Legislative Update to NOSIs Affecting Ontario Real Estate Transactions

The Ontario Government has recently passed Bill 200, the Homeowner Protection Act, 2024, which received Royal Assent on June 6, 2024. This legislation introduces significant changes to the handling of Notices of Security Interests (NOSIs) in real estate transactions, which consumers, real estate agents, and mortgage brokers need to be aware of.

Understanding NOSIs

A NOSI is an encumbrance registered on the title for certain personal property, such as rental items like furnaces or air conditioning units. This system ensured that any outstanding rental agreements or secured interests were clearly visible to potential buyers or lenders. As a result, rental items secured by a NOSI had to be resolved before the property could be sold or refinanced.

Legislative Amendment

The Homeowner Protection Act, 2024, amends the Personal Property Security Act (PPSA) to prohibit the registration of NOSIs for consumer goods in land registry offices. This change means that any existing NOSIs for consumer goods, effective before June 6, 2024, are now deemed expired and can be deleted from the title.

Implications for Real Estate Agents and Mortgage Brokers

Enhanced Diligence Required: Real estate agents and mortgage brokers must now exercise increased vigilance. It is important to ask sellers and borrowers about any rental equipment accounts. With these items now covered by the PPSA and no longer appearing on the title, they still remain secured as personal property. To prevent potential complications, it's essential to verify that there are no undisclosed rental agreements.

Engaging Experienced Real Estate Lawyers: Working with experienced real estate lawyers can help avoid complications during the transaction or post-closing matters. These professionals will ensure buyers are protected by conducting PPSA searches to confirm that sellers do not have any rental items tied to their name. This step prevents any issues that might arise post-closing and protects innocent buyers.

For more information on the legislative changes, view Bulletin 2024-07.