Our office is getting many calls lately about rental hot water tanks, rental furnaces, and rental air conditioning units, and the notices of security on such items. The headaches these rental contracts cause is increasing exponentially!
It used to be that only bigger ticket rental items like furnaces and air conditioner units would have security interests registered, but now these security interests are sometimes registered against title on your home for a simple hot water tank. Unfortunately, there are unscrupulous companies out there as part of a multi-billion-dollar industry trying to convince you to rent items for your home so you do not have to pay the up front cost. Such companies are known to prey on certain neighbourhoods where they believe they’re more likely to attract potentially vulnerable customers.
Once the contract is signed, many of these companies register a notice of security against the title of your house. This means that when you sell your house, either the buyer has to assume the rental contract, or you have to pay it out. Depending on the terms of the contract, the buyout could run to tens of thousands of dollars. This situation puts both buyer and seller in awkward positions. Sometimes buyers decide just to accept the contract in order to get the house they want. If the buyer does not want to assume the contract, the sellers are forced to pay out their contract, often for thousands of dollars more than these items are worth in the first place.
Many of these contracts don’t provide the homeowner with any real service other than replacing the unit if it fails. If, for example, your hot water tank fails and floods your basement, the company will likely not assist with the repairs. You will still need to make a claim through your home insurance, while the rental company will do no more than provide a new hot water tank.
Another issue with rental appliances is delay. This can happen when you want to sell your home and the buyer does not agree to assume the rental contract. The buyer still wants to get title free from the rental security claim, and this process of removing security claims from title can take months (removing security claims is not a priority for some of these companies). In some cases, closings are delayed over these security interests, leaving both buyer and seller frustrated.
Before you get into one of these rental contracts, please take all of this into consideration, read the fine print of the contract and ask yourself the question: Is it worth it?Call for more info!