The passing of Bill 200, The Homeowner Protection Act, 2024, by the Ontario legislature marks a significant change in the handling of Notices of Security Interest (NOSIs) for consumer goods. As of June 6, 2024, the registration of consumer NOSIs in the Land Registry is prohibited, and all existing consumer NOSIs are considered expired.
This change aims to safeguard homeowners from predatory lending practices that have particularly targeted vulnerable individuals and elderly Ontarians.
What is a Notice of Security Interest (NOSI)?
A NOSI is a legal claim registered on title to a property. It is often used by businesses to secure payment for financed or leased items, such as water heaters or furnaces.
Unfortunately, some unscrupulous actors have misused NOSIs to exploit homeowners, especially seniors, by converting NOSIs into high-interest mortgages that can lead to significant financial burdens and even loss of property. The typical scenario is an unsolicited door-to-door salesperson who will take advantage of a vulnerable senior by selling them unnecessary home upgrades. The Advocacy Centre For the Elderly has described that "In most cases, the products and services are grossly overpriced and provide little-to-no value. In some cases they are completely bogus and fraudulent."
Key Aspects of The Homeowner Protection Act, 2024
- Prohibition on Consumer NOSIs: From June 6, 2024, NOSIs related to consumer goods cannot be registered in the Land Registry. Consumer goods are defined as items primarily used for personal, family, or household purposes.
- Expiration of Existing Consumer NOSIs: All consumer NOSIs registered before June 6, 2024, are deemed expired as of June 5, 2024.
- Removal of Expired NOSIs: Expired NOSIs can be removed through a registration process approved by the Director of Titles.
Guidance from the Law Society of Ontario
In response to these legislative changes, the Law Society of Ontario (LSO) issued a Notice to the Profession on June 13, 2024. This notice highlighted the risks associated with registering NOSIs and completing mortgage transactions involving vulnerable clients. The new legislation requires heightened vigilance and adherence to professional obligations. The LSO has warned that some lenders may still attempt to extract payments from individuals in relation to previously registered NOSIs, which are now deemed expired.
Non-compliance with the new regulations can result in regulatory discipline. Lawyers are advised to consult Bulletin 2024-07 from the Director of Titles for detailed instructions.
Practical Measures for Lawyers
Some steps that lawyers may consider when dealing with NOSIs include:
- Verification: Confirm that NOSIs are not related to consumer goods and comply with the Personal Property Security Act (PPSA).
- Documentation: Include all necessary legal statements in NOSI registrations, affirming that the NOSI does not involve consumer goods.
- Client Advisory: Inform clients about the implications of the new legislation and provide guidance on handling claims or disputes related to NOSIs.
Resources and Support
The LSO offers various resources to assist lawyers in adapting to these changes:
- Practice Management Helpline: For ethical questions related to NOSIs, lawyers can contact the LSO's helpline at 416-947-3315 or toll-free at 1-800-668-7380, ext. 3315.
- Guidance Documents: Detailed information on identifying exploitative loan agreements and fulfilling professional responsibilities is available on the LSO website.
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