Cart Before The Horse?

The following is a story about laziness, inexperience, false-bravado, misunderstanding, and a wicked sense of entitlement.

It’s also a story about misconceptions that exist in the rental market, based on an uniformed opinion about social equality.

Overall, it’s really just trying to put the cart before the horse…


After seven years, and 1,201 blog posts, I can honestly say that I’m still trying to figure out which topics will produce the most opinion and conversation on the message board.

A good political debate always gets readers to crack their knuckles and begin typing, but when it comes to real estate blog posts, I still never know.

Stories about multiple offer situations seem to bring out the real estate bears, and anything about personal finances will lead people to opine.

But there’s one other topic or idea that always gets people to speak up, and that’s the notion of the social-left trying to put restrictions on the free market, with their ideas about societal values and norms, and how they should apply to capitalism.

I’ve written about the rental market before, and we’ve covered the theory behind “discrimination.”  Most of the people who commented last time were of the opinion, “If I work hard and generate enough savings to purchase an investment property, I’ll be damned anybody is going to tell me who I can and can’t rent to.”  To claim discrimination may be a stretch, but many of my readers have gone on record saying they don’t care!

My story today has to do, yet again, with this subject, and the bizarre perception that much of today’s society has about rights and privileges…

I have a condominium listed for lease at $1,599 per month.

It’s not a luxurious unit, but it is a condo unit for lease, and in today’s market – that puts the owner/landlord in the driver’s seat.

Vacancy rates are 1-2% in Toronto, and any property listed for lease in Toronto is bound to generate first-day inquiries.  If you’re bored, and want to test this theory – post an imaginary 2-bed, 2-bath for lease in Leslieville on Craigslist or Kijiji and see how many emails you get.

I told the owner of the unit I have listed for lease that it’s not finding a tenant that’s the hard part; it’s finding a suitable tenant, and one you essentially want to “partner” with for the next year or more.  This person is going to be living in your investment, and you want them to take care of it, respect it, and pay their rent on time!

When I list a property for lease on MLS, I put the following note in the remarks for brokers: “Please Include Equifax Credit Check, Employemnt Letter, References, And OREA Rental Application With All Offers.”

That’s fairly standard, right?

Perhaps not, it would seem, based on my experience last week.

I received a call from an agent who said that he had shown the property to his client, and the client was interested in making an offer.  I told him I’d take a look when he sent it, and kindly reminded him to include the necessary documentation – credit check, employment letter, references, etc.

He responded, “Well, if you’re going to accept the offer, then that’s no problem.”

I was driving at the time, and probably typing on my iPad, Blackberry, Nintendo Entertainment System, and Sega Genesis, so I didn’t quite hear him so clearly.

“Great, does he have a good credit score?  Do you know what it is off-hand?  What’s his income?” I asked.

There was a pause, and the agent responded, “Well, geez, I don’t know if that’s relevant.”

Hold the goddam phone, for a moment.

Since when is your income not relevant in a financial transaction?

I paused my game of Bad ‘n Rad on my Gameboy, pulled over, and started to take a greater interest in the conversation.

“You have pulled a credit check on him, right?” I asked.

The agent replied, “No, not yet.  We want to know if you’ll accept the offer, first, then we’ll get you his employment letter and whatever else you need.”


Was I REALLY having this conversation?

Talk about putting the cart before the horse!

“Neddy, the home-buyer’s guide says to actually go inside the house before buying it.”


I asked the agent, “Hold on a moment here – how am I supposed to make an informed decision about this tenant’s candidacy without his credit check and employment letter?”

The agent replied, “Well he has his first and last month’s rent, and he’s been a tenant before.”

Wow.  I could have just hung up the phone, since I had a pretty good feeling that this agent and I weren’t really compatible for doing a real estate transaction, but I had to know what other thoughts he had on this process.

I told him, “What I need is a credit check that shows your client’s credit rating, his debts, his delinquency record if that applies, as well as where he works, what he does for a living, and how much money he makes.  I need this information to decide IF we’re going to rent to him, and after looking at this information, perhaps my landlord would like to meet with him for a brief interview.”

This is where things took a turn to the um…..left, if you catch my drift…

He responded, “You don’t need to know about his credit history – that’s personal!  He’s young, and he may have made some mistakes in the past.  And his employment – that would be on the rental application itself.  Is it really necessary to have him bother his HR department at work for a letter?  And what do you mean ‘decide if you want to rent to him?’  If he has his two month’s deposit, he’s a suitable candidate.”

Left hook, right jab.

“Well, if he has bad credit, and he doesn’t make at least $55,000 per year, at a job he’s been at for 18 months or more, then my client won’t consider him a candidate,” I told him.

Bounce, weave.

“That’s pretty discriminatory,” the agent told me.  “Don’t you think?”

Block, counter.

