Finding reliable tenants for your rental property can make or break your success as a landlord. A thorough background check helps you make informed decisions and protects your investment from potential issues down the road.

Tenant screening goes beyond just checking credit scores and employment history. You’ll need to understand the legal requirements, gather the right documentation, and use trusted screening services to evaluate potential renters effectively. By following proper background check procedures, you can identify red flags early and choose tenants who’ll pay rent on time and take good care of your property.

What Is a Tenant Background Check?

A tenant background check examines key areas of a rental applicant’s history, such as identity verification, credit standing, and rental history. The screening process enables Canadian landlords to evaluate potential tenants through official documentation and verified sources. This includes:

• Identity verification through government-issued IDs like a driver’s license or passport. 
• Social Insurance Numbers (SINs), for specific consented purposes, in limited circumstances due to privacy concerns.
  • Landlords should not request SINs unless explicitly required for a specific, lawful purpose and only with clear consent
• Credit reports showing payment patterns, outstanding debts, and potential financial risks.
• Previous rental addresses, landlord references, and lease compliance records.Reports from credit bureaus such as Equifax and TransUnion.

Each component provides insights into an applicant’s reliability and responsibility as a tenant. Canadian landlords must rely only on checks performed in accordance with privacy laws under the Personal Information Protection and Electronic Documents Act (PIPEDA).

Key Components of a Thorough Background Check

A comprehensive tenant background check examines essential areas to evaluate potential renters. Each component offers specific insights into an applicant’s reliability and trustworthiness.

Credit History Reports

Credit reports reveal an applicant’s financial behaviour through payment history and credit scores. Key information includes:

• Current credit score
• Outstanding debts
• Payment patterns
• Collections accounts and bankruptcy filings

Criminal Background Screening

Criminal background checks protect Canadian property owners and other tenants. Access to criminal background checks varies widely across provinces and territories, and many regions restrict the use of this information to prevent discrimination. For example, Ontario’s Human Rights Code prohibits landlords from considering criminal records.

• Felony convictions within legal time frames.
• Misdemeanor records relevant to property damage or harassment.
• Pending criminal cases.
• Sex offender registry status as allowed under provincial and territorial regulations.

Employment Verification

Employment checks confirm an applicant’s income stability through:

• Current employer contact details
• Length of employment
• Salary verification
• Employment status (e.g., full-time, part-time, contractor)
• A minimum ratio, such as 30% of gross monthly income, is a common guideline

Rental History

Rental history records uncover past behaviours, including:

• Prior rental addresses
• Lease compliance history
• References from previous Canadian landlords
• Property maintenance and on-time payment history

Legal Requirements and Privacy Laws in Canada

Tenant background checks in Canada are regulated to ensure compliance with privacy laws and avoid discrimination. Key guidelines include:

Federal Privacy Laws

• Landlords must obtain written consent to conduct background checks and collect personal information.
• Personal information must only be used for stated purposes.
  • Applicants have the right to request and correct any inaccuracies in reports.
  • Canadian rules established by PIPEDA.
• Canadian Human Rights Act prohibits discrimination based on race, gender, disability, and other protected grounds in federally regulated housing.

Provincial and Territorial Laws

• Application fees are regulated, often with maximum allowable amounts.
  • These vary significantly between provinces. For example, in Ontario, landlords cannot charge excessive application fees, but Alberta allows reasonable fees.
• Screening criteria must comply with provincial human rights codes (e.g., Ontario Human Rights Code) to avoid discrimination based on race, gender, disability, etc.
• Specific restrictions apply to using criminal records or credit scores.

Red Flags to Watch For

Background checks can reveal potential issues in various aspects of a rental applicant’s history. These red flags help landlords identify risky tenants.

Credit Score Concerns

• Low credit scores (e.g., below 600)
• Multiple late payments or accounts sent to collections

Criminal History Warning Signs

• Repeated property-related offences
• Violent crime history posing a potential safety risk

Rental Background Issues

• Frequent past evictions
• Property damage complaints from prior landlords

Best Practices for Screening Tenants

Canadian landlords can follow these steps to ensure effective and legally compliant tenant screening:

Establishing Consistent Criteria

Develop a standardized checklist that includes:

• Minimum credit score requirements
• Income thresholds based on provincial guidelines
• Reasonable employment history expectations

Documentation and Record Keeping

Maintain organized files for each applicant, including:

