Energy schemes are prevalent in Ontario, and often involve door-to-door salespersons asking to inspect homeowners’ water heaters, furnaces, HVAC systems, and other equipment.
These tactics usually target vulnerable senior citizens who are persuaded to enter into exploitative loan agreements with private lenders to finance the purchase or lease of various fixtures and equipment on very onerous terms.
These schemes usually involve the registration of Notices of Security Interest (“NOSIs”), also known as fixture filings, on title to the residential property to secure the fixture loans. The homeowner is often unaware that the registration has even occurred until they are about to sell or remortgage the property. Some homeowners are later induced to take out increasingly larger mortgage loans secured against their homes, to pay off the NOSIs, often at predatory rates and from related entities.
In March 2018, the Ontario government banned unsolicited door-to-door and in-home sales of certain household equipment by amending the Consumer Protection Act. Despite these restrictions, energy schemes and improper NOSIs remained prevalent.
On June 5, 2024, the Ontario legislature passed Bill 200, The Homeowner Protection Act, 2024 (the “Act”). The Act amended various legislation, including the Personal Property Security Act (the “PPSA”), and among other things, banned the registration of NOSIs for consumer goods and deemed any NOSIs for consumer goods now registered against title to have expired as of June 5, 2024.
The Act and its amendments to the PPSA also expedited the process to obtain discharges of NOSIs. Before the Act, a homeowner could only obtain a discharge by negotiating with the lender, paying exorbitant buyout and discharge fees, or commencing a court proceeding against the fixture lender seeking a discharge. In addition to being costly and time-consuming, court proceedings are also inherently unpredictable. Success can depend on establishing duress, undue influence, and/or unconscionability, or in the instance of non-disclosure during the sales process and a subsequent NOSI registration, establishing bona fide purchase for value without notice.
Following the amendments, homeowners can now have their lawyers register an Application to Delete a NOSI pursuant to section 54(8) of the PPSA and Bulletin 2024-07 from the Director of Titles, without having to consult with or otherwise engage with the fixture lender or commencing a court proceeding. This will be a welcome change for homeowners.