A rented water heater or furnace is a contract, not a fixture you own, and it follows the house into the sale in a way that surprises sellers and buyers alike. The seller may have signed years ago, possibly at the door; the buyer may never be told. In Ontario, the closing can carry three separate questions about the same piece of equipment: who is bound by the rental contract after closing, whether an old notice of security interest (NOSI) is still sitting on the title, and what it costs to end the contract if nobody wants to keep it. The law on the second question changed in 2024, and much of what circulates online about NOSIs is out of date.
This explainer is limited to Ontario and to what could be verified on 2026-10-06 at the province's own pages and statutes, plus the published documents of one rental provider, Enercare. It is not legal advice, and it does not substitute for your lawyer's title search and review of your actual contract, which controls. It does not reproduce the cost tables on the calculators; for the rent-versus-buy arithmetic and the full buyout schedule, use the water heater cost calculator and, for the furnace side, the furnace replacement cost calculator. This post covers the transaction around them.
What a rental contract is, legally
Under a rental agreement, the supplier owns the equipment and you pay it a monthly fee. Enercare's current sample agreement (form EC.506_B.FOR, November 2022, which its support page assigns to water heaters installed on or after 2015-04-01) says so directly: during the term the water heater remains the supplier's property and does not become a fixture, and the customer agrees to keep it free of liens, security interests and mortgages. The same clause says the supplier may register, at the customer's expense, its interest in the water heater against the customer and against title to the premises. That registration clause is in the current template, and nothing read shows it has been removed. What the 2024 Ontario ban changes is what can be registered on title as a notice of security interest for consumer goods, covered in the next section, not the wording a contract may still contain. Enercare's support page publishes separate templates by installation date, including one for units installed between 2010-09-15 and 2015-03-31, so check which applies to your unit; your own contract controls.
On ending: the current template says the customer's sole method of terminating the agreement before the end of the water heater's useful life is to purchase it, at a buyout price Enercare publishes on its website. The buyer accepts the unit "as-is," assumes full responsibility for repair and maintenance, and pays when invoiced. There is no cancel-and-return option. That matters at a sale because if you do not want a buyer to inherit the contract, the exit is a purchase, not a pickup.
On transfer, the template's "Sale of your Home" section says that if you sell or otherwise transfer the premises you must inform the transferee, at or before the effective date, of the agreement and the rental water heater, and that the supplier will permit the transferee to assume your rights and obligations from the date of sale, provided five conditions are met. Unless they are satisfied, or the supplier waives some or all of them, which it has no obligation to do, you remain responsible for the rental and for all rental payments. A related clause on rental charges says that if you purchased the premises after the water heater was installed, you pay rental charges from the closing date of the purchase.
| Condition | Whose job | Practical consequence |
|---|---|---|
| You or your representative tell the transferee, in the sale or transfer agreement, that the water heater is rented and subject to the agreement | Seller or representative | The rental belongs in the agreement of purchase and sale, named as rented |
| You or your representative tell the supplier in advance the transferee's name and the intended date of sale | Seller or representative | A notice before closing, not after |
| You or your representative tell the supplier in advance the address and telephone number where you can be reached after the sale | Seller or representative | The supplier needs a forwarding contact for the seller |
| The transferee agrees, in writing or by conduct, to assume your obligations under the agreement | Buyer | Buyer takes the remaining terms, rate and any increases as written |
| You have paid all amounts owing under the agreement | Seller | Arrears are a closing item, not the buyer's problem |
Source: Enercare Water Heater Rental Terms and Conditions, form EC.506_B.FOR (NOV/22), a sample template on the Enercare water heater support page, section 5, read 2026-10-06. Until the conditions are met or waived, the template keeps the seller responsible for the rental payments. The template is a sample and applies to units installed on or after 2015-04-01; your own contract controls.
The notice of security interest: what changed in 2024
A notice of security interest is a document registered on land title to tell others that a supplier has a security interest in a fixture, such as an air conditioner or water heater. The Ontario government's NOSI page, last updated 2026-01-06, explains that consumer NOSIs were often registered when a business installed a leased or financed piece of equipment in a home used for personal, family or household purposes, that use of NOSIs rose sharply from the early 2000s, and that some businesses misused them, charging homeowners exorbitant fees to remove them or using them to discourage changing suppliers. Homeowners usually found out when they tried to clear their title for a sale or refinancing.
The Homeowner Protection Act, 2024 (S.O. 2024, c. 18) changed that. The Ontario page records that it became law on 2024-06-06 and bans the registration of NOSIs for consumer goods, which it defines as goods installed in a residential home and used primarily for personal, family or household purposes, naming a water heater, air conditioning equipment and a furnace as examples. The ban sits in Schedule 4, which amends the Personal Property Security Act. Section 54(1.1) provides that the fixtures clause of s. 54(1) does not apply to collateral that is consumer goods, except as may be provided by the regulations. Section 54(7) deems any consumer-goods notice in effect immediately before Royal Assent to have expired on that day, says it cannot be extended, and says the land described in the notice is not affected by any claim under it. Schedule 4 came into force on Royal Assent, according to its own commencement section.
