Ontario Homeowner Protection Act Introduces Safeguards for Buyers & Homeowners

If you’re buying or own property in Ontario, there are new protections coming in the recently tabled Homeowner Protection Act. Both the Ontario Real Estate Association (OREA) and the Toronto Regional Real Estate Board (TRREB) have signaled their approval of the legislation. 

While the Act was introduced primarily to strike down the placement of predatory Notices of Security Interest (NOSIs) for consumer goods on land titles, it also comes with broader protections including:

• Requiring public disclosure of builder cancellations of purchase agreements for new freehold homes, allowing buyers to see a builder’s track record 
• Consulting on ways to crack down on illegal home builds and selling
• Giving condo owners better resolution options and improving condo management by expanding the jurisdiction of the Condominium Authority Tribunal to cover more disputes 
• Consultations with stakeholders to strengthen protections for condo owners and buyers 

Fraudulent Notices of Security Interest primary target of bill

The Notices of Security Interest (NOSIs) that are currently in place on Ontario land titles total about $1 Billion. The Act strikes all of these down and prevents new ones from being put into place. 

A NOSI is put into place by businesses which rent, finance, or lease equipment that will be installed in a home, such as water heaters or furnaces. In a legitimate case, they were used to secure financing of appliances which could not easily be recovered in the event of non-payment. 

Bad actors have been exploiting NOSIs by registering them without the homeowner (frequently a senior) knowing about it and for more money than the value of the fixtures or appliances. In fact, you should probably check your title to make sure one of these is not registered on it, because the practice has become so prevalent. The amount of NOSIs registered in Ontario has gone from around 2,000 per year in the early 2000s to over 58,000 in 2023. 

The only negative news to come out of this part of the legislation is that rentals of items like water heaters or furnaces may be harder to come by due to the fact that they cannot secure financing in this way anymore. If you’re a landlord, hopefully you are buying your water heaters and furnaces as renting them often costs far more than the initial cost of either appliance. 

Other protections which will help investment property buyers

If you are a landlord, one part of the legislation which may give you added protection is the requirement for builders to disclose canceled purchase agreements. This way, if you are buying a new build investment property, you can gauge how reliable the builder is by how many of these purchase agreements they have canceled. 

Realistically, a builder will cancel a few of these here and there for good reasons, but if the number is high that builder may not be reliable. At the very least, they may not keep the original purchase price in place and demand more money over and above the contracted amount once the build is ready; a common practice over the last five years. At worst, it may signal their lack of reliability in other areas, such as the quality of the build and responsiveness to any warranty work. 

Expansion of the Condominium Authority Tribunal is also helpful to condominium landlords. This means that some matters could be handled through the Tribunal that currently can only be dealt with through the courts. While there aren’t details yet on exactly how the powers of the Tribunal are being broadened, so it may be too early to tell, condominium landlords will want to keep an eye on this aspect of the legislation – especially if they have a contentious condo board. 

Another landlord bonus is the 10-day cooling off period for buyers of new freehold homes. The agreements for these homes tend to have things buried in the fine print that only a lawyer can spot, and having 10 days to have yours go over that agreement is a welcome change. 

Overall, the legislation protects the buying public from predatory practices by bad actors across the board, and is welcomed by nearly everyone in the real estate industry. It strengthens trust in Realtors by cracking down on illegal home sales and protects seniors from predatory NOSIs. If both the OREA and TRREB are expressing their collective approval, then almost everyone is happy with it.