# Water heater forced rental agreement from new home builder



## can_84 (Jul 2, 2011)

I am looking for some advice about water heater rental that is being forced on us by Mattamy homes. We bought a new home from Mattamy and just realized that they are forcing us to sign a rental agreement with crickethomecomfort for our water heater at $100/month. 

Based on my research the water heater costs $800 at home depot and $200 to install which I would have happy paid. We were not provided with any details about the contract such as the cost or the length at the time we signed the purchase agreement with Mattamy. Based on my initial discussion with cricket the buy out price is $4000.

I feel this is very unethical what Mattamy has done to home buyers as they are getting a kick back from Cricket. Does anyone know if I can just get out of taking on this contract? I really dont want to pay $4000 for a water heater that costs me to have installed $1,200.

I also noticed that there was an article on CBC about this situation:

https://www.cbc.ca/news/business/enercare-story-marketplace-1.4598718


If anyone has goan through similar problem and found a way to get out I would really appreciate you sharing your experience. 


Right now I am considering taking the water heater out and installing one I purchase from home depot then calling cricket to pick it up because we have not signed anything with cricket at this point in time.


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## OptsyEagle (Nov 29, 2009)

Yeah, it is a big scam these days. Obviously the builder is getting a big kickback since a gas water heater should not cost more than around $30 per month. It's the kickback that I would like to see eliminated. I am sure it is probably being looked into but that stuff can be kind of slow. If done, then the rental company would have no problem lowering the monthly amount. None of it will help you unfortuneately. Be glad the builder did not stick you with a rental furnace as well. That is the latest and more lucrative scam.

To confirm the kickback, you could call up the rental company and pretend to be a new customer and ask the rental cost for an identical heater. Get the price and the duration and buyout and you will most likely find it to be significantly below what you are contracted to pay.

I wish I could help you more but you are probably beat. These guys have been ripping people off for a long time and I suspect they have dotted their i's and crossed their t's sufficiently.


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## Mukhang pera (Feb 26, 2016)

No personal experience with this, but I am not sure how a competent adult can be "forced" to sign anything short of, literally, a gun to the head.

The solution to your problem will depend on what you have signed to date, if anything. Even then, there might be provincial consumer protection legislation that applies, depending on where this transaction is occurring. Further, there might be common law privity of contract arguments that will apply. Hard to know on the limited facts presented and without seeing any relevant documents.


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## can_84 (Jul 2, 2011)

Mukhang pera said:


> No personal experience with this, but I am not sure how a competent adult can be "forced" to sign anything short of, literally, a gun to the head.
> 
> The solution to your problem will depend on what you have signed to date, if anything. Even then, there might be provincial consumer protection legislation that applies, depending on where this transaction is occurring. Further, there might be common law privity of contract arguments that will apply. Hard to know on the limited facts presented and without seeing any relevant documents.


The only thing in our purchase agreement with the builder is this:

"Energy Star qualified tank less water heater is a rental unit. Purchaser to execute agreement with designated supplier"


I have not signed with the rental company as of yet and I am hoping not to sign unless I am forced to by law. Would you advise taking this route or just allow them to rob me?

Thank you


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## Mukhang pera (Feb 26, 2016)

can_84 said:


> The only thing in our purchase agreement with the builder is this:
> 
> "Energy Star qualified tank less water heater is a rental unit. Purchaser to execute agreement with designated supplier"


I would draw a line through that provision and insert: "Purchaser will arrange and pay for installation of water heater to be obtained by purchaser at purchaser's expense."

Initial the amendment and request the realtor (if one is involved) to obtain the initials of the vendor's authorized agent.

In my view, you are buying a house and not buying the right to be hosed by a third party who is a stranger to the contract. 

I have heard of unethical business practices, but this is worthy of a true slimeball award.


