Sanaulhaq Zarawar has a tenant who won’t pay rent and won’t move out.
It’s the kind of stressful situation he says he wanted to avoid when he hired a real estate agent to find him a “good” tenant for his only rental property, a four-bedroom house in Whitby, Ont., shared with multiple family members as an investment.
“Why else would I have paid a Realtor than to make sure I have a good tenant and to do the vetting and background checks?” he said.
The tenant moved into the home in 2023. Several months in, Zarawar says, he stopped paying. Panicked, Zarawar took a closer look at the application and began calling the references himself.
That’s when he says he realized he may be dealing with a fraudulent tenant. The tenant, who was also represented by his own agent, appeared to have applied with false documentation, listing employers who never answered calls and falsely claiming a second applicant who would be contributing to rent.
It turns out vetting was not included in the contract with his real estate agent, he says.
Landlords share their experiences with rentals
“He promised me he was going to do the background checks,'” Zarawar said of the agent he hired. “I trusted two Realtors and that was a big mistake.”
He says the tenant now owes him nearly $40,000 in rent and unpaid utilities.
In many big cities across Canada, many small landlords hire real estate agents, believing they will help them find good tenants for their rental properties. But the agents do not actually guarantee vetting in standard contracts, and are under no obligation to do so — despite what they may verbally promise.
“If [landlords] want vetting and background checks to be something their Realtor is legally required to do, then they need to request for that to be added in,” Toronto paralegal Bita Di Lisi said. “Verbal promises are not legally binding.”
Both real estate agents and Zarawar’s tenant declined to comment to CBC News.
In Ontario, landlords can direct complaints about a real estate agent to the Real Estate Council of Ontario (RECO). Since CBC first reached out last December, RECO has said “there may be confusion relating to the standard forms” between agents and landlords, and it says it has started communicating with agents more on the issue this year.
The stakes are high for landlords — despite starting to fall, rents remain high, and so do mortgage rates, making it costly if things go sideways.
Meanwhile, overwhelmed landlord-tenant boards across the country are facing long delays. In all, landlords say it’s nearly impossible to evict a problematic tenant before their rent arrears start piling up. Zarawar says he’s had two hearings on this issue at the Ontario Landlord and Tenant Board, with long delays in between and still no resolution. Only the LTB can issue an eviction order.
And as rents have risen in the past several years, so have fraudulent applications. According to RentPanda, a rental services company in Ontario, 9.1 per cent of all applications it had reviewed as of May contained fraudulent information, ranging from fake IDs to adjusted T4 statements. That’s more than quadrupled since 2022, when it was at 2.1 per cent.
Property manager breaks down what she says is a fraudulent application
That uptick is why many landlords say they use real estate agents.
“You hired a realtor thinking you are going to mitigate risk, but unfortunately that is a false sense of security, and there needs to be a lot more awareness around what a Realtor is actually obligated to do for you,” said Pamela O’Hagan, a property manager in Brampton, Ont., who oversees about 250 rental units.
When speaking with CBC, she pointed to a recent application she had received from an agent that she said had “very clear” indicators of fraud, including a fake pay stub and references.
“Anyone who knows what they are doing would have caught this — for this Realtor, it’s fast cash [to earn commission on a rental] and just not their bread and butter.”
The landlords CBC spoke with for this story said they believed the primary job of their real estate agent was to vet tenants. Experts say this just isn’t the case.
“Vetting is not the responsibility of a Realtor and any landlord needs to understand they have to read their contracts and take responsibility for their investments,” said Di Lisi, the Toronto-based paralegal.
“Things go wrong with the tenant and the landlords want to blame the Realtor, but this is not their job, no matter what they tell you.”
Still, last fall she began adding vetting as part of the information seminars she offers to brokerages across Ontario.
“Everyone needs more education when it comes to contractual obligations as well as how to properly vet for prospective tenants.”
She still describes real estate agents as “the first line of defence” against so-called professional tenants, or those who knowingly use false information on their application to game the system.
Di Lisi’s advice? Always call a tenant’s second-last landlord, as well as work and personal references. She also suggests paying extra for credit checks and checking online for legal disputes or complaints.
For Mischa Hamara, a small commercial landlord, he wants to see reform in how these contracts are written.
“When someone looks you in the eye and says, ‘I’m going to do a strong vet and get you a great tenant,’ and they don’t, there should be something you can do about that,” he said.
Hamara lives above a small commercial space in Toronto that he owns. Commercial tenants are much easier to evict, but payment for real estate agents is much higher. Hamara paid his agent the standard, non-refundable $14,000, or five months’ commission, for a tenant who ultimately never moved in.
He says the agent offered to find him another tenant at a reduced rate, but he did not want to work with him again. (The agent declined to comment to CBC News.)
Similar to Zarawar, Hamara says he began to vet the tenant himself after he realized something was wrong. He says he found some evidence he believes should have raised “serious red flags” to his agent — including a now-deleted Facebook page warning people not to do business with him.
Hamara doesn’t believe RECO can offer much help to landlords in these situations.
“Right on their website, it says they can’t get you any money back, so why would I even bother complaining at this point?”
If a real estate agent is found in violation of the Real Estate and Business Brokers Act 2002 code of ethics, that agent could only be subject to paying a fine to RECO.
RECO says it only began collecting data on complaints related to vetting tenants in 2023. It says the number remains low, with just nine this year as of May.
Of them, RECO said it required six agents to complete an information course on verifying tenants. Three are still under review.
Hamara’s warning is to other landlords: Don’t expect your agent to do the vetting, and take that on yourself.
He has since hired another agent and has worked with him to add vetting and background checks into the contract — something Di Lisi says landlords should do if they really want to protect themselves. But they should still conduct background checks themselves, she says.
“At the end of the day, this is your investment, and you will be stuck with whoever you agree to lease to.”