• Signed rental applications and consent forms
• Credit reports and supporting documents
• Notes on screening results and decision-making processes

Avoiding Discriminatory Practices

To ensure compliance with Canadian human rights laws, landlords must avoid discriminatory practices during the tenant screening process. This includes:

• Focusing on Relevant Criteria: Assess applicants based on objective factors such as credit history, income stability, and rental references, rather than personal characteristics.
• Avoiding Protected Grounds: Do not inquire about or base decisions on race, ethnicity, gender, marital status, family status, sexual orientation, religion, age, disability, or other protected grounds under federal, provincial, or territorial human rights codes.
• Using Consistent Standards: Apply the same screening criteria to all applicants to ensure fairness and transparency.
• Providing Equal Opportunity: Be cautious with policies that may indirectly disadvantage certain groups (e.g., requiring years of Canadian rental history may exclude newcomers).
• Documenting Decisions: Keep clear records of the criteria used to evaluate applicants to demonstrate that decisions were based on lawful and relevant factors.

By conducting thorough tenant background checks aligned with Canadian and provincial laws, you can safeguard your rental property, maintain a safe rental community, and foster positive tenant-landlord relationships. Landlords should always thoroughly review local and federal rules and requirements, and seek professional advice where necessary

The City of Kitchener has implemented a new bylaw aimed at regulating lodging houses—shared living arrangements where tenants rent individual rooms while sharing common areas like kitchens or bathrooms. The Lodging House Bylaw is designed to improve safety, reduce nuisance issues, and establish clear guidelines for property owners and tenants. These changes are part of Kitchener’s broader strategy to expand affordable housing options in the city while ensuring quality and safety for residents. The bylaw took effect as of January 1, 2025.

With the new bylaw now in place, those operating lodging houses will need to follow updated standards. However, the licensing process for owners will be streamlined and simplified.

What Is a Lodging House?

In Kitchener, a lodging house is defined as a dwelling unit where five or more renters, excluding the property owner, rent individual rooms, with shared spaces like kitchens and bathrooms. This setup allows for flexible living arrangements but with some important distinctions: lodging units do not feature private kitchens or bathrooms for individual tenants.

This type of housing includes some student residences but not group homes, hospitals, or hotels. The bylaw categorizes these as distinct from other housing types, specifically focusing on shared-living arrangements that can provide more affordable options while prioritizing health and safety.

Key Updates in the Bylaw

The new bylaw brings several critical changes to how lodging houses operate in Kitchener. 

To streamline the process for lodging house operators, Kitchener has created an online portal for license applications and reduced the licensing fee to $750. 

One of the key additions to the new regulations is the requirement for lodging house owners to designate a ‘Responsible Person’. This individual must be available to address any emergency within one hour and non-emergency issues within three hours. Property owners are also now required to display a Lodging House License and a Lodging House Handbook that outlines tenant rights and other important regulations.

With the new bylaw, owners of lodging houses must maintain safe, well-kept properties that comply with multiple levels of legislation. This includes meeting the Ontario Building Code, Ontario Fire Code, and municipal laws surrounding zoning, noise, parking, and property standards. Lodging houses will need to undergo fire safety and property standard inspections as part of the licensing process, helping ensure that these homes meet the necessary health and safety regulations. For example, owners must:

• Ensure that working smoke and carbon monoxide alarms are installed in all relevant areas.
• Maintain the property in line with all fire safety requirements.
• Have adequate measures in place to deal with waste and yard maintenance.

Failure to comply can result in fines, penalties, or other enforcement actions.

Tenants are also given a more structured legal framework, and will have access to protections under the Residential Tenancies Act, with individual lease agreements now required. The City has created online systems where renters can alert authorities about hazards or conditions that don’t meet the established standards.

The Impact on Affordable Housing

The introduction of this bylaw aims to provide Kitchener with a regulated means of expanding housing options, allowing for a more flexible housing mix across residential areas. The intent is to create more affordable, shared-living spaces without sacrificing safety or quality.

By updating the licensing system and making it easier for property owners to comply with the regulations, the City hopes to make lodging houses a more accessible, reliable housing option. The bylaw is in line with Kitchener’s Housing for All strategy, which focuses on increasing the variety of available housing types across the city while ensuring high standards of safety and maintenance.

CREA released their December statistics along with their hallmark annual optimism heading into January. The big question on everyone’s mind is whether or not that optimism is warranted moving into 2025’s real estate market. 