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## OptsyEagle (Nov 29, 2009)

I am guessing he has already signed the purchase agreement, that inside of it, had the agreement to rent the tank. The water heater companies rarely have anything to sign. Quite weird but they do most of their business on other people's purchase and sale documents or verbally over the phone...and then get their lawyers to provide the ongoing customer service that seems to accompany their business practices.

If you don't pay them they usually have the right to execute a lien on your house, but again, I am not an expert on that process, but another thing (liens) that could use some regulation upgrades if one asked me.


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## Mukhang pera (Feb 26, 2016)

OptsyEagle said:


> I am guessing he has already signed the purchase agreement, that inside of it, had the agreement to rent the tank.


Yes, I suppose you are right and this is an attempt to close the barn door after the horse has bolted. The OP would have been advised to pay more heed to what he was signing.

Assuming the OP has now signed a contract which stipulates: "Purchaser to execute agreement with designated supplier" I would say all is not lost. I cannot see a court enforcing an agreement to agree with some unknown third party.

When I refer to an "agreement to agree", this is a term of art in Canadian law. For a contract to be enforceable, there must be certainty as to the parties' identity. I am not persuaded that "designated supplier" meets that requirement. Next, there must be certainty as to the terms of the contract. For a water heater rental it would, at minimum, require amount of monthly (or weekly, or whatever) payments to be set out, the term (duration) of the contract, a complete description of the item(s) to be rented, and some description of the parties' respective obligations (such as any obligation to repair and details as to that). The law is such that a vaguely-worded "agreement to agree" is no contract at all.

The only way I can see the builder here succeeding in sticking the purchaser with a rental contract in favour of a third party is by making that party a party to the contract. I am not even sure that if that third party does not join in an execute the contract, that it would be sufficient to annex the rental contract to the house purchase contract, with the latter stipulating "The purchaser hereby agrees to execute a contract with Ripoff Rentals Ltd. in the form hereto annexed." 

As suggested above, I see the main stumbling block here for the scummy builder and water heater owner as being the doctrine of privity of contract. For a description see:

Toyota Canada Inc. v. Lipetz S.C., Scarth J., Vancouver A972413, October 01, 1998 , 16pp., where, at para. 30 the court observed:

The doctrine of privity of contract...(b)roadly
speaking...stands for the proposition that a contract
cannot, as a general rule, confer rights or impose
obligations arising under it on any person except the
parties to it...

http://www.courts.gov.bc.ca/jdb-txt/sc/98/14/s98-1474.txt

Time does not permit me to deliver a full treatise on the law, but let me say that I can find more factors weighing against enforceability of the rental obligation as against the purchaser here than I can see supporting it.


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## OptsyEagle (Nov 29, 2009)

Mukhang pera said:


> Yes, I suppose you are right and this is an attempt to close the barn door after the horse has bolted. The OP would have been advised to pay more heed to what he was signing.
> 
> Assuming the OP has now signed a contract which stipulates: "Purchaser to execute agreement with designated supplier" I would say all is not lost.


Yes, you are probably right, but they will probably weigh on the side that he might not want to go to the trouble of suing. I looked into it once and it is not without serious hassle, although I am sure you understand the process much better then I do.

I am also sure, with the way these rental companies operate, that they have seen the inside of these courts quite frequently so to them, it is just another day at the office. That being said, I also suspect their lawyers would not want to venture inside a court room unless they had the evidence they thought they needed to win. I suspect that sometime before they go to court a settlement would be proposed, but a lot of time and aggravation would most likely happen before that. Again, all conjecture on my part.


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## Mukhang pera (Feb 26, 2016)

I am guessing this is taking place in Ontario. Perhaps the legal issues have been litigated there. I am fairly certain there has been no litigation here in BC on a fact pattern such as that described here.

There, the OP has a few options I can think of (but Ontario law might provide for more):

1. Give in and do the bidding of the builder and water heater owner. I suspect they are related entities. There is either a kickback as suggested above or the builder also owns the rental company.

