A Landlord Refresher: Screening Tenants

I just came across a story about someone who has rented three places in the last three years with fake references and credit reports. The Equifax report that the tenant supplied was doctored and the references were all friends of the scammer.

Landlords, please pay for a credit report when screening tenants.  If you are renting your place out with the help of a licensed sales representative or broker, ask them to pay for a new report.  The report that tenants pull up doesn’t have payment factors and you can’t verify that the report has not been doctored. If you order your own, you’ll see all kinds of information like aliases, former addresses and employers.  These are all things that can be used to verify that the rental application was filled out correctly. If an applicant doesn’t want you to run a credit report, don’t rent to them.

If the credit score is in the 800s, you have yourself a star applicant and someone who is likely to pay rent on time every month.  Someone in the 700s is likely also great.  Someone in the 600s may have had some trouble paying bills in the past or may just have thin credit, or not a lot of credit history, which is more common with young people.  A lot of tenant applicants score in this zone, so you’ll have to satisfy yourself with each particular applicant using all of the other information.

If someone applies to rent your place and they are selling their home because they are in trouble, their score may be low and you must decide if you are willing to take this risk.  What does their current home look like?  And, just because that home is well maintained, doesn’t mean they won’t damage yours.  And just because they will have a large infusion of cash at the closing of their home, doesn’t mean they will pay rent on time every month.  Sticking to an over 650 rule will likely help weed out any applicants who don’t pay their bills on time, but it’s not a guarantee.

If an applicant lies on an application, don’t rent to them. Verify that you have the correct Landlord for their previous or current home.  If the wrong name is listed for a reference, this is not someone that you want to rent to.  It’s easy for sales representatives and brokers to verify this information, so it’s probably best to involve a professional who has had lots of experience with rentals.

A google search will pull up all kinds of information including verification of the applicant’s place of employment. You can also google the name on the employment letter and make sure that the person who signed the letter actually works for the company. I also call the company using a number that I’ve looked up myself instead of the number provided by the applicant.

One last tip is when you are handing over keys, ask for identification.  Is the person who is getting the keys the same person who you are renting to?  Is the last name different?  If so, I would ask why.  Check the identification from everyone on the lease. People who use aliases don’t make good tenants.

When you move in a good tenant, you’ll get your rent paid on time every month.  But keep records, just in case things change. If a tenant suddenly asks to change the date when rent is due, say “No”.  It’s usually fine to let one month come in later, but changing the date from now until the end of the lease is usually a sign of trouble to come.  Keep all NSF cheque records. And if you are missing one whole month of rent, please follow up with the correct paperwork so that if you end up in a Tribunal, all of your ducks are in a row.  That paperwork is the topic of another blog, but you can find everything you need on the Social Justice Tribunals webpage.  http://www.sjto.gov.on.ca/ltb/

 

 

 

 

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Proposed Landlord Licensing in Oakville

The Town Council has asked their staff to come up with some options to “enhance tenant health and safety and protect and maintain stability of residential areas” which has resulted in a proposed by-law that, in my opinion, contravenes human rights legislation as well as the Residential Tenancies Act.

Rooming houses are the only type of residential housing that is currently regulated in Oakville.  And some concerns may stem from some homes being modified to include too many bedrooms and renting to too many people which also results in parking issues.

 

But the proposed by-law is going to negatively affect landlords and tenants in single family homes now referred to as Class A.

One of the restrictions is bedroom size for an adult which should, according to the proposal, be 14 square meters, which is a 12′ x 12′ room approximately.  The building department approves bedroom sizes much smaller than this for brand new homes, so it’s fine for your adult relative or friend to sleep in a 9′ x 9′ bedroom if you own the house, but not fine if you are renting.

 

And something that someone needs to consider is that under human rights legislation, we are NOT allowed to ask the age of the occupants.  We are not allowed to discriminate.  Will Oakville by-law enforcement officers be allowed to discriminate? And what happens when one of my tenants moves an extra adult into the home? I cannot evict that person but I assume I would lose my license for that rental.  What happens to the tenants? Will the Town evict them?

 

If you own a rental property in Oakville you would have to get a license which would require a police check … for you.  Do not attempt to get a police check on a prospective tenant because this is not allowed and nor should it be. If a corporation owns the rental property, any shareholders with over 30% ownership will need a police check.

