Section 6 of the Standard OREA Agreement of Purchase and Sale is RENTAL ITEMS. What does this mean? Essentially, this section covers rental items, leased items, or leased to own items. These "items" for the most part are water heaters or heat pumps, or HVAC systems. In Canada and North America, water heater rentals are rare in most parts. Ontario and the GTA is encased to a bubble of rental HVAC equipment. The prices for water heater rentals can vary from as cheap as $20 a month to well over $60 a month.
Water heater rentals or HVAC rentals do have benefits, such as service repairs to the unit where the unit breaks, however, they can be costly and affect title to your house. Often, without the home-owners full understanding, individuals sign multi-year contracts for these units, which the rental company then registers against your homes title. What does this mean you ask? Well, when you go to sell your home and the would-be purchaser's lawyer searches title, they are going to see a Security Notice against title for the full amount of the Rental Contract (second position). On closing, there are two options. The would-be Buyer assumes the contract; or two, the Seller pays out the contract. Talk to your agent or lawyer if you are thinking about selling your home to discuss the best available options. As not including the rental items in Section 6 could leave you, the Seller, on the hook with the bill.
A third problem can arise where an individual wants to refinance their home. Your existing mortgage will likely be in first position and a Security Instrument may be in second position. Once the first-place mortgage is discharged, the second-position Security Instrument moves into first and any new mortgage will be listed in second position. This is not likely the idea the new lending institution had in mind when agreeing to loan you the funds. The way around this is to have the Institution holding the Security Interest agree to Postponing their interest to the new mortgage institution, or payout the existing rental contract (which can alter your service contract).
It is essential to understand the equipment to understand whether you are better to rent or own. Understanding this will ensure that a sales-person, door-to-door proposals, or aggressive company strategies are not taking advantage of you due to your lack of understanding.
There are different types of water heaters that come in different sizes, some of which have advanced tremendously within the past few decades. I will leave this part to the professionals and suggest anyone in the market for a new unit contact their local professional about options that are suitable to your home. However, always ask for clarification before signing the dotted line, as often times these contracts or for 10 years or greater.
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This blog is not to be construed as legal advice and you should consult a lawyer for legal specific matters.