Key takeaways
- Many homes have rented equipment — hot water tanks, furnaces, air conditioners, water softeners or full HVAC systems. Whether an item stays with the home depends on the rental contract, your agreement and whether it has become a fixture.
- Buyout and buyer assumption are the two common routes, but they are not the only ones, and each depends on the rental contract and the supplier’s co-operation.
- If the buyer assumes the rental, it should generally be disclosed and written into the Agreement of Purchase and Sale (APS).
- Undisclosed rental contracts can delay closing. Tell your lawyer and agent about every rented item early, and do not assume an old Notice of Security Interest on title still has legal effect — most consumer ones expired in 2024.
What counts as rental equipment?
Rental equipment is any appliance or system in your home that you don’t own outright — you pay a monthly fee to a supplier who owns it. Because you don’t own it, you generally can’t simply sell it with the house or take it with you. The contract typically has to be settled — subject to the rental contract and the agreement of purchase and sale.
The most common rented items in Ontario homes are:
- Hot water tanks — probably the most common rental of all.
- Furnaces — the unit that heats your home.
- Air conditioners — central cooling systems.
- Water softeners — equipment that treats hard water.
- Full HVAC systems — combined heating, ventilation, and air conditioning packages.
These are often supplied by companies such as Enbridge, Reliance, or Enercare. If you’ve been paying a monthly charge for any of these — sometimes bundled onto your gas bill — it’s very likely a rental, not something you own.
Why does rented equipment matter when I sell?
It matters because the equipment stays physically in the home, but the contract to pay for it is in your name. When ownership of the house transfers to the buyer, that mismatch has to be resolved before closing day.
You generally can’t just leave a rented hot water tank behind and stop paying. The supplier still owns it and will typically keep billing whoever holds the contract — or come to remove the unit. So on most sales you’ll need to actively deal with each rental contract. Leaving it unresolved is one of the classic causes of last-minute closing problems.
Two routes come up most often: buying the contract out, or having the buyer take it over. They are not the only possibilities. Depending on what your contract says, the supplier may also allow the equipment to be removed and returned, may permit the contract to be cancelled on payment of a stated amount, or may require a formal assignment with its written consent, or a new account in the buyer’s name. Some contracts allow none of these on the terms you would like. You can mix and match across items — buying out the water heater while the buyer assumes the furnace — but every route is subject to the rental contract and to what your agreement of purchase and sale provides.
Option 1: Can I buy out the rental contract?
Yes. Buying out the contract means paying the supplier a lump sum to own the equipment outright before closing. Once you’ve bought it out, the item becomes your property and can be included in the sale as something you own — no monthly contract follows the buyer.
The main thing to know is that a buyout can be costly. Depending on the equipment and how long the contract has run, the buyout figure can be substantial, and it comes out of your sale proceeds. To decide whether it’s worth it, contact the supplier and ask for the current buyout amount in writing before you commit.
Buying out is often the simplest path when a buyer doesn’t want to take on your rental contracts, because it lets you present the equipment as fully owned and included in the price.
Option 2: Can the buyer take over the rental?
Yes — the buyer can agree to assume the rental, meaning they take over the contract and the monthly payments going forward. This avoids a buyout cost for you, but it isn’t automatic. The buyer has to agree to it, and the agreement needs to be written into the Agreement of Purchase and Sale rather than left as an understanding between you.
That protects both sides: the buyer knows exactly what ongoing costs they are taking on, and you have a contractual basis for the transfer. Getting the supplier to release you is a separate step.
Two things follow from this, and sellers routinely get both wrong. First, if the assumption is not in the agreement, you generally cannot compel the buyer to take the contract on, and you may be back to buying it out at the last minute. Second — and this is the one that costs people money — putting it in the agreement deals with the buyer, but it does not by itself release you from the supplier. The rental contract is between you and the supplier, and you are usually released only when the supplier agrees: by consenting to an assignment, or by opening a new account in the buyer’s name and closing yours. Until that happens the supplier can keep billing you, whatever the buyer agreed to. So treat the supplier’s written confirmation as the step that actually ends your liability, and follow up after closing until you have it.
Why do I need to disclose every rented item early?
Because undisclosed rental contracts can delay closing. If a rental surfaces late — during your lawyer’s review, or when the buyer’s side spots a monthly charge — the deal can stall while everyone scrambles to decide who pays for what and to get the paperwork corrected.
Closing day runs on tight timing: money and documents are exchanged, and there’s little room for surprises. A rented furnace nobody accounted for can force a buyout you weren’t budgeting for, or a rushed amendment to the APS. Either way, it’s stress you can avoid.
The fix is simple: tell your lawyer and your real estate agent about each rented item early — ideally before you list, and generally before you sign the APS. That gives everyone time to decide, item by item, whether you’ll buy it out or the buyer will assume it, and to get the right wording into the agreement from the start — subject to the rental contract and the agreement of purchase and sale.
How do I find and handle my rentals before closing?
Work through it methodically so nothing slips:
- Make a list of every rented item. Walk through the home and check your bills. Hot water tanks, furnaces, air conditioners, water softeners, and full HVAC systems are the usual suspects. If you’re paying a monthly charge for it and didn’t buy it, treat it as a rental.
- Confirm each contract with the supplier. Contact companies like Enbridge, Reliance, or Enercare to confirm what’s rented, the monthly cost, and — importantly — the buyout amount.
- Decide buyout or assumption for each item. Compare the buyout cost against whether your buyer is willing to take the contract over.
- Get it into the APS. Any rental the buyer will assume should generally be disclosed and written into the Agreement of Purchase and Sale.
- Tell your lawyer and agent everything, early. Your own licensed real estate lawyer handles the closing paperwork and makes sure each contract is properly dealt with, so give them the full list well before closing.
Handle these steps up front and rental equipment becomes a routine part of the sale rather than a closing-day emergency.
What about a Notice of Security Interest on my title?
- For years, rental and financing companies registered a Notice of Security Interest, or NOSI, on title against homes where they had supplied equipment. Sellers often discovered them only when the property was searched, and they could hold up a closing. The law changed in 2024.
- Since 6 June 2024, a NOSI can no longer be registered where the collateral is consumer goods. The Homeowner Protection Act, 2024 amended the Personal Property Security Act to prohibit it.
- Consumer NOSIs that were already registered and in effect immediately before that day are deemed to have expired on it, and the land is no longer affected by any claim under them.
- The ban applies to consumer goods only. Commercial NOSIs — for industrial equipment, for instance — are unaffected and can still be registered.
- One practical wrinkle catches people out: an expired NOSI does not vanish from title by itself. It stays on the register until someone applies to remove it. Because the land is no longer affected by it, there is no emergency, but on a sale it is usually tidied up. A lawyer can register an Application to Amend the Register, with a law statement confirming the NOSI relates to consumer goods and was deemed expired, and pay the applicable fee. Ask your lawyer to check your title early so this is handled before closing rather than on the day.
- What the expiry does not do is cancel your contract. The rental or financing agreement survives, and so does the supplier’s security interest in the equipment itself. The supplier keeps its rights under the contract, can sue if you stop paying, and may in some circumstances be entitled to repossess the equipment. What it has lost is registered notice against the land. So the NOSI change is a reason not to panic about an old registration, not a reason to stop dealing with the contract.