CREA also seems to feel that we can see a resurrection of volume (the number of homes sold in 2025) without prices rising to the point of unaffordability. 

I think they might be right. At this point, people are buying homes again because they can afford to. As long as that doesn’t change, 2025 should be a good year for Realtors, even if it’s not a good year for the homeowners hoping their house prices go up. 

We should certainly hope to see some life in the resale market, given that new condo sales in 2024 were the lowest they’ve been since 1996, according to a recent report from Urbanation.

Source: Urbanation

Should this housing correction continue along its path, it looks like we’re in about the third or fourth inning here, and it’ll be a while until we see house prices trend upwards again in a meaningful way. BMO recently visualized this in the excellent chart below.

As we close the books on 2024, it’s worth reflecting on the Canadian housing market’s performance, particularly during its quieter December period. After a remarkable fall rebound, the market saw sales activity dip 5.8 per cent in December compared to November. 

At first glance, this might seem like a retreat, but dig deeper, and the picture tells a different story—a market poised for a potentially significant shift this coming spring.

Much like a second-period intermission, December’s slowdown feels more like a pause than an end. Despite the dip, sales were still 13 per cent above where they stood in May 2024, just before the Bank of Canada made its first interest rate cut in June. 

In fact, the fourth quarter was among the strongest in the past 20 years (excluding the pandemic), showing the resilience of the Canadian housing market even amid affordability challenges and economic uncertainty.

A supply story, not a demand story

The narrative driving December’s cooling wasn’t a lack of buyers—it was a scarcity of homes for sale. Nationally, new listings fell 1.7 per cent month-over-month, marking the third consecutive decline after a September surge. 

The result? A market where potential buyers found themselves facing limited options, even as affordability began to improve. Faced with this challenge, many buyers may have pushed their purchase to Spring 2025, which fuelled CREA’s belief in a “pent-up demand” scenario in the year’s first quarter. 

The bigger question on my mind is whether or not we could see a “pent-up supply” scenario as well, given the market is facing a few key factors:

• The impact of a trade war (Bank of Canada is predicting as much as a -6 per cent impact)
• Rising unemployment (albeit surprisingly strong in December)
• A change in government that promises less government jobs and spending
• Increasing purpose-built rental supply competing with investors
• Historically high jump in supply from completions in 2024 and 2025
• A record number of mortgages renewing at higher interest rates 
• To me, the pent-up supply argument could be stronger than the one for pent-up demand.
  
  

Absorption is normal, not “strong” 

The national sales-to-new listings ratio, a key indicator of market balance, eased back to 56.9 per cent in December from a 17-month high of 59.3 per cent in November. For context, this figure hovers near the long-term average of 55 per cent, reinforcing the idea that we’re still in a relatively balanced market. Yet, with inventory levels well below historical norms—128,000 properties listed nationally, compared to a long-term average of 150,000—buyers remain at a slight disadvantage.

Affordability: A fragile silver lining

One of the more optimistic takeaways from CREA’s December data is the indication of modest improvements in housing affordability. Mortgage payments as a percentage of income (MPPI) have begun to decline, supported in part by the Bank of Canada’s interest rate cuts earlier in the year. This relief has allowed more buyers to consider entering the market, particularly in regions where prices have stabilized.

However, this silver lining comes with caveats. The national average sale price rose 2.5 per cent year-over-year to $676,640, and the MLS HPI edged up 0.3 per cent month-over-month. While these price increases are smaller than those seen in previous years, they could still erode the modest affordability gains if household incomes do not keep pace. In short, any improvement in affordability remains precarious.

Adding to the uncertainty are broader economic pressures. Rising unemployment and potential government hiring cuts loom as risks that could dampen affordability this year. These factors may offset the positive effects of declining mortgage payment costs, particularly if interest rate cuts slow or stall.

The forecast remains uncertain: will sustained rate reductions and stable home prices bolster affordability, or will economic pressures push it further out of reach for many Canadians? For now, the improvements in affordability offer a glimmer of hope, but the coming months will reveal whether that hope is sustainable or fleeting.

The role of inventory in 2024’s narrative

A closer look at inventory trends highlights why 2024’s market defied expectations in certain months while tapering off in December. After peaking in September, new listings steadily declined over the fall, creating a bottleneck that frustrated buyers eager to capitalize on improved affordability. By December, there were just 3.9 months of inventory on the market—a slight increase from November’s 3.6 months but still well below the long-term average of five months.