Three consequences follow, and each one is easy to get wrong. First, an expired NOSI may still appear on the title: the government's page says expired notices continue to appear on land title documents even though the land is not affected by them. A title search done for your closing can therefore show a notice that has no legal effect. Second, removal is optional and goes through a lawyer. Section 54(8) allows a notice that is deemed expired to be deleted from title by registering an application in the proper land registry office, and the government's page describes the filing: an Application to Amend the Register, with the associated fee, and a law statement confirming the notice is for a consumer good subject to the ban. It says there is no need to take immediate action because the land is no longer affected. Third, the ban is narrow in what it undoes. The government says it does not cancel an existing contract for a fixture and does not eliminate any underlying security interest the business has in the fixture. The business keeps its contractual rights and can pursue remedies in court if a consumer does not meet their obligations, and suppliers may retain the right to repossess the fixture in certain circumstances. The ban also does not cover commercial NOSIs.
The Financial Services Regulatory Authority of Ontario (FSRA) made the practical point in a 2024-09-04 announcement: NOSIs registered for consumer goods like water heaters are now expired, and it expects mortgage agents, brokers and brokerages to protect clients from making unnecessary payments to businesses seeking to collect on expired NOSIs. FSRA noted that homeowners had been victims of door-to-door scams that led to new mortgages, increased loans and new liens to pay off home-improvement and home-service-equipment contracts. For notices registered before 2024-06-06, FSRA says consumers may want to contact a lawyer if they wish to delete the NOSI. The Ontario government's NOSI page also warns of a company contacting homeowners and offering to remove NOSIs for a fee, which it calls a scam, and advises reporting it to police or the Canadian Anti-Fraud Centre.
The consumer-protection backdrop
How these contracts are made is governed by the Consumer Protection Act, 2002, and the water heater calculator page already sets out the cancellation rights (restricted door-to-door sales, the 10-day cooling-off period and the one-year window), so they are not repeated here. Two points from the Ontario government's door-to-door page (updated 2026-06-19) bear on a sale. Its questions to ask before signing include whether the company will register a security interest on title, which it says could have consequences if you cancel early, apply for financing or sell your home, and whether you will be responsible for transferring the contract to the purchaser or paying cancellation fees if you sell. And its tips say that when you buy a home you may be taking on responsibility for an existing appliance contract that comes with the home, so ask your real estate agent or your lawyer. The province does not say a rented water heater is automatically the buyer's or automatically not; it says it may be, and to ask. The supplier's own sale-of-home clause, below, supplies the mechanics.
In the agreement of purchase and sale
The Ontario Real Estate Association (OREA) has told its members for a long time to verify rented equipment and name it in the agreement. A 2004 OREA special bulletin about a supplier's expanded rental program, which then included furnaces, air conditioners, humidifiers and air cleaners as well as water heaters, advised REALTORS to verify the existence of rental equipment and identify it in the agreement of purchase and sale just as you would a rental water heater. The bulletin is old and does not show current form wording, and the standard form itself was not read for this post. The point survives: if the item is rented, the agreement should say what is rented, from whom, whether the buyer is assuming the contract, and who deals with any buyout.
A clean provision answers five questions, and a lawyer should draft it to your facts. What is rented: each unit by type (water heater, furnace, air conditioner, humidifier, water softener), with the supplier named. Whether the buyer assumes the contract or the seller must end it before closing. What the seller delivers: a copy of the contract, a recent statement, and confirmation of the buyout figure if relevant. What happens with any NOSI that appears on title: the government's guidance is that an expired notice has no effect, and a lawyer can have it deleted. And who pays whatever is owing at closing. The sample sale-of-home clause makes the last point for you: the seller must have paid all amounts owing under the agreement, and until the conditions are met or waived the seller stays responsible for the rental payments.
| Route | How it works | Who pays what | What to confirm in writing |
|---|---|---|---|
| Buyer assumes the contract | Sample sale-of-home clause: the buyer assumes the contract if the five conditions are met (rental named in the sale agreement, advance notice to the supplier, seller's contact details, buyer's agreement, amounts owing paid) | Buyer takes over the monthly fee from the closing date; seller clears any arrears and remains liable until the conditions are met or waived | Supplier's notice of the sale, the contract copy, the remaining term and fee, and whether any transfer fee applies |
| Seller buys out before closing | Customer's sole way to end the contract before the unit's useful life ends, at the published buyout price, accepted as-is | Seller pays the buyout when invoiced; buyer then owns the unit with no ongoing rent | Written buyout quote with an expiry date; whether tax is added; the supplier's payoff confirmation |
| Neither: unit left undisclosed or disputed | No clear assignment; the supplier still has its contract with the seller | Open: the seller remains the supplier's customer | Not a route; it is the failure case a lawyer drafts around |
Sources: Enercare sample rental terms EC.506_B.FOR (NOV/22), sections on Sale of your Home and Termination by You, read 2026-10-06; Ontario door-to-door sales and home service contracts page (updated 2026-06-19). Whether a transfer fee or tax applies is not stated in the sources read; ask the supplier.
