Proposed law bans ‘predators’ from tying consumer goods loans to Ontario land titles

The Ontario government is introducing legislation on Monday that  will eliminate the ability for people to place Notices of Security Interest or “NOSIs” for consumer goods on the land registry system.

The Homeowner Protection Act, 2024, will also eliminate all NOSIs which are currently in place, which amounts to about $1 billion, according to Todd McCarthy, Minister of Public and Business Service Delivery.

While the new legislation will eliminate NOSIs, there is a lot more to the proposed bill.

The province says there will be a mandatory 10-day cooling off period for the purchase of new freehold homes, public disclosure when builders cancel purchase agreements, and an expansion of the Condominium Authority Tribunal’s jurisdiction over disputes.

McCarthy was at Waterloo police headquarters in Cambridge on Monday morning to announce the new legislation in an effort to protect residents from scammers who had been fraudulently using NOSIs.

“NOSis can be registered on the Land Registry by a business when it rents, finances, or leases certain goods that become fixtures in homes, such as water heaters or furnaces,” he explained.

McCarthy noted that initially businesses were using NOSIs to protect themselves when items such appliances were purchased with financing.

“Over the past few years they have become tools for organized and deliberate deception used to scam hardworking Ontarians,” he explained.

“Since the early 2000, the number of NOSIs registered on Ontario’s land registry has skyrocketed from around 2,000 each year to more than 58,000 in 2023 alone.”

McCarthy said that in many cases, these are registered without the homeowner’s knowledge and for more money than the product’s actual worth.

“Homeowners usually discover NOSIs when they want to sell or refinance their homes, and then bad actors exploit this by demanding exorbitant fees to discharge them,” he said. “In some instances, multiple NOSIs are registered on a single property, which are later converted into sham mortgages that rob hardworking and law abiding Ontarians of their life savings and their home equity.”

McCarthy and a number of local MPPs were on hand for the announcement and they credited Waterloo police Det. Adam Stover for pushing for the legislation.

“Det. Stover’s efforts have been instrumental in investigating and documenting the harms caused by NOSIs,” the minister said. “It is because of his and the Waterloo Regional Police Service’s tireless efforts that we are here today to take a stand against those who seek to victimize our fellow citizens and residents.”

For his part, Stover noted that some businesses use NOSIs legitimately and will need to find other ways to protect their interests. “This news is going to come with some disappointment to some that are affected by the change,” Stover old reporters. “It’s important to understand that (for) the upstanding companies that were previously utilizing NOSIs as practice, I believe they’ll adapt and they’ll thrive without its use.”

“What the removal of NOSIs does, it eliminates the predators. It serves to remove likely over — and I say this with confidence — over $1 billion that are sitting on Ontario citizens’ titles. It’s going to put that money back into the homeowner’s pocket and remove it from organized crime. Organized crime — they’ve been using these NOSIs and predatory lending to liquidate the equity from our vulnerable seniors homes.”

The Canadian Lenders Association told Global News they were disappointed with Monday’s announcement as the organization says that homeowners will be hurt by the move as it will create increased borrowing costs for homeowners and increase home prices.

“By retroactively eliminating NOSIs without a replacement system, the government is creating chaos for nearly three million Ontario HVAC & Home Improvement Consumers, who could now face a new hit to their credit rating as a direct result of the government’s unprecedented retroactive action,” CLA president Gary Schwartz stated.

Industry is calling on the government to act responsibly and introduce an alternative framework for home equipment financing before implementing this new legislation to ensure a healthy transition for businesses and consumers who do not deserve to be negatively impacted.

In contrast, the Ontario Real Estate Association backed all of the initiatives that the Ford government put forth on Monday including mandatory cooling off period as well as the disclosure from builders.

“Extending this protection to newly constructed homes will enhance consumer protection by allowing buyers a 10-day period to review and cancel an agreement without penalty, leveling the playing field between Ontario’s hardworking families and well-resourced corporate developers with a team of lawyers,” OREA CEO Tim Hudak said in a statement.

He also went on to praise the province for not putting the same restrictions on the resale market “as it would undermine certainty in resale transactions, which are typically between private citizens and do not involve corporate developers, and could lead to speculation.”