This constrained inventory helped keep prices relatively stable, even as sales activity slowed. Sellers, wary of accepting lower offers, chose to hold firm or delay listing altogether, contributing to a stalemate in the market. This dynamic was particularly evident in urban centers like Metro Vancouver, where the market displayed modest stability with a 0.7 per cent month-over-month price increase and steady demand. The limited flexibility in prices on both sides reflects the cautious behaviour of buyers and sellers alike, highlighting the ongoing challenges of navigating a market shaped by tight inventory.

Spring 2025: The perfect storm for a demand surge?

Looking ahead, spring 2025 could mark a turning point. As snow melts and sellers bring new properties to market, demand is expected to unleash in a big way. Historical patterns suggest that real estate springs to life earlier than anticipated, and this year should be no different. 

CREA anticipates a notable uptick in activity for 2025, with an estimated 532,704 residential properties expected to change hands through Canadian MLS—a substantial 8.6 per cent jump over 2024. Shaun Cathcart, CREA’s senior economist, predicts that the anticipated bottoming out of interest rates will encourage more sellers to list their homes, further fueling the surge in activity.

The market conditions brewing this spring could create opportunities not seen in years, particularly if affordability continues to improve.

How interest rates shape the 2025 outlook

Interest rates remain the wild card. The Bank of Canada’s decision to cut rates in June 2024 provided a much-needed boost to affordability, but further reductions will be critical to sustaining momentum. Lower interest rates could not only draw more buyers into the market but also encourage sellers to list properties that were previously held back due to unfavourable market conditions.

However, the timing and scale of rate adjustments will play a pivotal role. A delay in cuts could dampen the anticipated spring surge, while aggressive reductions could reignite fears of another housing bubble. Policymakers will need to strike a delicate balance to support market stability without overcorrecting.

The long road to balanced housing

Despite the promise of greener pastures, structural challenges in the Canadian housing market remain unresolved. Inventory levels are still below historical averages, and the gap between buyer expectations and seller realities shows no signs of closing quickly. 

Adding to these challenges, recent announcements regarding reductions in immigration targets could have a significant impact on housing demand. Canada has relied heavily on immigration to drive population growth, which in turn fuels housing market activity. With immigration levels curtailed, the anticipated surge in demand may soften, potentially easing pressure on housing supply but also creating uncertainty for developers and long-term market stability. Lower immigration could temper price growth in some regions, but it also risks stalling construction projects and reducing economic momentum tied to new arrivals.

The chart below highlights the municipalities with the highest population changes in 2024 compared to 2023, a trend heavily influenced by the surge in international students. This demographic has significantly contributed to local rental and housing demand. Such growth may not be as pronounced in the coming years.

Source: valery.ca 

What December tells us

While December 2024 wasn’t the blockbuster end to the year some might have hoped for, it offers valuable insights into the market’s current state and future trajectory. Inventory levels remain tight but are improving, prices are stabilizing, and the balance between buyers and sellers is holding steady.

The question lingers: will the spring market deliver the long-awaited relief buyers crave, or will it usher in another cycle of rising prices? One thing is clear—2024 stands as a transitional year—neither a full recovery nor a complete correction. It offered glimpses of stability but left plenty of unanswered questions for 2025. 

The calm before the storm? Perhaps. But in Canadian real estate, the only constant is change.

As we begin 2025, it’s time to face up to our dire housing crisis and come up with serious fixes to the problem. Failure to do so will inevitably affect our economic well-being and lead to grim consequences.

Like Captain James T. Kirk declared at the beginning of each Star Trek episode, it is time “to boldly go where no man has gone before.”

This year will be pivotal for the new housing market. We are at an inflection point, staring into the abyss.

In Ontario, the goal of building 1.5 new million homes by 2031 now seems but a pipe dream. In 2023, construction was started on only 110,584 new homes in the province. That figure included homes and condos, as well as long-term care beds, and additional residential units. Latest figures show that the sales of both new homes and condos are languishing at historically low levels in the GTA.

The condo market has taken a beating, with declining sales, increasing inventory and financial challenges for buyers and investors. Condo developers in Ontario have not been able to build units that people and families can afford due to high taxes and fees. Fewer cranes are now active in the GTA.

But the pain is not over. We expect that housing starts over the next few years will continue to weaken, exacerbating the already-dire supply shortage. A report prepared for RESCON indicates that the downturn in residential construction will last well into this year and be followed by a slow recovery in activity from 2026 to 2028. 