What a buyout costs, and where to price it
Enercare publishes its water heater buyout schedule by type, model and age of the unit, and the 2026 schedule was read on 2026-10-06. Its shape is a price that falls with the unit's age and reaches C$100 at 15 or more years across every type and model listed; for example, a conventional vent CV40 is C$1,804 at 0 to 1 year, C$1,371 at 5 to 6 years and C$787 at 10 to 11 years. The page does not say whether HST is added, and none of the sources read says whether a transfer fee applies, so get both answers in the supplier's written quote. The full schedule, and the rent-versus-buy arithmetic, are on the water heater cost calculator; the furnace purchase side is on the furnace replacement cost calculator. A furnace rental buyout schedule was not read for this post.
What the buyout does not buy is service. Enercare's rent-versus-buy page says a buyout means you take on the cost of all repairs, parts and labour, and lists customer-owned repair examples at C$827 plus tax for a venter assembly, C$526 plus tax for a gas valve, C$342 plus tax for a flame sensor and C$183 plus tax for a thermocouple. For a seller, buying out and passing the unit on gives the buyer an owned appliance the buyer must then maintain; for a buyer, those figures are one reason to prefer assuming a rental on an older unit, and the calculator is where to weigh the remaining rental fees against a buyout and replacement.
Closing-day sequence
These steps combine the statutes, the government guidance and the supplier template above. They are not a checklist from a regulator and do not replace your lawyer's.
- Before listing or offering, identify every rented item. Look for the tank label or sticker, the monthly bill, and the paperwork. Furnaces, air conditioners, humidifiers and air cleaners are rented in the same way, and OREA's 2004 bulletin told members to verify and name all of them.
- Get the contract. Ask the supplier for a copy and a current statement. The Ontario page tells consumers to ask whether the contract can be transferred on a sale and whether cancellation fees apply.
- Decide assume or buy out. If the buyer will assume, say so in the agreement; the sample clause requires the transferee to be told in the sale agreement. If the seller will buy out, get the quote in writing with its expiry date.
- Order a title search through the lawyer. A pre-2024-06-06 NOSI may still appear; it is deemed expired and the land is not affected. If the buyer or lender wants it gone, the lawyer can file an Application to Amend the Register with the fee and a law statement. Do not pay a third party who offers to remove it.
- Notify the supplier before closing. The sample clause requires the seller or representative to advise the supplier in advance of the purchaser's name, the intended sale date, and an address and telephone number where the seller can be reached.
- Clear arrears and settle the buyout through the closing. The sample clause requires all amounts owing to be paid, and until the conditions are met or waived the seller stays responsible for the rental payments; a buyout is paid when invoiced.
- After closing, keep the paperwork. If the buyer assumed the contract, keep the confirmation. If the seller bought out, keep the supplier's payoff confirmation, because it is the evidence the contract has ended.
These items interact with the other closing costs a buyer and seller already face. The Ontario closing costs calculator totals the standard Ontario buyer costs; a buyout, if the seller pays it, is a seller's cost, and none of the sources read says whether a transfer fee applies. Treat both as items to add to your own estimate once the supplier has quoted them.
Mistakes the sources warn against
- Assuming an expired NOSI is a live lien. The government says the land is not affected by an expired consumer NOSI. A lender or buyer who treats it as a lien, or a homeowner who pays a stranger to remove it, is acting against the guidance of both the Ontario government and FSRA.
- Assuming the ban ended the contract. It did not. The government says the ban does not cancel an existing contract or eliminate the business's underlying security interest, and suppliers can pursue court remedies, and in certain circumstances repossession.
- Treating the rental as a fixture that sells with the house. The sample template says the unit remains the supplier's property and does not become a fixture. A buyer who does not assume the contract has no rights to the unit unless it is bought out.
- Signing a replacement at the door. The Consumer Protection Act restricts door-to-door sales of these products, with a 10-day cooling-off period and a one-year window for defective contracts. A new supplier's contract also means ending the existing one, which the government says may carry fees.
- Skipping the supplier notice. Under the sample clause, the seller must tell the supplier in advance the purchaser's name, the sale date and a contact address and number. Without it the transfer conditions are not met, and the seller remains responsible for the rental payments.
- Not asking about HST or fees. The buyout schedule read does not state whether tax is added, and none of the sources read says whether a transfer fee applies. Ask the supplier, and get the answer in writing.