Conducting Pre-Leasing Investigations: How to Run a Credit Check for Rental Properties?

The pre-leasing investigation evaluates the applications of prospective tenants, aiding in making informed decisions. It includes obtaining a credit report and rental references to create a profile of the potential tenant. This is one of the many tasks undertaken by property managers.   

Here are some insights to assist you in conducting a comprehensive pre-leasing investigation before renting out a property.

The Significance of Pre-Leasing Investigations

Pre-leasing investigations are a crucial step for property managers in the rental process. They help avoid unpleasant surprises and secure your real estate investment (or that of your client).

By conducting a thorough investigation, you can identify any potential financial or behavioral risks posed by the prospective tenant.

If a candidate refuses the credit check or if the results are unsatisfactory, you reserve the right to withdraw their application.

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What Pre-Leasing Verifications Are Necessary?

During a pre-leasing investigation, various checks are conducted to ensure the reliability of prospective tenants. These checks can be performed independently or through specialized pre-leasing verification services.

These checks include examining the credit history, searching for criminal records, and validating rental and employment references.

Credit History Verification

It is advisable to conduct a credit bureau check before approving a tenant.

Credit history verification involves scrutinizing payment history, including any delays and the regularity of payments made. Debt levels are also assessed during credit checks.

A comprehensive credit report will help you gain an overall understanding of the potential tenant’s financial health and reliability as a payer, influencing your final decision.

It is possible to check if the individual has a criminal record as part of a pre-leasing investigation.

Conducting criminal background checks helps better assess the risks associated with renting to the candidate.

It’s important to note that discovering criminal records doesn’t automatically mean rejecting the candidate, but it provides essential information for an informed decision.

A thorough check of the candidate’s file with the Tribunal Administratif du Logement (TAL), formerly known as the Régie du logement, is advisable.

This process will reveal if the candidate has been involved in contentious rental matters, such as payment delays or disputes with landlords or other tenants.

This information provides insight into the candidate’s past behavior regarding lease obligations, helping identify and evaluate risks.

You can inquire with the current or previous landlord of the prospective tenant.

You can obtain information about the tenant’s behavior, including timely rent payment, adherence to building rules, and property maintenance.

Employment reference verifies the candidate’s employment status and assesses their financial stability. Along with the credit check, this verification helps determine if the candidate has sufficient income to cover rent.

This aspect of the investigation contributes to a better understanding of the candidate’s ability to fulfill their rental obligations.

Obtaining Candidate Consent Before Conducting a Pre-Leasing Investigation

Before conducting pre-leasing investigations, the landlord must obtain the consent of the prospective tenant. It is essential to respect the tenant’s right to privacy and ensure that the investigation complies with privacy protection regulations.

Procedure for Obtaining Consent from the Prospective Tenant

  • Clear Formulation: The consent form should be drafted in clear terms, precisely stating which checks will be conducted and for what reasons.
  • Candidate’s Signature: The candidate must sign the document, indicating their understanding and acceptance of the checks to be carried out.
  • Document Retention: It is essential to retain a copy of the signed consent for compliance purposes.

Valid Reasons for Rejecting a Tenant Candidate According to the Tribunal Administratif

When rejecting a tenant candidate, landlords and property managers must adhere to objective and legal criteria. Based on available information, here are the key points to consider:

  1. Objective and Non-discriminatory Criteria: Reasons for rejection must be based on objective criteria such as the candidate’s financial solvency, the accuracy of provided documents, and their ability to comply with lease conditions (source: Educaloi). The law prohibits rejecting a candidate based on origin, gender, family status, health status, religion, or other discriminatory criteria. Discrimination in the rental process can lead to serious legal consequences for the landlord.
  2. Justification for Rejection: While it is not legally mandatory to justify a rejection, it is advisable to do so to maintain good relations with candidates. Providing a reason for rejection, while remaining relevant and respectful, can also assist the candidate in their future searches.
  3. Pre-Leasing Evaluation: Conducting a thorough pre-leasing evaluation helps base decisions on facts rather than appearances. Landlords should only collect information necessary for assessing the candidate, in compliance with personal data protection laws.

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