We would need to build 150,000 new homes annually for the next seven years to meet the target. But we’re not even close.

Building Costs Must Be Cut

Going forward, we know what needs to be done. The cost of building a new home must be reduced by cutting the tax burden on new housing, reducing red tape and adopting digitization of the approvals process.

With both a federal and Ontario election looming, now is the perfect time to hold our senior levels of government to account.

Sadly, we’ve witnessed massive hikes in new housing taxes, fees and levies. The tax burden now accounts for 36 per cent of the purchase price of an average new home in Ontario – up from 31 per cent three years ago.

The average new home now costs $1,070,000 in Ontario, so that means consumers are on the hook for $381,000 in income taxes, corporate, sales and transfer taxes, and development charges and fees. Development charges account for a big chunk of the tax burden and have risen to stratospheric levels.

In the GTA, the average municipal charge for new homes is now $164,920 – about $42,000 higher than three years ago. For apartments, the current figure is $122,387 – about $32,000 higher than in 2022.

To reduce development charges, senior levels of government must ensure municipalities have adequate funding for local infrastructure.

Refreshingly, there have been some inroads. The federal Liberals are removing the sales tax on construction of new rental apartment buildings and the Ontario government intends to follow suit. 

The federal Conservatives, who are projected to form the next federal government, have promised to cut the sales taxes on all new housing under $1 million. The Tories estimate the measure will reduce the cost of an $800,000 home by $40,000, and spur construction of 30,000 more homes per year.

Meanwhile, the cities of Burlington and Vaughan have taken action and lowered development charges. We need other municipalities to follow suit. 

Slow Approvals Add to Cost

Red tape is also adding to the cost of new housing. Bureaucratic delays add $2,672 to $5,576 per month per unit depending on the municipality. When applied to the typical delay period, it can add $43,000 to $90,000 per unit.

And, although we live in the digital age, many municipalities still have outdated and antiquated development approvals systems. The systems need to be digitized and standardized across the province.

A survey of private-sector homebuilders by StrategyCorp noted that planning processes and constantly shifting regulations are putting a damper on housing construction although there are tools available at little cost – like a universal planning application – that would streamline the process.

This can not continue. The residential construction industry is critical to the economy, employing 600,000 workers in Ontario alone and contributing $57 billion to the Ontario GDP. Nationally, the construction industry employs 1.6 million and contributes $151 billion, or 7.4 per cent to the country’s GDP.

We know we can fix this. 

We’d be wise to heed the words of Captain Jean-Luc Picard, another notable Star Trek figure, who noted, “There is a way out of every box, a solution to every puzzle; it’s just a matter of finding it.”

Establishing clear expectations from the very beginning is a critical factor in managing tenant relationships. Taking the time to outline responsibilities, communicate rules, and foster open communication sets a foundation for smoother, more cooperative interactions over time. When these expectations are unclear or inconsistently communicated, misunderstandings and conflicts are more likely to arise, leading to increased frustration and potential turnover. Starting off on the right foot with tenants not only prevents many common issues but also enhances trust and satisfaction, leading to longer, more successful tenancies.

Why Starting Off a Tenant Relationship Right Matters

Positive starts are always important. The early days of a tenancy are crucial for setting the tone of the entire relationship. Clear communication from day one helps tenants feel confident in their new home, minimizes confusion, and establishes mutual respect. 

When tenants know what to expect and feel their landlord or property manager is approachable, they are more likely to voice concerns early, follow the rules, and maintain the property as agreed. Additionally, a positive beginning leads to better first impressions, which often translates to tenants staying longer, paying rent on time, and adhering to lease agreements. In contrast, if tenants start off unsure of their responsibilities or feel neglected, they may be less cooperative, leading to disputes, costly maintenance issues, or early lease terminations.

Establishing Ground Rules During Lease Signing

One of the best opportunities to set expectations is during the lease-signing process. It’s essential that landlords or property managers walk tenants through every section of the lease, ensuring they fully understand the terms. Key areas to highlight include rent payment deadlines, maintenance reporting procedures, and rules about noise, guests, or common area usage. When tenants are aware of their responsibilities from the start, they are more likely to comply, significantly reducing the chances of conflict later.

Preventing Miscommunication and Conflict

Missteps in expectation-setting often lead to conflicts that could have been easily avoided. 

