Can you reject a potential tenants application based on amount of income?

Can you reject a potential tenants application based on amount of income?

This is a question I have been getting a lot lately, and there are a few current cases of potential tenants pushing back on landlords after they have been rejected for this reason.

I need to start by saying, if you recieve an application, make sure to look at it from the point of view of “under what conditions would this application be approved”.

Then step two, line it up with your application screening process.

Step three, make sure if you are going to turn down an application, you are not violating any human rights.

In Canada, some of the basic human rights that can never be violated  that relate to property managment are as follows: Race, nationality, religion, family status, and sexual orientation.

Unfortunately I have heard stories of various landlords, property managers, and super intendants, blatently telling potential tenants that they do not want to give them an application, based on one of the above.

The other side of the application process, that you may cross over into violation territory is the federal privacy legislation.  It is important to note, that just because a person mentions this to try and avoid providing you necessary information to properly screen them, that will not work in their favor.

The federal privacy laws are more to do with how you handle the information you are collecting.  If you are being trusted with sensitive data that may include things like family status, sources of income, government ID numbers, etc., you need to handle it with care.

Ok, now that I got that out of the way, here is the deal.

It depends

What I mean by that, is each province, state, region or Country will have a set of rules that govern the issue of rejection based on an affordibility scale.

I did contact the residential tenancy board in my area (Nova Scotia, Canada) and here is what they had to say on the issue:

Dear Mike,

We have reviewed your email regarding the rental application process.

Nova Scotia’s Residential Tenancies Act determines the rights and responsibilities of landlords and tenants, but does not extend to the application process.

Either party may end negotiations before a formal rental agreement is entered into.

Considering this, a landlord may ask for whatever information they consider necessary to evaluate a potential tenant.

If the applicant is uncomfortable providing any of the requested information, they may seek accommodation elsewhere.

Regarding when a tenancy begins, Section 3 of the Residential Tenancies Act states the following:

(1) Notwithstanding any agreement, declaration, waiver or statement to the contrary, this Act applies when the relation of landlord and tenant exists between a person and an individual in respect of residential premises.
(2) For the purposes of subsection (1), the relation of landlord and tenant is deemed to exist in respect of residential premises between an individual and a person when an individual

(a) possesses or occupies residential premises and has paid or agreed to pay rent to the person;
(b) makes an agreement with the person by which the individual is granted the right to possess or occupy residential premises in consideration of the payment of or promise to pay rent;
(c) has possessed or occupied residential premises and has paid or agreed to pay rent to the person.

This condition also includes the payment of a security deposit, as per Section 6 of the Act:

(1) No person shall demand, accept or receive, from an individual who may, or applies to, become a tenant of that person, a sum of money or other value in consideration of or respecting the application by the individual to become a tenant of that person.
(2) For the purpose of a proceeding in respect of subsection (1),

(a) a person who contravenes subsection (1) is deemed to be a landlord;
(b) the individual from whom that person demands, accepts or receives a sum of money or other value is deemed to be a tenant; and
(c) a relation of landlord and tenant is deemed to exist between them.

At the federal level, the Office of the Privacy Commissioner of Canada discusses privacy standards under the Personal Information Protection and Electronic Documents Act (PIPEDA). If you wish to explore the issue from a privacy perspective, you may contact the Office of the Privacy Commissioner of Canada:
Toll-free: 1-800-282-1376
Phone: (819) 994-5444
Fax: (819) 994-5424

The Residential Tenancies Act and its processes can be complex. As follow-up questions are likely, we cannot thoroughly respond to Residential Tenancies questions via email. Please contact Residential Tenancies directly by calling (902) 424-5200 or 1-800-670-4357 to discuss questions in detail. We are available to assist you Mondays through Fridays, 8:30 am to 4:30 pm.

As you can see, the laws around this issue are pretty clear.  Make sure to check out the laws in your area, before you start screening applications.  Fair and affordable housing has been becoming a hot topic lately especially in Canada and the USA.  The other problem is that more investors own properties in both Canada, the USA, plus various states and provinces.  That creates a challenge, due to the fact that each state or province has its own residential tenancy guidelines.

I hope that this post clears up some of the grey around this issue.

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