 

You’ll have to dig up your deed and provide it with the application for the license.  With current technology, the town staff should have access to land registry information and the tax roll so you would think that would be enough to verify that it is in fact the owner of the home who is applying for a rental license.

 

If a corporation owns the home, you’ll have to provide articles of incorporation and a shareholder list. Nevermind that you had to provide that when you purchased the home, you’ll have to do so again.

You’ll have to have an HVAC and an ESA inspection.  If the house wasn’t built within the last two years, imagine all of the items that the ESA inspection will come up with as the code has changed significantly.

 

For instance, under the current code, every bedroom must have a wired smoke detector in the bedroom with a strobe light.  The cost for each detector is around $250 plus the re-wiring and drywall repair work.  Are you required to change this in your own home where your own children sleep?  No. But you may be required to add this to your rental property.  Are there 20 amp breakers for your own kitchen receptacles?  If not, you won’t need to change to these unless you renovate with a permit (which is the only way to renovate), but you may be required to change this for the rental property.

 

Rental properties will be classified into 4 different categories.  This is from the Town’s website: https://www.oakville.ca/townhall/residential-rental-housing.html

“Possible classes of licences include

  • Whole Home (Class A) – The entire home is rented out under a single lease.
  • Non-Owner Occupied (Class B) – Rental units in a house not occupied by the owner.
  • Owner Occupied (Class C) – Owner rents out one or more units in a house they are living in.
  • Lodging House (Class D) – A building, or part of a building, in which people rent rooms, with or without meals included.”

I propose that the Town eliminate Class A from the by-law.  Get us to register our rentals if you want so that you know who to contact if any neighbours complain about current by-law infractions, but all of these other rules just deter good landlords from owning rental property in the Town of Oakville, which is why I find this proposal so concerning. Does Oakville not want any residential housing? The Town’s website talks about how residential housing is impacting some Oakville neighbourhoods.  There are people who want to live in Oakville who can’t afford to buy their own home, so they rent.  These are good people who are “affecting residential neighbourhoods”.

 

If the problem truly is rooming houses, then enforce the current by-law and leave our single family tenants and homes alone. Our tenants have the RTA, the human rights code and the fire code to protect them.

If you want to provide feedback, you can write to the town (like I did) at enforcementservices@oakville.ca.  The by-law will be presented at the council meeting on Monday November 6, 2017.

 

Oakville’s Real Estate Market Bouncing Back

Here’s a snapshot of the averages for Oakville’s sales data from OMDREB.

We’ve had the first increase in average sale price since March when we were at record numbers.  A $110,000 decrease in average price between March and April and then another sharp decrease from May to June of $159,000 in average price.  Volume has dropped also from the height of 451 units sold in March to 212 in August.  The average price is up slightly from July to June. Days on the market is up to 33 average.

For the first time in years, we have a buyer’s market with 3 months of inventory.  First time buyers have lots to choose from, but prices are still high, so our younger buyers still have to search elsewhere if they want to buy without a condo fee. The lowest price on a freehold townhouse in Oakville in August was $509,000 compared to the lowest price on a condo townhouse at $300,000 with a $563 condo fee.

September is historically an active market, and we’ll see what happens after everyone gets settled into school.  We’re likely going to see an increase in the mortgage rates in the next few weeks after the positive Canadian economy reports that were released. And we’ve got Hurricane Irma bearing down, following Harvey that prompted our gas prices to shoot up about 10 cents a litre.

Enjoy the first day of school and drive carefully !

 

 

Real Estate Boards and Numbers

There are many Real Estate Boards throughout Ontario and each Board is connected to a group that shares its MLS listings.  Oakville (OMDREB) is tied to the Regional Board, Burlington and Hamilton has its own Board (RHAB), but is currently sharing with Regional, and Toronto, Mississauga and Brampton (and other markets) are on their own on TREB.