For instance, a tenant might assume that landscaping services are included, only to be hit with unexpected fees at the end of the month for not maintaining the property outside. Similarly, if an owner or property manager fails to clarify maintenance reporting procedures, minor issues may go unreported (or not be received), so remain unresolved, eventually escalating into larger, costlier repairs. Another common example is subletting. A tenant may mistakenly believe they can sublet their apartment, and not obtain the proper permission if subletting was not clearly and specifically addressed.

Setting clear expectations from the outset is critical to avoiding these issues. Regular check-ins with tenants, especially in the first few months, can reinforce guidelines and clarify any uncertainties before they become problems. These check-ins also create opportunities for tenants to ask questions as they arise, as they may not think of everything immediately after moving in, and new questions often come up over time as the tenants settle in.

Setting Up for Success

Have a system in place to ensure all new tenants consistently get the right information and have it on hand when they need it. This will simplify the process for you, and make it easier for your tenants.

An effective way to set expectations is by providing tenants with a welcome packet outlining essential information, such as garbage pickup schedules, parking rules, and emergency contact numbers. They can easily review it at their convenience, and recheck the information whenever they need to. Another best practice is sending a friendly follow-up email after a tenant moves in, reiterating key lease terms and providing a direct point of contact for questions. These proactive measures not only clarify expectations but also demonstrate the landlord’s commitment to a smooth, hassle-free experience for the tenant.

Consistency

Even with the best of starts, it’s important to be aware that setting expectations is not a one-time event but an ongoing process. Landlords and property managers must ensure that their actions are consistent with the agreements made during lease signing. If the lease states that maintenance requests will be addressed within 48 hours, it’s crucial to meet that commitment. Following through on these promises builds trust and reinforces the tenant’s respect for their landlord. Tenants are then more likely to uphold their responsibilities in kind. Both parties know what they can expect, and know how to work together for a more successful arrangement.

In the high-stakes world of real estate, a single misstep can transform a promising career into a legal nightmare.

Although I’m an active Realtor, back in the 1970s, as a broker, I was called upon to testify as an expert witness. The case involved a broker who was accused of not being vigilant during an open house when jewelry was stolen by someone from the public. That single case started a second career for me as an expert witness. I’ve testified in about 600 trials and written thousands of expert reports, seeing firsthand how quickly professional dreams can unravel.

The real estate industry is experiencing a critical moment. An influx of poorly trained, part-time agents who fail to understand fundamental rules and regulations is creating a perfect storm of potential litigation. The consequences are far more than monetary—they can devastate an agent’s reputation and professional future and negatively impact their brokerage.

The landscape of professional liability

Agents face numerous potential legal challenges, including professional negligence claims, fraud allegations, breaches of fiduciary duty, misrepresentations of professional expertise, financial damages from incorrect advice to buyers and sellers, vicariously dragging their brokerage into litigation and the besmirching of their personal and their brokerage’s reputations (which can be dramatic in smaller communities).

One of the most insidious risks lies not in outright lies but in strategic omissions. Agents who fail to disclose critical property details—whether they’re zoning restrictions, environmental hazards or structural defects—are setting themselves up for potential lawsuits.

Common pitfalls

There are many recurring issues that invite legal scrutiny and lawsuits, including:

Agents stating that zoning or other uses are legal when they’re not. It’s up to you to verify the zoning online or in person at the local zoning office.

Omitting negative factors

Sloppy practice inclusive of badly written offers

Accepting details from older, previous listings as fact, like incorrect lot sizes or room and gross area dimensions. Original builder representations of square footage can be exaggerated. Buy a decent laser measurement tool and, if possible when listing, get electronic floor plans and the provincial assessment gross floor area.

Pushing buyers to make a clean offer when they won’t qualify for an adequate mortgage

Selling land for a home or other construction only for the buyer to find out that it’s in a flood plain or on a restricted site

Selling contaminated land without disclosure, promising the buyer a specific (and usually inflated) price for their home when the market value wasn’t there, so they can’t close

Lack of understanding of the rules and regulations that guide the real estate industry

Your best defense: Documentation

The difference between surviving a lawsuit and being crushed by one often comes down to one critical factor: meticulous record keeping.

Agents must maintain comprehensive documentation of every transaction, including all offers, counteroffers and forms, detailed transaction diaries, email correspondence, text messages, handwritten notes and verbal communication summaries.

Be sure to verify all facts including former MLS listings and verbal representations by your sellers or buyers.

