What You Need to Know About NOSIs

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Yesterday, the Ontario government introduced the Homeowner Protection Act, 2024, which is aimed at stopping predatory practices related to Notices of Security Interest (NOSIs).

Here's a simplified explanation so you're fully informed for your clients:

What is a NOSI?
A Notice of Security Interest is a legal document that can be registered on the title of a property.

They show that a company has a financial interest in things like furnaces, air conditioners, or hot water tanks installed in the home.

It’s like putting up a flag that says, "Hey, I have a claim on this property because the owner owes me money."

Why are NOSIs a problem?
NOSIs have earned a negative reputation because they're commonly used with predatory rental contracts.

Homeowners, especially elderly, get caught up in financing deals for these items, thinking they were just signing up for manageable monthly payments.

These companies then register NOSIs without fully explaining what they mean and using them as leverage to demand high fees in exchange for the discharge.

They were notoriously difficult to deal with from lawyer's offices as we scrambled to get rid of them on closing - often for sums much larger than the asset was worth.

What does the new legislation do?
The new legislation will stop companies from being able to register NOSIs for household items like HVAC systems or water heaters.

This means companies can no longer use these NOSIs to trap homeowners in expensive agreements with the threat of holding up the sale or refinance of the home.

It also authorizes the removal of ALL current NOSIs on these types of consumer goods, providing needed relief to homeowners who already have them.

Why does this matter?
Understanding the new legislation around NOSIs directly impacts the real estate market and your clients.

With NOSIs for consumer goods now banned, you can assure your clients that their properties won't be unfairly encumbered by these predatory practices, making homes easier to sell and finance.