“No, I don’t.” I told him.  “I think it’s a very standard business practice, and it’s being responsible.  Do you really expect that a landlord would lease to a tenant with bad credit, who doesn’t make enough money to carry the property?”

I thought the question was rhetorical.  This is all pretty standard, right?

What’s the difference between a bank making sure a mortgagee is qualified and a landlord making sure a prospective tenant can pay the bills?

There’s this bizarre idea out there in society that any applicant “should” be able to get a property that they’re interested in leasing.  I come across this over, and over, and over!

If we truly live in a free market, where capitalism is the soup de jour, then a property-owner should be able to lease his or her property to a person that he or she believes is qualified, at his or her own discretion.

Does this open the door for discrimination?  Perhaps.

But can’t we rephrase “unemployed woman with dependants and poor credit history” as something like “adorable single mother” if we were so inclined?

So perhaps discriminating against a single-mother isn’t as cut and dry as electing not to lease to a person who isn’t qualified financially.

I’m tired of certain segments of society acting like fiscal responsibility automatically leads to social injustice.  If the government wants to provide affordable housing, and the taxpayers are going to absorb the cost, then that’s fine – I’ll pay my share, gladly.  But if the individual who invests in real estate and takes on the associated risks is expected to rent to the first person that raises their hand, qualified or not, then I have a big problem with that.

If you cross the street, you look both ways.

If you get behind the wheel, you do up your seatbelt.

And if you look to rent out your investment property, you do a thorough check on the applicant, and make an informed decision based on their finances and personal circumstances.

These three things can all be described as “being responsible.”

Since when is the expectation among the renter-pool that having a cheque for $3,200 is the ONLY prerequisite for leasing a property?


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  1. Annie says:

    The problem is magnified by a toothless Landlord and Tenant board. The same system that doesn’t enforce orders against bad landlords is just as ineffective in cases against bad tenants. When taking a chance on someone could mean going to the LTB for a hearing (more than one hearing if the tenant knows how to work the system, buying some time with a bouncy cheque on the day of the hearing), then pay the Sheriff for an eviction, wait for the requisite number of notification weeks from the Sheriff, and never see the 6 months’ rent owing plus costs because the tenant doesn’t conveniently leave a forwarding address, who can blame landlords for being cautious? If shoplifting charges worked like unpaid rent, grocery stores would have to let the thief continue stealing while they wait 2-3 months for a hearing, and then another few weeks of free groceries before they could even schedule an appointment with someone to put an end to it. Ironically, this very system that was designed to protect tenants who are temporarily down on their luck only makes it harder for the very segment of society in precarious housing situations – no one wants anything to do with them because it’s too much of a risk. PS: As a long time “lefty” voter, I really hate your repeated oversimplifications of “lefties”. People are more nuanced than that. Toronto needs to move away from putting people in boxes (left/right, car/bike, downtown/suburbs) – that type of thinking only serves to divide even more.

  2. Rob Fjord says:

    are you beginning to see the benefits of living in your parents basement.
    maybe if they abolished all rent control laws, rents would ease a bit…and also the demands of landlords.
    it be da gawddamn gubmint agin.

  3. JC says:

    David, the Agent you were dealing with is a putz. Unfortunately, they are dime a dozen and overpriced at that. I don’t know how many times I run into Realtors that don’t like to play by “generally accepted” rules, or in some cases, actual Law, especially when rentals are involved.

    On the flip side, I deal quite a bit with relocation, and as much as I tell the relo company that clients MUST come prepared with letters of employment, credit checks etc, completed application forms etc., it generally falls on deaf ears. They arrive with nothing. Then they wonder why they didn’t get the unit when it goes into competition. On the representing the landlord end, I state that all offers must have credit checks, and completed application forms as a minimum. Most offers I submit have a clause allowing for 24 hours for the Landlord to check into references and make a final decision.

    I don’t have a very high regard for a lot of Landlords in Toronto. Many of them are absentee, wanna-be slumlords and only interested in getting their hands on post-dated cheques. That said, I’ve seen a few good people be taken advantage of by professional Tenants that know the Law (and the LTB appeals process) better than the Landlord – leaving them with unpaid rent for several months and several thousand dollars in damage to the unit.

    Unfortunately, you HAVE to be very discriminating (as in selective) with regards to who you take on as Tenants, because in Ontario, they seem to be better protected than Landlords.

  4. Gorgonzola's Choda says:

    remember the Golden Rule. Those who have the gold make the rules.

  5. Adrian says:

    I’m curious about this credit score business. Presumably, good credit score = good potential tenant, bad credit score = bad potential tennant. What about no credit score? I’ve never borrowed money in my life. My credit report is blank, and according to Equifax my credit score is uncomputable. I’ve always been able to rent apartments just fine, so I’m guessing it’s not a bad thing. Or was I just lucky?