Putting this all together can be challenging and depending on the case can eat up two weeks of an agent’s time. Text message downloading can be a chore. As well, the brokerage has to produce a similar list. Preparation is your shield.

Here’s some practical advice you can implement now:

• Maintain a detailed transaction diary
• Document every conversation and action
• Verify all property and market information
• Be transparent about potential limitations
• Follow legal counsel’s guidance precisely
• Learn the rules, and study your provincial and board guidelines

The emotional and professional toll

Being sued is more than a legal battle—it’s an emotionally draining experience that can paralyze your business. If you end up in a legal case, remember, the lawyers assigned to it are veterans and they will guide and advise you. Follow their direction at all times.

Some cases settle not because the agent did something wrong but because the lawyer felt that they would make a poor witness. Some people simply can’t handle the cross-examination of opposing counsel—I’ve observed agents breaking down and quivering on the stand during that process.

The real estate profession demands more than sales skills—it requires unwavering professionalism, attention to detail and a commitment to ethical practice. Keep these tips in mind to protect your reputation and your business.

The City of Toronto has made progress in its housing efforts with its Purpose-Built Rental Housing Incentives stream, a program aimed at expanding the city’s rental housing supply. This initiative forms part of the city’s larger commitment to enable the construction of 20,000 rental homes by the end of 2026, addressing critical housing shortages.

The Purpose-Built Rental Housing Incentives stream is a component of Toronto’s Rental Housing Supply Program, which supports the development of various new rental homes, including rent-geared-to-income, affordable rental, rent-controlled, and purpose-built rental homes. This stream offers financial incentives to developers to encourage the construction of purpose-built rental units, thereby increasing the city’s rental housing supply.

Program Goals and Approved Projects

The first phase of the program has resulted in the approval of 7,156 net new rental homes across 17 projects in 12 wards. These include 6,109 net new purpose-built rental units and 1,047 net new affordable rentals. The city has set a requirement that at least 20% of all units must meet its income-based definition of affordability, ensuring lower rents for qualifying tenants. These affordability commitments are guaranteed for at least 40 years, with the potential to extend up to 99 years.

Financial Incentives for Developers

Developers participating in the program are offered a range of financial incentives to make their projects more viable. The most notable benefit for purpose-built rental homes is an indefinite deferral of development charges on the municipal portion. Projects including affordable rental units are further incentivized with exemptions from development charges, community benefit charges, parkland dedication fees, and property taxes during the affordability period.

Additionally, eligible projects may qualify for up to $260,000 in capital funding per affordable or rent-geared-to-income unit. A new Multi-Residential Property Tax Subclass, expected to be confirmed in the 2025 budget, will also reduce municipal property tax rates for new multi-residential buildings by 15 percent.

Eligibility and Prioritization

Both private and non-profit housing organizations are eligible to apply for the program. However, the city has prioritized projects based on specific criteria to ensure swift progress and alignment with its goals. Priority was given to developments that were financially ready, had secured approvals, or demonstrated an ability to begin construction in the near term. Projects led by organizations with strong financing histories, including those designated as frequent builders by the Canada Mortgage and Housing Corporation (CMHC), were also favoured.

All approved developments must commit to maintaining their purpose-built rental and affordable housing status over the long term. This requirement ensures that these homes remain available as rentals, contributing to the stability of the city’s housing supply.

Sector Response and Future Potential

The response to the first phase of the program has been overwhelmingly positive, with 75 applications submitted representing over 32,600 proposed rental units, including 7,400 affordable homes. Although only 17 projects were approved initially, the city is optimistic about advancing additional applications in the program’s second phase.

The second phase of the program could unlock up to 24,450 additional rental units if provincial funding through the Build More Homes Rebate becomes available. This rebate would offset development charges and a significant portion of property taxes for eligible projects, making them more financially feasible for developers.

The Purpose-Built Rental Housing Incentives stream presents a new opportunity for investors and developers to participate in Toronto’s growing rental market. The combination of deferred development charges, property tax reductions, and capital funding aims to lower the financial barriers to building new rental housing. 

Purchasing both sides of a duplex can be an excellent strategy for Canadians looking to enter the real estate market while building long-term wealth. This approach offers unique opportunities, including generating rental income, taking advantage of favourable financing terms, and mitigating risk. However, it requires careful planning, financial preparation, and an understanding of local markets and regulations. 