2. Try to have the contract amended (if signed already) to delete the rental provision.

3. Refuse to sign any rental agreement. Now it gets interesting. Let's say Corrupt Construction Ltd. has in its purchase and sale contract a clause requiring the purchaser to execute a rental contract with Ripoff Rentals Ltd. Purchaser declines. Now what? Can Corrupt sue for damages or specific performance of a covenant in favour of Ripoff? The doctrine of privity of contract would suggest not. Can Corrupt sue in its own right? Again, privity poses a problem. Corrupt is not a party to the contract sought to be enforced. 

There also remains the other issues to which I have made mention, concerning certainty. The purchase contract simply says that the purchaser will sign a contract in favour of Ripoff (if, indeed, Ripoff is even identified except in its own rental agreement). The clause quoted by the OP simply says the purchaser will execute an agreement with Ripoff. So, does that mean _any_ agreement, regardless of how onerous? Presumably, the OP can be required to sign an agreement committing him to pay $1,000 a month for 25 years. Will the court enforce that? If not, does it become a case where the court will impose on the parties a contract it will write for the parties? Courts always say it's not the task of the court to write a contract where the parties have failed to come up with their own enforceable contract.

Were I in the OP's shoes at this juncture, I think I'd choose Door #3. Dig in my heels and force them to sue. In addition to the identified frailties I see in the position of the putative plaintiff(s), there is also a prospect of a court finding the whole debacle to be an unconscionable transaction.


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## OptsyEagle (Nov 29, 2009)

The problem I see is that I doubt the rental company will sue. They will issue a lien on his house and at the same time send the debt to a collection agency. At that time the only way the OP can get the collectors off his back will be to sue. As I said before, that suing is a real pain in the neck. It sounds simple in principle but a little onerous, in my opinion, in practice.

I looked into once. * I actually successfully got out of hot water heater rental contract,* but my experience was significantly different then the OP. In my case I was selling a condo. My condo management company was forcing us to change the water heater every 10 years and mine was up. So, being cheap, I decided to get a rental instead of buying and installing my own. That turned out not to be the cheaper option but was mostly due to very bad luck on my part.

I will give the story, just so that others who think they only get the bad luck can know they have company.

It was an electric heater and the cost was about $17 per month. Company comes over, installs a brand new tank, turns it on, all good, clean hot water. It should have been that simple. I was not living in this condo that I was selling (it was empty) and about a week later I noticed a rusty coloured water that would shoot out when one first turned on the water and then would clear up. Unfortuneatly the rust colour was very noticeable and was not going to help me sell my condo. So I called the rental company and they sent over a technician. The technician tried to flush out the water inside it, thinking that some sediment got dislodged during installation and hopefully it would clear up. It didn't. Again, only rust when first used after it sat for about 5 hours or more.

Upon my reply that the problem still existed the rental company decided to install a whole brand new tank. That was done and guess what. The next day, hello rusty coloured water. At this time I am thinking it is my condo water and not the tank. What are the odds that two brand new hot water tanks would produce rusty water. So I spent the better part of a month, isolating the source, and guess what? Yes indeed they did install two defective brand new hot water tanks. Now the problem I had was getting them to admit it. I sympathized with them, not being there, that it must be my problem and not there's but it was there tank. If it was a tank I bought at home depot it would have been dripping rusty water in their returns line in 1 hour after I first noticed the problem, but I had this darn rental company in my way.

I had documented and video taped everything. I videod the rusty water coming directly out of the T&P valve. I showed how the water came into my condo from a wall and within 3 feet went into the tank and also teed off to the cold water. I videod the cold water running crystal clear. I noted the names of every technician that came to see it and them saying, like me, the rust must be getting generated from the tank

I then went back to the rental company and demanded a new tank but of a different model and manufacturer. They reluctantly agreed but then did absolutely nothing but stall and waste time. I think they thought I would get frustrated and write them a cheque for $1,700 to get out of the contract. They really did not know me at all. Anyway, I sold my condo and had to do something before closing, since the rental company was stalling and basically not returning my calls or emails. So I had no choice but to remove the tank myself and I reinstalled a new one I bought from Home Depot and guess what. Nice clean running hot water everytime. You would think it was rocket science but as we all know it is not.

