Data from Innovation, Science and Economic Development Canada (ISED) released on Friday, June 30, announced that from May 2022 to May 2023, consumer bankruptcy filings increased from 687 in May 2022 to more than 837 last month. This is an increase of 21.8%(1).
Even if each file must be analyzed, this jump of nearly 22% will have an impact on the rental world which is already very very tight as we saw the day after July 1st with hundreds of homeless families.
There is no doubt that repeatedly rising interest rates and inflation that increases prices and leads to an overrun of the ability to pay are important elements in bankruptcies.
It can therefore be assumed that many landlords will no longer be able to meet their payments and will return to the rental market, not by choice but by obligation.
Even if this clientele does not meet the positive criteria in terms of credit during a pre-lease investigation, we must be careful and make sure to check all aspects of this potential tenant.
If he owns a condominium or his house, verification of the current owner is impossible. On the other hand, he may have the contact details of his former owner.
It will also be important to check his employment and Court records (Administrative Housing Tribunal, Criminal and Civil Records).
In many situations, the landlord could ask for an endorser to sign the lease as a surety.
The landlord may require an assessment of the endorser’s creditworthiness because the landlord must ensure the ability to pay the deposit if the tenant does not pay.
The endorser is responsible for the entire rent in the event of default by the tenant until the end of the lease term. If the lease is renewed, the endorser is no longer liable unless the endorser has signed and agreed to an extension.
As an APQ member, you have access to sample letters and the lease bond form that provides for this type of situation, do not hesitate to contact our legal advisors for details.
Increases in bankruptcies in 2023
