How to cancel an HVAC contract in Ontario

Are you renting HVAC equipment (water heater, furnace, air conditioner, etc.) from a company such as Reliance and Enercare and want to be free of the ever-increasing monthly fees and high cancellation penalties? Are you stuck in a purchase-cost-plus lease with a high interest loan?

Whether you took over a contract after purchasing a home, or recently signed a contract with a direct sales company, you have a few options.

Here are your rights under the Consumer Protection Act when signing or cancelling a contract in Ontario:

Restriction on entering into certain direct agreements

No supplier shall, while at a consumer’s dwelling or at any other prescribed place, solicit the consumer to enter into a direct agreement for the supply of prescribed goods or services or enter into such an agreement unless the consumer has initiated contact with the supplier and has specifically requested that the supplier attend at the consumer’s dwelling or the other prescribed place for the purpose of entering into such an agreement. 2017, c. 5, Sched. 2, s. 16.

Same

(2) The following activities do not constitute solicitation for the purpose of subsection (1):

1.  Leaving marketing materials at a consumer’s dwelling or any other place prescribed for the purpose of that subsection without attempting to contact the consumer with respect to any prescribed direct agreement.

2.  Such other activities that are prescribed. 2017, c. 5, Sched. 2, s. 16.

Agreement void

(3) A direct agreement that the parties enter into in contravention of subsection (1) is void. 2017, c. 5, Sched. 2, s. 16.

Section 43.1 of Consumer Protection Act

Cancel within the 10 day cooling off period

You can cancel a contract for any reason within 10 days of receiving a written copy of the agreement. To request a cancellation, send the company a message in writing either by email or by registered mail so that you have a record of when you sent it and have a record of the communication. Keep a copy of your letter.

You do not need to give the supplier a reason for cancelling during this 10-day period.

Here is an example template:

Subject: Contract Cancellation Request

[Company name]
[Company address]

To whom it may concern,

I am writing to formally request the cancellation of our contract for HVAC services, effective immediately as it is within the 10 day cooling off period.

Please confirm receipt of this request and let me know if there are any further steps I need to take to finalize the cancellation.

Thank you for your attention to this matter.

Best regards,
[Your Name]
[Your Contact Information]

Check the rental items section of your home’s Agreement and Purchase of Sale

An Agreement of Purchase and Sale is a written contract between a seller and a buyer for the purchase and sale of a particular property.

See if the unit is listed under Rental Items – for example “hot water heater”. Our purchase agreement included this:

If the rental equipment is listed, this means that the buyer agreed to assume the contract, even if they have not seen the contract itself. Generally, the law says that if you had had concerns, you could have made the Agreement conditional on reviewing the rental agreement.

If you did not see a copy of the contract or its terms, it could be argued that the buyer did not fully agree to the terms, but in that case the next step is to talk to a lawyer.

If the rental, lease, lease to own equipment is not listed under rental items, the buyer may demand that the seller buy out the contract

If an item is a rental but not disclosed as such in the Agreement of Purchase and Sale, the buyer can consider the item a fixture included in the purchase price. In this case, the buyer may require the seller to buy out the contract and deliver the equipment free and clear on closing.

Jay Teichman, Toronto Real Estate Lawyer

“Unless otherwise stated in this agreement or any schedule hereto [in the Rental Items section], Seller agrees to convey all fixtures and chattels included in the purchase price free from all liens, encumbrances or claims affecting the said fixtures and chattels.”

This means that if you, as the seller, have a rental contract or payment plan on any item included in the sale, you are responsible for paying it off by the closing date!

I have seen thousands of dollars spent on buying out a rental contract because the seller had mistakenly sold the item to the buyer. Imagine signing up for a 3-year alarm contract, then needing to pay it all at once!

The Agreement of Purchase and Sale (Part 3), Peter Bottcher

Ontario Real Estate Association (OREA) should improve the rental items section

The Ontario Real Estate Association (OREA) should update this section of the Agreement of Purchase and Sale any time to require more details be provided to the buyer (make, model, copy of the contract) than just the words “hot water tank”:

After discussing with the Ontario Real Estate Association and the Real Estate Council of Ontario they acknowledged that in recent years a plethora of buyers in the province have experienced the terrible surprise of being locked into these agreements. The question has come up: Should the Standard Agreement of Purchase and Sale revise this particular clause? Perhaps it should say that if any rental equipment in the home is to be assumed, the seller is to provide full disclosure on the length and terms of that contract.

Mutch Property Group

OREA’s training form acknowledges the importance of the section:

RENTAL ITEMS: This has become an important issue in recent times. There are a number of items that potentially are not owned by the
Seller but rather leased or rented. The Seller would have to identify these to a Buyer. An important issue these days is the “hot water tank”.
These may be rented or more frequently now, on a contract for “lease to own”.

Ontario Real Estate Association Agreement of Purchase and Sale – training form

Notices of Security Interest (NOSIs) were banned and existing NOSI liens retroactively canceled by Ontario Homeowner Protection Act, 2024

The Personal Property Security Act (PPSA) allows Notices of Security Interest (NOSIs) to be registered in the land registry system to gives notice to third parties that a lender is owed money for a fixture such as a water heater or furnace installed in the home. A business may register a NOSI on a home’s title at any time after entering into a contract with the debtor to protect its interest in the goods should the homeowner default on payment or if the homeowner decides to sell or needs to refinance the property.

HVAC companies register them without notifying customers and use them as leverage when homeowners try to sell or refinance their home.

