Choosing the right tenant is the best way to protect your investment, but when getting to know prospective tenants, there is often hidden information that a standard screening process cannot uncover.
This makes it difficult to ensure you have selected the right leasee at the outset, and that leaves you, your business and your company vulnerable. Decreased cash flow, frequent turnover, rent concessions, lease modifications, default, evictions and costly dispute resolution are just some of the many risks that exist.
To offset these risks, it is important to consider enhanced screening methods that take a deeper look at your prospective tenants.
The first step in the screening process is completing a prospective tenant application. This application will provide your commercial credit reporting agency with the information they need to properly screen applicants.
To ensure that your application is processed quickly so that you can start earning income on your investment property, you and your prospective tenant must work together to ensure the application contains all the required information.
It is very important that your prospective tenant provides the full legal name of their company along with any operating name(s). Please have them include the province in which the company was incorporated, as well as the date of incorporation.
If an individual is to be included on the lease, it is essential that they provide their full legal name, as well as any other names that they may use, along with their current address and date of birth. Please also have them indicate if they own the property in which they reside.
Banks will not release information without the transit number and account number. It is important that your prospective tenant provides the exact account holder name. If they can provide the account manager's name and telephone number as well, it is very helpful and will expedite your report.
All credit applications must be signed. Please note that if accounts are held jointly and two signatures are required at the bank, two signatures need to be included on the application. With regards to corporate tenants, please ensure that the individual signing the credit application is a signing authority at the bank.
It is important that your tenant provides as many details as possible with respect to their landlord and supplier references. As indicated on the applications, include the company name, address, telephone/fax number, a contact and the name that appears on the account/lease.
Every bank in Canada requires the signed authorization of the account holder prior to releasing any banking information. The signature of the account holder must match the signature card at the bank.
While you will not know whether the individual signing the credit application has signing authority at the bank, it could be helpful to mention this point to the prospective tenant when providing them with the application to ensure the proper name and signature are supplied.
One of the biggest issues that we come across when assisting clients with the screening of their potential tenants is inaccurate or missing information on the credit application. By explaining to your tenant, the importance of accuracy, and taking the time to review the application thoroughly before sending it to your commercial credit reporting agency, you can minimize the time it takes to receive your credit report.
For more information on our prospective tenant report and application process, contact us today.
Tags: Property Management