Abel Cheung didn’t anticipate that signing up for a simple water filter rental would end up forcing him to pay $11,000 for the privilege of refinancing his home.
The Ottawa-area man rented the filter system in 2019 after being convinced by door-to-door sales representatives that it would qualify him for an energy rebate and lower his monthly bills.
Those savings, he said, never materialized. That turned out to be the least of his problems.
When Cheung went to refinance his home in 2021, he discovered a surprise roadblock. A Notice of Security Interest (NOSI) had been registered on his land title and he’d have to pay it off before going through with the financing deal.
“I felt really bad when I found out that I had to pay the $11,000 to clear the lien on the house,” he said. “And I feel like those companies, they can actually do these things and get away with it.”
The House10:09Ontario’s potential crackdown on lien scam ‘crisis’
The Ontario government is trying to crack down on “bad actors” abusing a legal loophole meant to protect rental companies — that is instead seeing “crisis” levels of notices of security interest, or liens, being placed on unsuspecting property owners. The House speaks to Ontario business service minister Todd McCarthy, NDP critic Tom Rakocevic, lawyer Dennis Crawford and victims of the practice to ask if the new rules will protect consumers.
A NOSI is a lien instrument meant to provide a company some assurance that a contract will be paid. It usually stays attached to the title until the contract ends or is paid off.
But homeowners don’t always know when a NOSI has been attached to their property. Cheung and others report that they only discovered the lien when they were facing tight timelines for home sales or refinancing. In many cases, those deals can’t go through while the NOSI is in place.
Feeling the pressure, Cheung eventually shelled out $11,000 to pay off the NOSI — much more than what similar water filter systems retail for online.
His experience is part of a trend that Ontario’s Public and Business Service Delivery Minister Todd McCarthy said has blown up into a “crisis” situation.
To address what it calls the “abuse” of the NOSI system, the Ontario government recently passed changes to the Consumer Protection Act which include steps to make removing NOSIs easier and faster. It also recently concluded a consultations on possible additional steps and says it will act to prevent people from exploiting the NOSI system.
“Doing nothing is not is not an option,” McCarthy said in an interview with CBC’s The House. “We will take action to address this, to curtail it, and to stop the bad actors from abusing it.”
The CBC’s Marketplace has investigated the NOSI issue before, including Cheung’s case and the company he was involved with, Ontario Green Savings (OGS). Neither the company nor the lawyer representing it replied to CBC’s request for comment for this story. In the past, they’ve dismissed prior allegations against the company as unfounded.
Lawyer Dennis Crawford, who has dealt with dozens of cases similar to Cheung’s, said there are common threads to many of them. Many of those victimized by NOSIs are elderly, or new Canadians, or others facing language barriers or challenges, he said. They sign up for rental contracts and — without their knowledge — a NOSI is registered against their title.
“The problem comes in when the homeowner tries to remortgage or sell their house,” he said. “Their lawyer would tell them, ‘Hey, there’s a lien on your house’ — and this is almost always the first time the homeowner is hearing about it.
“They have to get the lien off title before the closing of their house sale, so they don’t have time to dispute this with Consumer Protection Ontario. They don’t have time to take the finance company to court and ask the court to delete the lien.”
One of Crawford’s clients, Ian Craig, has several liens on his land title from work done on his home in Kitchener, Ont. Craig said he didn’t know the NOSIs would be applied.
“I don’t know how they’re allowed to make a lien like that. It’s just unbelievable. They put a lien on your house and you don’t even know it. And I think that’s disgraceful and that should be changed,” he said.
Several of the companies with registered NOSIs on Craig’s title did not reply to requests for comments. One company noted in a media statement that Craig had signed contracts indicating the company could place a NOSI on the title and that he was aware of his rights under consumer protection legislation.
Contracts provided by the company do include that language.
Craig said he was struggling with the loss of his wife at the time and did not really know what he was signing.
Situation getting worse, minister says
Over 38,000 NOSIs were registered in Ontario last year alone. While not all of those are related to situations like Cheung’s, McCarthy said the overall abuse of NOSIs had worsened significantly.
“Often it’s a senior, a new Canadian, or a Canadian with language barriers or challenges [who] is duped into believing that they have to pay out some exorbitant amount of money. They’ll do so almost as a form of blackmail to get to clear up their title,” he said.
“The notice of security interest has become a crisis just in the past year. And there’s a whole range of options that we can consider, and these include the option of complete abolition of notices of security interest as a tool for giving notice of the security interest.”
That’s the change Crawford said he would like to see.
“In my opinion, [NOSIs] are not supporting any legitimate commercial interest. They’ve outlived their usefulness. And it would be a lot better for consumers if, instead of making it easier for consumers to get these liens off title, just make it so that these liens can’t be put on title in the first place,” he said.
The NDP, the provincial opposition in Ontario, supports that idea.
“Increasingly, more and more people that I speak to, whether it’s lawyers and consumers who have been harmed by this, refer to these types of liens as nothing more than extortion,” said Tom Rakocevic, the NDP’s consumer protections critic.
Rakocevic said the provincial government should strongly consider banning NOSIs entirely. He said Ontario lags behind other jurisdictions when it comes to consumer protection, and he has proposed the creation of an independent consumer watchdog.
McCarthy said it’s too soon to say what legal changes might emerge from the consultations and a decision will be made in the new year.
He said that while getting rid of NOSIs altogether is on the table, they do have some legitimate uses and the provincial government is focused on cracking down on their abuse.
“There’s that option [of banning NOSIs], and there’s many options between doing nothing and taking other steps,” he said. “And that’s the range of remedies that are available and we’ll look at all of them.”