibility. Along with the proof of income, it confirms not just that they can afford to pay rent but that they can make these payments on time. Of course, the higher the credit score, the better. Most landlords look for a minimum score of 650, but some will be content with 600.

Employment History

Many landlords enjoy the financial stability that comes with a long-term lease, typically a 12-month one. Therefore, it’s wise to look for tenants with a long, steady employment history. Check if your tenant not only has a job but also if they have a habit of changing jobs often or if there are gaps in their employment. Frequent job changes can result in payment delays, as the tenant is waiting for their paycheck, or worse, missed rent payments.

Background Checks

Running a background check on your potential tenants is just as important as checking their credit score or employment history. For example, you’ll want to know if your tenant has been evicted in the past and the circumstances behind the eviction. If you’re running a background check for criminal convictions, always do so in accordance with the law, and be cautious of any discrimination.

Landlord References

References are essentially letters of recommendation for your tenant. As a landlord, you’ll want to know if your tenant has had a good relationship with their previous landlords, whether they made timely payments, and whether they left the property in good condition.

Of course, if you’re dealing with first-time renters, you won’t be able to ask for previous landlord references. In such cases, a reference letter from their employer or even a professor could be a good alternative.

Pet Ownership

Regardless of whether you have a pet-friendly apartment or a strict no-pets policy, asking your tenants if they have pets is a must. Of course, everyone wants a tenant that’s low maintenance, and sometimes, pets can complicate things. Yet that doesn’t mean you should rule out a tenant just because they have a pet. Since so many renters have pets nowadays, realistically speaking, there’s a good chance that your tenant will have one as well.

Attitude and Communication

The ideal tenant is not just someone who pays rent on time while keeping the place in pristine shape, but also someone you can have a good relationship with. Setting up an interview allows you to assess your tenant’s character in a way that credit scores and employment history can’t.

Does the tenant have a professional and polite attitude? Are they punctual? Easy to contact? Did they make sure their application was filled in correctly? Are they honest about their lifestyle choices, such as having pets or smoking? If your tenant ticks these boxes, you can be sure that you will have a professional and productive relationship for the duration of the lease.

 
 

B.C. to extend rent freeze to end of 2021, increase protections against ‘renovictions’

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NDP government says it’s meeting recommendations from a 2018 task force on rental issues

The British Columbia government says it will introduce legislative changes to extend a rent freeze through to the end of this year to stop illegal “renovictions” and improve the dispute resolution process for tenants and landlords.

The province has already introduced and extended a rent freeze during the COVID-19 pandemic, and it says in a news release Monday that new legislative changes will keep it in place through Dec. 31.

It says tenants can disregard any notice of a rent increase they’ve received that would have taken effect before Jan. 1, 2022, and starting next year rent hikes will be capped at the rate of inflation.

The release says before the NDP government took power in 2017, the maximum allowable rent increase was as high as 4.3 per cent, well above inflation.

‘Progress’

“We know there’s more to do, but with these new changes, we’re continuing to make progress,” said Spencer Chandra Herbert, MLA for Vancouver West End.

The province also says the legislative changes mean tenants will no longer face so-called renovictions, or eviction notices for “phoney” renovations aimed at driving out long-term tenants and jacking up the rent.

Landlords will be required to apply to the Residential Tenancy Branch before they can end a tenancy agreement for renovations, and they will also not be able to evict tenants for renovations that are not substantial or do not require the unit to be vacant.

‘Not surprised’

Andrew Sakamoto, executive director of the Tenant Resource and Advisory Centre, said as part of the release that it is common for landlords to illegally renovict tenants without the necessary permits required by law or for minor cosmetic improvements.

“Rather than forcing tenants to dispute these types of meritless eviction notices, we are pleased that landlords will now have to go through an application process before issuing such notices in the first place,” he said.

David Hutniak, CEO of Landlord B.C., which supports landlords in the province, says the extended period of frozen rents was expected.

“We’re not surprised,” he said about Monday’s announcement.

He said that by the end of 2021, it will be close to two years since landlords have been able to raise rents to help cover property taxes, insurance, maintenance costs and increased costs due to the pandemic

“Which is very challenging … COVID-related expenses are going through the roof,” he said.

He says his members are looking forward to increasing rents in line with inflation in 2022.

The bill with the proposed changes comes on the first day that the Legislative Assembly of British Columbia resumed its 42nd parliamentary session.

The bill stems from 23 recommendations made by a B.C.’s rental housing task force in 2018, which focus on protecting tenants from situations where they are forced to move out by landlords who say they plan to renovate the property.

