In Ontario, there is no law stating that a tenant must pay his/her landlord a damage deposit – in fact, according to the Residential Tenancies Act (RTA), the law that governs tenant-landlord relations in Ontario, it is illegal for a landlord to collect or request one.  A landlord is only permitted to collect a deposit securing payment for the last month of tenancy, however, this deposit may not be used toward damages to the property.

As a landlord, you want to ensure that your investment is protected.  Decreases in the property’s value, in addition to extra maintenance upon changes in tenancy are issues that often occur due to tenant negligence.  To avoid undue stress, it is important to take the time to select a tenant who will care for your property as much as you do.

The following steps can be taken by landlords to help select trustworthy tenants, while respecting their rights as well as your own.

Reference Check

Obtain references from the applicant’s past landlord(s).  An applicant who has built good relationships with former landlords are more favourable candidates.  Also, applicants who have rented from reputable landlords keep both your best interest and theirs in mind.

Employment Verification

Verify a tenant’s income by contacting his or her employer.  If a tenant is self-employed or a student, request proof that he or she is capable of paying for rent in full, and on a timely basis.

Obtain Credit History

Candidates who have established a good credit rating are considered low risk borrowers by financial institutions, and more likely to pay their rent on time than those who have a poor credit rating.

Get Everything in Writing

Create a written tenancy agreement outlining your responsibilities as a landlord and any rules the tenant must follow.  This agreement, however, must only contain conditions approved by the RTA and must adhere to the Ontario Human Rights Code.  A written document provides a record of the initial agreement that both parties can refer to should a dispute arise.

Starting a tenancy is a big step — following the proper procedures can help you avoid issues that may become problematic in the future.  For more information about the Residential Tenancies Act and answers to frequently asked questions, visit the Landlord and Tenant Board website: 

http://www.ltb.gov.on.ca/en/Key_Information/STEL02_111232.html