When buying a home, it’s easy to get swept up in the excitement of the property itself—location, layout, finishes—but there are some hidden details that can turn into costly surprises if you’re not careful.
One of the most overlooked?
Rental equipment.
Items like water heaters, furnaces, air conditioning units, and water softeners are often rented rather than owned, especially in homes across Ontario.
These contracts can carry significant financial obligations, and in some cases, the buyer may be expected to assume them.
What Are Rental Agreements for Home Equipment?
Rental agreements are contracts homeowners sign with companies that provide large home systems or appliances. These agreements typically involve:
- A fixed monthly payment
- Ongoing service, repairs, or replacement during the rental term
- Multi-year commitments—often 7, 10, or even 15 years
While renting may seem like a good option upfront—especially for those avoiding large capital expenses—it’s not always the most economical long-term choice. What’s more, these rental agreements can be transferred to new homeowners if the equipment remains in the house.
Common Rental Providers in Ontario
Here are a few well-known companies that provide rental equipment:
- Enercare – Offers rental water heaters, furnaces, and air conditioners. They also provide maintenance and protection plans.
- Reliance Home Comfort – One of the largest providers in Ontario, offering everything from HVAC systems to water purification and security systems.
- AWHR Canada – Focuses on water heater rentals and offers various protection plans for homeowners.
- Cricket Energy – Provides water heaters, heat pumps, and energy-efficient solutions for residential properties.
Each company has its own contract language, buyout options, and cancellation terms, so reviewing these documents thoroughly is crucial.
Many buyers and their agents do NOT ask for details until it’s too late. Confirm any details that are important to you BEFORE you finalize the offer with the seller.
Homebuyer Obligations: What to Watch For
If you’re purchasing a home with rental equipment, check whether the Agreement of Purchase and Sale (APS) mentions any rental items.
If it does, you may be required to assume those rental contracts—meaning you’ll inherit the monthly payments and all associated responsibilities.
However, rental agreements must be disclosed. If the seller fails to mention them, it could be a legal issue. That’s why your real estate lawyer should always review the agreement and any disclosures before closing day.
Your Options as a Homebuyer
Once you’re aware of a rental agreement, you generally have three options:
1. Continue Renting
If the monthly cost is manageable and you like the convenience of included maintenance or repairs, you can simply continue the rental. Make sure the provider properly transfers the agreement to your name to avoid billing issues.
2. Buy Out the Contract
Most rental companies offer a buyout option. This means you pay a lump sum to own the equipment outright. Buyout prices vary widely—newer units could cost $1,000 to $5,000 or more, while older equipment may be cheaper or close to being transferred without cost, depending on the age and terms.
3. Cancel the Agreement
You may also choose to return the equipment and cancel the contract. That said, this route often comes with high termination fees—sometimes over $1,000—and may require you to purchase a new unit to replace it.
Before You Close: What You Should Do
- Read the offer closely – Make sure all rental items are clearly listed and understood.
- Request all rental contracts – Review the full terms and conditions of anything you’re assuming responsibility for.
- Talk to your real estate lawyer – They can help you identify risks and explore your options before closing.
Final Thoughts
Rental water heaters and HVAC systems can be a sneaky source of unexpected costs. As a buyer, it’s your right—and responsibility—to understand these contracts before taking them on. With the right guidance and due diligence, you can avoid unwelcome surprises and feel confident about your investment.
If you’re purchasing a home and want expert advice on how to handle rental contracts, reach out to our team—we’re here to help you make a smart, informed move.