  6. Ian says:

    I think the discussion about whether this is “discriminatory” or not needs clarification. Of *course* it is “discriminatory”. The question is whether employment income and creditworthiness are reasonable and justifiable grounds for discrimination, as opposed to – say – race, religion, sexual orientation, etc., which are not.

    The word “discrimination” is, let’s try to remember, an inherently value-neutral word. It’s the “based on” that matters. When an employer hires based on relevant academic credentials or prior employment experience, they are in fact discriminating – i.e. between candidates that have relevant academic credentials and prior employment experience, and those who don’t (and hence aren’t qualified for the job). It’s when they discriminate based on inappropriate or irrelevant grounds, such as race, religion, etc., that the problem arises.

    A landlord is, in effect, extending a huge amount of credit and financial trust to a prospective tenant. The tenant is taking physical possession of a huge financial asset of the landlord’s, and is promising to pay future amounts that have been contracted for (10 months out of 12 worth of rent, in a normal lease, assuming first and last up front). So creditworthiness and income are of course hugely relevant and appropriate grounds to discriminate between one prospective tenant and another, in light of a landlord’s legitimate need to protect their asset and the reliability of the income flow from it.

    TL/DR: Yes, David, she’s wrong.

    1. Gorgonzola's Choda says:

      why does ‘discriminate’ often get associated with negative things? Because of the left leaning media? I have no idea.

      I think discriminating is a GOOD thing. I am a discriminating investor. “My Clinton was a discriminating wine connoiseur” That means prudent, sound, discerning..

      Hey Mr Choda, you are discriminating to potential lessees! You are god damn right I am discriminating. Thats the point, isn’t it?

      1. Gorgonzola's Choda says:

        Discriminating is a positive virtue.

      2. Jason H says:

        Discriminate is used in negative examples – rightly or wrongly it is what it is.

        I think reviewing your options is prudent and sound but also recognize that good tenants should do the same. There is a reason the law is stacked against the landlords (and I think it doesn’t go far enough, but I also believe there should be more laws for the removal of problem tenants).

        In every rental I have been in, the landlord is fairly absent. The landlord does the bare minimum upkeep and we (the tenants) are left with all the wonderful inconveniences of their “investment”. If people were “investing” in these houses they would upkeep them instead of the standard band-aid that continuously gets applied.

    2. ScottyP says:

      Well put, Ian.

  7. Joe Q. says:

    I personally don’t think it’s discriminatory to ask for a credit check and letter of employment from prospective tenants. It would only become discriminatory if you turned away someone with excellent credit history and salary on the basis of race.

    Asking for proof of ID (showing a driver’s license or passport at the time of application, to verify identity) is also reasonable, though I think that asking for photocopies of the applicant’s passport / driver’s license / health card, as some landlords do, is going too far.

    As for reference letters — there are some who argue that reference letters from former landlords are worse than useless, as these former landlords may write glowing letters to help get rid of problem tenants. I can see the logic in this, though I’m not sure how common it is in real life.

    1. Jason H says:

      “It would only become discriminatory if you turned away someone with excellent credit history and salary on the basis of race.”

      What’s the definition between 750-800 in your credit score?

      “As for reference letters — there are some who argue that reference letters from former landlords are worse than useless, as these former landlords may write glowing letters to help get rid of problem tenants. I can see the logic in this, though I’m not sure how common it is in real life.”

      One of the best situations I’ve seen friends of mine who are landlords – go to their house. It will say more about who they are than a reference will.

  8. Jason H says:

    There are only a few things I’ll include with a rental application:

    My credit score (with absolutely no information on debt)
    My employment letter with my salary
    At this point 1 reference and absolutely NO deposit other than first and last

    “Since when is the expectation among the renter-pool that having a cheque for $3,200 is the ONLY prerequisite for leasing a property?”

    In many cities it is the ONLY pre-requisite.

    1. Vlad says:

      Unfortunately, Toronto isn’t “many cities.” With a 1-2% vacancy rate, it’s a seller’s market. If you don’t like their rules…tough.

      1. Jason H says:

        I don’t disagree with you whatsoever.

    2. Gorgonzola's Choda says:

      “IN many cities”

      “In a Galaxy far, far away…”

      Where are you talking about? Baghdad? Beirut?

      1. Jason H says:

        Outside of the GTA.

        1. Gorgonzola's Choda says:

          No. Wrong.

          1. Jason H says:

            Actually you’re wrong.

          2. Joe Q. says:

            Rental vacancy rates in many Canadian cities are several times higher than in the GTA. Lots of communities out East especially with vacancy rates in the 5-10% range. Keep in mind though that the CMHC methodology makes it hard to compare cities to one another.

          3. Gorgonzola's Choda says:

            To assume that lower vacancy rates means that no one checks credit scores is pretty naive. As naive as, say, renting a place out that you own without checking their credit score.

          4. Joe Q. says:

            I never said landlords don’t check credit ratings. Just pointing out that landlords aren’t in the driver’s seat everywhere.