Monday’s bill includes expanding administrative penalties that can be levied as part of dispute resolution proceedings and grounds for the review of arbitrator decisions.

The bill also clarifies language in the Manufactured Home Park Tenancy Act to address conflicts between park rules and tenancy agreements.

Commercial tenants and landlords and COVID-19

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My experience during COVID-19 drew upon two “laws” I learned early in my law career: what’s legal isn’t always fair and contracts are as good as the parties who sign it. Why am I telling you this?

Because COVID-19 showed me that, notwithstanding one’s legal rights, landlords and tenants can co-operate, especially since their survival was interdependent. This is especially true during the height of COVID-19, as replacing a tenant or moving to a better location simply wasn’t an option.  As such, if you find that you do not have the ability to suspend rent payment by invoking a contractual right or terminating the lease due to a common law principle, not all is lost. While the law may not be on your side, the economic reality of interdependence is.

Generally, there are two ways tenants may find relief from their contractual obligations – one under the force majeure clause and the other under frustrated contract principle.

Force majeure “rights” are derived from your contract and this right allows you to not perform a covenant under the contract because of circumstances that are beyond your control. This right doesn’t exist unless it’s in your contract and the nature of the right – that is, what obligations you don’t have to perform – depends on the language of the force majeure clause.

There are two types of force majeure clauses – specific and general.

The general type of clause typically states that a party will not be liable for failure to perform a covenant/contractual obligation due to an event of “force majeure”. General clauses typically reference “Acts of God” and will not provide detail as to what a force majeure event happens to be; these clauses are likely to give rise to the most amount of litigation as enterprising lawyers will attempt to expand the definition “Acts of God” to include pandemics.

The second variety of force majeure clauses – a specific clause – is identifiable because of the exhaustive list of events that are defined as “force majeure” events. A robust specific clause suggests, according to case law and general contract law principles, that the parties have turned their minds to what a force majeure event could be and have specifically decided to include and exclude certain events. As such, if your specific clause does not include a pandemic, you may not have the ability to rely upon the force majeure clause to get out of performing a certain obligation, such as paying rent. Of course, attempts will be made to shove COVID-19 into other listed events, such as “government intervention” and I suspect that today’s more sympathetic courts may agree.

Assuming that COVID-19 qualifies as a force majeure event, you must understand which obligations you don’t have to perform due to the event. Most leases specifically exclude rent payments, meaning that even if COVID-19 is a force majeure event, you still have to pay rent. Let’s say, however, that your force majeure clause allows you to not pay rent, you still have to prove that COVID-19 makes it impossible, not just inconvenient, to pay rent. This means that if paying rent just hurts your bottom line but isn’t impossible, then the force majeure clause doesn’t apply and you have to pay rent.

In addition to proving impossibility, you have to prove that the pandemic, along with the consequences that have affected your ability to pay rent, were beyond reasonable foresight and your skill to foresee when you entered into the contract. For this reason, if there is anyone who’s entering into an agreement in today’s economic climate, it would be unreasonable to assume that they’d be able to rely upon the force majeure clause as the economic impact on one’s business is simply obvious. But wait, there’s more…

The courts do not look favourably upon a party to a contract who is leveraging a certain situation in order to get out of performing an obligation. In other words, you have to try and make arrangements to ensure that you can reduce the impact of the intervening/unforeseeable event on your inability to meet an obligation under your lease. This means that you’d have to figure out how to change your revenue streams, take advantage of all government programs and negotiate with the landlord before you can rely upon the clause.

Finally, these clauses typically have strict notice requirements. A phone call, text or email may not qualify as proper notice and the notice may have to be provided within a specific number of days after the event. Timelines, as many of us in this business know, are critical to pay attention to as failure to meet the notice obligations will likely bar your ability to rely upon the clause.

Tenants who did not have a force majeure clause then asked if they could rely upon the doctrine of “frustration”. This common law doctrine applies when a situation arises, the parties have no clause in their contract to address this situation and performance of the contract becomes “a thing radically different from that which was undertaken by the contract.”

Unfortunately, this concept is much more difficult to prove than showing that a force majeure clause should apply. This is because “it is not enough that the contract become more onerous, or even significantly more difficult, but still possible to perform”.  In other words, “a party must show that the original purpose of the contract has been frustrated, and it would be unjust for them to be bound to the contract under the existing circumstances”.

Since what you’ve contracted to do – pay rent – hasn’t changed completely due to COVID-19, I suspect that paying rent during these times may be unjust, but the law won’t give you relief. And this is why it’s important to sign contracts with parties who are reasonable and willing to work towards a common solution, regardless of what the law says.