On June 5, 2024 Ontario’s Homeowner Protection Act, 2024 banned the registration of new Notices of Security Interest (NOSIs) for consumer goods on the Land Registry and retroactively cancels existing NOSIs for consumer goods currently registered against title as of June 5, 2024.

Some lenders may still attempt to extract payments from individuals in relation to previously registered NOSIs, which are now expired.

Cancel within 1 year for unfair practices and get a full refund

Rescinding agreement

Any agreement, whether written, oral or implied, entered into by a consumer after or while a person has engaged in an unfair practice may be rescinded by the consumer and the consumer is entitled to any remedy that is available in law, including damages.

Section 18 of Consumer Protection Act

Unfair practices include:

False/misleading representations

If the business has represented their goods or services in a false, misleading or deceptive way. Check the full list of representations to see if any apply to your situation. You can also report instances of to the Competition Bureau using the online complaint form or by telephone at 1-800-348-5358.

Unconscionable representations

If the business knew or ought to know that the consumer cannot protect his or her own interests (perhaps because of a disability, illiteracy, impairment, etc.), was put under too much pressure, or received a misleading opinion that that the consumer relied on to make their decision, among others. Check the full list of representations to see if any apply to your situation.

Direct agreement (door-to-door sales) contract is missing information

If the contract was signed at your door or in your home, it is a Direct Agreement. If the contract does not include all the specific information in these Requirements for Direct Agreements about the goods or service and your rights as a consumer, you can cancel the contract within 1 year of entering into the agreement.

Cancellation: failure to meet requirements

In addition to the right under subsection (1), a consumer may cancel a direct agreement within one year after the date of entering into the agreement if the consumer does not receive a copy of the agreement that meets the requirements under section 42.  2002, c. 30, Sched. A, s. 43 (2).

Section 43 (2) of the CPA

Delivery of goods and services is 30+ days late

If the business hasn’t delivered any of the products or services and it’s been more than 30 days from the date stated in the contract, or 30 days from the date you signed the contract if there is no date stated in the contract, then you can cancel the contract at any time before they deliver or start the services.

If the delivery date or commencement date is not specified in this agreement and the supplier does not deliver or commence performance within 30 days after the date this agreement is entered into, you may cancel this agreement at any time before delivery or commencement of performance. You lose the right to cancel if, after the 30-day period has expired, you agree to accept delivery or authorize commencement of performance.

REQUIREMENTS FOR DIRECT AGREEMENTS SUBJECT TO SECTION 43.1 OF ACT

Failure to refund, breaking the Consumer Protection Act

If the business fails to refund you as requested,

When a consumer is entitled to a refund under the existing Consumer Protection Act, the business must issue that refund within 15 days of the consumer giving notice. The legislation also gives the consumer the right to sue when businesses do not provide refunds as required. When a consumer takes legal action to obtain a refund that a business has failed to provide, the proposed new legislation would give consumers the right to recover three times the original refund amount.

Furthermore, if a consumer succeeds in a refund action at the Ontario Superior Court of Justice in relation to a supplier’s failure to provide a refund in compliance with the new Ontario Consumer Protection Act, the Court must order that the supplier refund the consumer for an amount three times the original refund obligation (subject only to the Court’s discretion in cases of “inequity”).

File a complaint

If you’re outside the 1 year timeframe, or you think the company has broken the law in the Consumer Protection Act, file a complaint with the Ministry of Government and Consumer Services. These complaints eventually lead to provincial investigations.

Charges commonly laid against these kinds of companies include:

The new Ontario Consumer Protection Act would increase the maximum fines to $100,000 for individuals and to $500,000 for corporations to further deter offences and egregious business conduct.

The new Ontario Consumer Protection Act introduces a new administrative penalty scheme under section 95, which gives the Director (as defined under the new Ontario Consumer Protection Act) the ability, by order, to impose an administrative penalty of up to $50,000 if the Director is satisfied that the person has contravened or is contravening a provision of the new Ontario Consumer Protection Act. Such a penalty can be imposed regardless of whether an offence is being prosecuted and is an “absolute liability” order (i.e., it can apply even if “all reasonable steps” were taken by a supplier who had “an honest and reasonable belief” in a mistaken set of facts).

Report companies claiming to be affiliated with, or endorsed by other companies or government programs to the Canadian Anti-Fraud Centre

If the salesperson falsely posed as a representative of a legitimate corporation such as Enbridge or Google or a government entity or program such as the Ontario Energy Board or Greener Homes Grant, report it to the Canadian Anti-Fraud Centre toll-free at 1-855-495-8501, contact the organization that they were claiming to be affiliated with, and/or contact local police.

Leave an honest review of the company

On Cansumer, Trustpilot, Google, BBB and others. Other consumers have reported having their rebate and contract buyout issues resolved after leaving 1 star reviews.

You have the right to review.

Report companies that fail to provide rebate/buyout/device as advertised to the Competition Bureau

Report this misleading marketing practice to the Competition Bureau.

Post your experience to social media

Spread the word about the company and your situation on Reddit, Facebook, Twitter, Instagram. These companies must maintain their online reputation in order to trick new customers. The more people post about their experiences online, the harder it is for them to cover it up.

Ask CBC Go Public, Global News, and CTV News to publish your story. They all publish stories about HVAC scams those who have their stories published typically have their contract concerns resolved by the company.

Buyout the contract

It may be cheaper in the long run to pay the contract cancellation fee/penalty, get rid of the rental equipment and replace it with units that you own.

Limits on purchase-cost-plus leases

The updated Consumer Protection Act, 2023 will limits on termination costs for purchase-cost-plus leases if a consumer wishes to end a contract early.