NOTE: The following information was compiled and posted by Community Legal Education Ontario (CLEO) on September 18, 2024, and is being re-posted with permission. Sign up for CLEO’s mailing list here!
In June 2024, the Homeowner Protection Act came into effect in Ontario. It aims to stop companies from using a legal tool called a notice of security interest or NOSI to scam homeowners. Older adults were their primary targets.
People ended up owing thousands of dollars and some lost their homes. And, even with the new law, companies who used NOSIs are still trying to get money from homeowners.
What is a NOSI?
A notice of security interest (NOSI) is a legal document that a company can put on someone’s home. Companies use NOSIs to make sure they get back any money that a person owes them.
In Ontario, companies used NOSIs when a person rented or financed certain items from them. These were items that they installed in the person’s home, such as water heaters, heating, ventilation and air conditioning (HVAC) units, and furnaces.
When someone finances an item, it means that a company lends them money so they can buy it. The person usually pays off the loan in monthly payments.
After a company put a NOSI on a home, the homeowner had to pay off the NOSI before they could:
- renew or change their mortgage, or
- sell their home.
What the new law does
The new law bans companies from being able to put a NOSI on someone’s home when the person rents or finances an item from them.
NOSIs that companies have already put on homes are now expired. People do not have to pay them off. But homeowners might need to remove them if they want to sell their home or change their mortgage.
If this happens, it’s important that people get advice from a real estate lawyer. The government charges a fee of $70 plus HST to remove a NOSI.
Who was targeted
Companies targeted vulnerable homeowners. This included older adults who:
- had a difficult time understanding because of dementia or other conditions,
- had lower literacy skills, or
- spoke English as a second language.
How the scam worked
The scam was run by home service companies and financing companies. Home service companies rent or finance equipment to homeowners, like water heaters, HVAC units, or furnaces. Financing companies give private mortgages or loans to people.
They had a typical way of running the scam.
Step 1
A home service company would send a salesperson to knock on the doors of vulnerable homeowners.
Step 2
The salesperson offered equipment like a water heater or furnace at a price that was much more than it was worth. For example, if it was worth $5,000, they offered it for $30,000.
The salesperson then told the homeowner that they did not have to pay for the equipment because the cost was covered by government rebates. But this was not true.
There was no government plan that paid for the equipment.
Step 3
The salesperson pressured the homeowner to sign a contract right away without reading it or getting advice.
By signing the contract, the homeowner agreed to:
- pay for the equipment by borrowing money from a financing company and not through government rebates, and
- let a financing company put a NOSI on the home that was based on the high cost of the equipment.
Step 4
The financing company transferred the money that the homeowner was borrowing from them to the home service company.
The home service company then installed the equipment in the homeowner’s home.
And the financing company put a NOSI on the home that was based on the high cost of the equipment.
The homeowner thought they paid for the equipment through government rebates. And they did not understand that they were borrowing money or that a NOSI had been put on their home.
Step 5
The homeowner found out about the NOSI and the arrangement with the financing company when they wanted to change their mortgage or sell their home.
The homeowner ended up paying tens of thousands of dollars to the financing company to get rid of the NOSI and end their contract.
Companies worked together
Some companies worked together to target the same vulnerable homeowners. This meant that these homeowners signed several contracts and had many NOSIs put on their property.
Mortgage scam
Some companies also scammed people into taking out a private mortgage on their property. These mortgages had very high interest rates that were 25% or more.
Many homeowners were forced to sell or lose their property because they could not afford the mortgage payments.
Homeowners still being targeted
The new law is in effect. But companies with NOSIs are still trying to get homeowners to pay by sending them legal notices.
It’s important for a homeowner to get legal help right away if anyone contacts them about a NOSI on their home.
If the homeowner is an older adult, they may be able to get free legal advice from the Advocacy Centre for the Elderly.
Past victims
If a homeowner was already scammed, they should get legal advice to find out their options. For example, they may be able to sue the company.
Steps to Justice Legal Resource
Steps to Justice has step-by-step information about legal problems. Click on the questions linked below for more information on each topic:
What can I buy from a door-to-door salesperson?
I bought something from a door-to-door salesperson. Can I get out of the contract?
Write a consumer complaint letter
CLEO’s Small Claims Court Guided Pathways
Related resources
Notices of Security Interest (Government of Ontario website)
Homeowner Protection Act, 2024 (Government of Ontario website)
Fall 2024 newsletter: NOSI update [PDF] (Advocacy Centre for the Elderly (ACE))