Benefits of Buying Both Sides of a Duplex

Owning both units in a duplex provides a unique level of control and flexibility that is difficult to achieve in other real estate setups. This can simplify property management and other aspects of property investment, especially for first-time landlords.

Entry-Level Investment Opportunity

Buying both sides of a duplex combines homeownership with the potential for earning passive income and property appreciation of both units. This can be an accessible way to build equity and establish a real estate portfolio.

Autonomy 

Unlike in situations where one side of the duplex belongs to a separate owner, you are not at the mercy of a third-party neighbour’s decisions or wishes. 

Owning both sides of a duplex gives you control over major improvements and repairs, like roofing, siding, or structural updates, that would typically require collaboration with the owner of the second unit. This collaboration can often create challenges. Deciding on shared expenses, such as roof repairs, exterior painting, or driveway resurfacing, often requires negotiation, compromises, and, at times, disputes. However, owning both sides eliminates this complexity.

This eliminates potential delays or conflicts over timing, budgets, or the scope of work and avoids the risk of being pressured into updates you may not prioritize. 

While landlords must meet minimum legal standards for rental units, owning both sides still offers greater autonomy in managing your property. This makes duplex ownership a unique option—allowing you to enjoy affordable housing without some of the complications common when two or more owners share a wall.

Choosing Your Neighbours

When you own both sides of the duplex, you have the distinct advantage of greater control over who lives next door. If you’re living in one unit and renting out the other, you get to screen potential tenants to find reliable ones that will not damage the property and detract from your value.

Simplified Landlord Responsibilities

For first-time landlords, owning and living in one unit of the duplex can make the landlord role more manageable. When you’re on-site, daily tasks like maintaining the yard, clearing snow, or inspecting the property become more convenient. For example, mowing the lawn for both units at the same time reduces the time and effort compared to managing a property in a separate location.

Being physically present also makes it easier to monitor the other property, without being invasive, and allows you to respond more quickly to any issues. 

Financing and Tax Benefits

Buying both sides of a duplex can offer potential financial benefits, especially if you live in one unit. Owner-occupied properties often qualify for lower down payments and favourable mortgage terms, allowing lower down payments than non-owner-occupied properties. Rental income from the second unit is taxable but allows for deductions like maintenance costs, utilities, and loan interest, which can help offset expenses. 

Challenges and Considerations

As with any investment, there are risks. Purchasing the second unit as a rental property exposes you to risks, including market volatility, vacancies, tenant damages, and others. There are also several factors to consider, so you are well prepared.

Financial Readiness

While duplexes can offer financial relief, there remains the higher initial cost of buying both units, instead of just the one required for living.

Property Management

Managing rental units adds responsibilities. Landlords must maintain the property, handle tenant issues, and ensure regulatory compliance under provincial tenancy laws. 

Zoning and Municipal Regulations

Certain municipalities may impose restrictions on duplexes, such as occupancy limits, additional parking requirements, or regulations about short-term rentals like Airbnb. Buyers must ensure the property complies with local bylaws.

Local Market Conditions

Location is critical when purchasing a duplex. In urban centres such as Toronto, Vancouver, or Montreal, demand for rental housing is strong, but purchase prices are higher. Smaller cities like Kingston or Guelph offer lower entry costs, as well as consistent rental demand, making them appealing to first-time investors.

Mortgage Pre-Approval and Budgeting

Determine how much mortgage you qualify for and the associated costs. Canadian lenders often consider potential rental income when calculating mortgage eligibility, but each institution has different criteria.

Tenant Screening and Agreements

While being next door may encourage tenants to be responsible and careful with the property, you still need to carefully vet potential tenants. You want to find ones that are likely to be reliable in paying rent and not causing unnecessary damages and wear and tear on your property. Use written leases that clarify responsibilities up front, and which adhere to provincial landlord-tenant regulations to avoid legal issues.

Property Condition and Inspection

Older and poorly maintained duplexes are likely to create higher maintenance costs for you. Investing in a thorough home inspection can identify potential structural or mechanical issues, helping to avoid expensive surprises.

A Unique Path to Homeownership and Landlord Success

By owning both sides of a duplex, you not only gain full control over your property and immediate neighbours but also make the transition into being a landlord significantly easier. On-site living allows for hands-on management, efficient upkeep, and smoother operations while reducing the uncertainties often associated with working with independent neighbours or tenants. This approach is particularly well-suited for first-time buyers looking to balance homeownership with the financial benefits of real estate investment.