I’m going to use Oakville real estate in my example.  In the 4 weeks including June 5, 2016 – July 3, 2017 there were 238 sales in Oakville.  This information is contained in 441 listings that were posted.  Here’s what was posted and where:

  • Posted on OMDREB only ………………………………………….10
  • Posted on RHAB only ………………………………………………..3
  • Posted on TREB only ……………………………………………….46
  • Posted on TREB and RHAB ……………………………………….14
  • Posted on TREB and OMDREB …………………………………141
  • Posted on all three (OMDREB/RHAB/TREB) ……………..24

And why are the listings not all posted in the same place? It’s because not all registrants are members of all three boards.  People from all over the GTA are shopping … all over the GTA, so when I list a property in Oakville, I want to make sure the buyers and their representatives all over the GTA have access to my full listing, and not just what’s available on Realtor.ca.  60% of the listings in Oakville were listed on both OMDREB and TREB.  And 24 listings were posted on all three.

Each board has a different data form with different mandatory fields.  For instance, Regional, which is where OMDREB houses its listings, requires square footage as a mandatory piece of information and TREB does not.  Roof type is mandatory but the date the roof was replaced is a field, but is not mandatory.  In my humble opinion, more mandatory data is needed for all of the boards.  The data forms should contain ever bit of information that the buyers’ insurance broker will be looking for.

When I pull up stats for Oakville, I pull them up from the Oakville board.  But, the Oakville board is missing data for 46 sales, or 19% of the sales, which I think is a significant number.

I wish we could have one database and that all of the Boards would share the one database. This would eliminate duplicates and would make life simpler. It would also mean that all registrants in Ontario would have access to all of the data in Ontario.

 

 

 

 

Building in Oakville … Legally

I am very proud to be associated with two Registered builders in Ontario. The first one is our family business (Belsito Homes) and the second is affiliated with my brokerage (Stonemill Developments Inc.).  Both builders have zero conciliations and zero claims.

 

Being licensed and providing a Tarion Warranty isn’t optional. It’s the law! In Oakville, every legally built home has a Tarion enrolment number unless it was built by the homeowner, in which case there should be a Letter of Confirmation from Tarion (a new requirement for a building permit in Oakville).  Oakville is one of the following municipalities that is working with Tarion in a pilot project to help prevent illegal building. No Tarion enrolment or Letter of Confirmation = no building permit.

  • Barrie
  • Belleville
  • Collingwood
  • Greater Sudbury
  • Markham
  • Middlesex Centre
  • Midland
  • Newmarket
  • Niagara Falls
  • Oakville
  • Sarnia
  • Penetanguishene
  • Stratford

There are links to Tarion’s website below.

Builders who fail to register with Tarion can face legal action, resulting in possible convictions, heavy fines, and even jail sentences.

It’s not just the missing warranty that puts home buyers at risk. The Canada Revenue Agency will be looking for HST on a new build and there aren’t many ways to hide from the taxman, especially with easily traced documents on Real Estate Boards and Land Registry. CRA is currently targeting British Columbia’s illegal builders with audits and is hiring 85 extra staff to deal with the problem. It’s only a matter of time before the crackdown happens in Ontario. There’s a link to a CBC story about this below.

So it’s not the builder registration fee ($500) or the enrolment fee ($385 – $1,500) that the illegal builders are trying to save, it’s the underwriting and investigating that Tarion performs as part of the registration process AND it’s the 13% HST that they are trying to avoid paying along with income tax on the profit.  Being registered with Tarion would put these illegal Builders on the radar with CRA.

 

See links for more information below:

Requirements for Building Your Own Home

Building Your Own Home in Ontario FAQ

Letter of Confirmation Application Form

CBC’s story about CRA crackdown in BC20160512_094057

NOT across the industry!!

shutterstock_135232376I’m not worried about the CBC Marketplace report showing that some sales representatives or brokers are offering to break rules in order to double end a deal because I would not have been filmed doing this. This practice is illegal. There’s a big difference between Customer Service and Agency and we MUST be experts in knowing who we are talking to and what secrets we are giving away. CBC hasn’t named the people caught on tape breaking the rules, but hopefully our regulating body (RECO) will be able to get the names and punish the offenders appropriately. CBC’s reason for not giving up the names was that “experts told Marketplace the problems are not specific to individuals but exist across the industry”. I disagree.  During the past few years, I’ve been to hundreds of offer presentations on behalf of my Buyer clients and I can say that the majority of professionals are just that … professional.  Once in a while, we’ll come across someone who seems as if they may be breaking rules, but there’s not a lot we can do about it because of the secret nature of the multiple offer process.

