Ontario is looking to combat lien 'abuse' that's costing some homeowners big money

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."

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.