The bottom line is that I would NEVER be filmed making these promises to potential buyer clients because I would NOT do this. If I am already representing the Sellers, I usually explain to any potential buyers that they will be treated as a customer. They’ll get honesty and fairness, but I will not divulge secrets.

We did have one situation where we listed a house and then our current Buyer clients wanted to make an offer. Pat sat with the Sellers and I sat in another room with the Buyers. I didn’t offer price advice to the Buyers but did follow their directions to improve their offer. I had no idea what the other offer was. My Buyers were very keen to get this house, likely had more money to spend, and they offered enough so that the Seller preferred their offer.  The only reason that these Buyers were treated as clients was because they were already clients. But that meant that neither Pat nor I could advise them about what price to offer. Nor could we advise the Sellers about what price to accept from these particular Buyers. This is Real Estate 101 and all of us should know this inside and out.

That doesn’t mean that Buyers aren’t under the impression that there is something to be gained by “going through the listing agent”.  A month ago I was sitting in a Tim Horton’s with some buyers who came through my Open House. We were going to be putting together an offer. They asked me to help them out with price … to give them a hint about what the Seller would accept.  I clearly explained, again, that the Sellers were the clients and that while I was very happy to be honest with these buyers, any fiduciary duties were owed to my Sellers, which means I would keep their secrets.  These buyers asked me if they should just get their own agent and I suggested that it might be the best idea. I got home an hour and a half later than I was supposed to, didn’t get the other side of that commission, but I did my job and I did it properly. My Sellers were well represented.  And if I had provided customer service to these buyers, I would have followed the rules to the letter.

If everyone understood Agency and followed the rules, we wouldn’t have to change a thing. Changing the rules so that Multiple Representation is no longer allowed wouldn’t stop what was recorded from happening. These offenders could just refer the Buyers to a friend who was in on the scam. The best way to handle this situation is to punish the offenders and the only way that RECO can investigate is if they have names.  It’s likely that these people would no longer be allowed to trade in Real Estate and that would be the best outcome.

Marketplace Story

 

Did you read Schedule B?

 

Schedule B.jpg

Someone asked why photos of the home they had purchased were still posted on-line and Joseph Richer, the Registrar of RECO, answered as follows: “once ownership of the home has been transferred to you — the new owner — a seller’s representative can’t make any reference to the property in advertising without your written consent. That includes posting photos of the home on their website or anywhere else.”

Mr. Richer went on to add that “before publishing an ad that contains the selling price, closing date or other details about the deal, a sales representative needs to obtain written consent from both you and the seller, regardless of who owns the property at the time of the advertisement.”

Have you given written consent to the listing brokerage to advertise these details of your agreement?  Look through your agreement for the listing brokerage’s Schedule B.

Most brokerages include clauses in a schedule to cover under what terms interest will be payable on your deposit. Other items are also included. I like to include a limit of one hour on any revisits and agreement that the deposit will be a bank draft. Sometimes there are clauses where the Buyer and Seller both agree that they have not received any professional advice from either brokerage like legal, engineering or environmental advice.

But there is a troublesome clause that I always adjust for my buyers, and that’s this one:

“In accordance with the Privacy Act (PIPEDA), the Buyers and Sellers hereby agree to allow the Listing Brokerage and their Representatives to distribute information pertaining to the sale of the property in future marketing material upon this Agreement becoming firm and binding. Such information may include the price but shall not include the names or personal information about the Buyer or Seller.”

There is no end date in this clause so I always add “until completion only” which gives permission to advertise the sale details until the closing date only.  It makes sense that a Listing brokerage will want to be able to advertise that they successfully sold the house and that usually includes the price or some sort of identifying information about the price – like 102% of asking or $50,000 over asking.  If this is not acceptable to you as a Buyer, ask your representative to get rid of the entire clause.

Be warned that changes to this clause shouldn’t negatively affect you in a multiple offer situation because this won’t affect the Seller’s bottom line, but this will depend on how the change is explained to the Seller.    Click the link below to read the article.

See Toronto Star Article here