So now I need to get rid of the rental company. That was when I looked into suing them. That was going to be a hassle. I think you need to send them an official complaint first and give them time to respond. 3 days or something, I can`t remember. So I wrote about 7 or 8 pages of everything that happened. Who I talked to, when I talked to them, down to the day and hour. There names and titles. I identified their poor service by chronolgically noting how many emails and phone calls that I sent that they did not think worthy of a reply. Who and when they were sent to. I sent pictures and videos of the water from the bad tanks and of course a video of the clean running water from the new tank I was forced to install because of their breach of contract. Lastly I told them that if I did not get out of the contract not only would I sue them but I added that due to their breach of contract, I would add about another $1,000 of additional costs incurred, all itemized, plus of course, court costs. I specifically said that if they did not agree to terminate my contract within the allotted days that I would not only be suing them but I would NEVER settle out court for anything less then my full costs. I reminded them that I had no other reason to get out of my contract then their breach. It cost me more money to get out of the contract then it would have if they had of provided me with clean water and we kept the contract, since my condo buyer would have been paying the ongoing monthly cost. A judge could not possibly miss that point. I did everything I could to make that contract work and they did very little and they are supposed to be the professionals.

When I contacted the company again, I could tell the girl I first talked to thought I was just another customer who did not want to pay a monthly amount and wanted out of the contract. She deals with those everyday and attempted to present her official script. I cut her off and gave her the readers digest version and she put me on hold for about 20 minutes. When she came back she said they were going to terminate my contract and that was that. I am guessing she either talked to the resolutions manager or their legal department and I am guessing they decided better to do the right thing then to see me in court...and they were right.

Anyway, that is my experience with hot water tank rentals. Considerably different then the OP. He is the guy that the last girl I talked to deals with everyday and I suspect she is quite good at it and any deficiency she has, there is probably a lawyer willing to take over. But I can`t be sure.


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## Mukhang pera (Feb 26, 2016)

Interesting story, OE. Thanks for sharing. I expect it will be of value to some here.

I agree with you that the rental company is unlikely to sue. Two reasons: (i) it costs money; (ii) good chance the company will lose.

I cannot say about Ontario, but putting a lien on the house is no small trick in BC. Short of having a judgment from the court, the only way here that might be open is under the Builders’ Lien Act. I think they call it the Construction Lien Act in Ontario. I cribbed this material from the website of a firm with offices in Ontario:

https://mcmillan.ca/The-Construction-Lien-Act--Understanding-the-Basic-Rights-and-Obligations 

_The lien must be preserved by the claimant's registration of a claim for lien within 45 days after the earliest of publication of a certificate of substantial performance of the contract or the date the contract is completed or abandoned in the case of a contractor, or the last supply or certification of completion in the case of a subcontractor. 

The next step that has to be taken to maintain and enforce the lien right is to commence an action to enforce the lien prior to the end of the 45-day period next following the last day on which the lien could have been registered. Therefore, the action must be commenced within ninety days of the last supply of services or materials. If this step is not taken within that time period, the lien will expire and the lien right will be lost._ 

What is set out there is not too much at variance with BC legislation. What that above passage tells me is that the time for filing a lien began to run when the water heater installation was completed. I suspect the house has been built and the water heater is there. The supplier has 90 days to sue. That time has perhaps run already. The persons/entity(ies) then to be sued was the builder who ordered the installation and the registered owner of the property.

If the water heater is not in already, and the plan is for Ripoff to run over and install it real quick once a purchaser is identified, I would simply tell the builder I don’t want a water heater, thank you. 

In BC, if a lien is filed, as in Ontario, it can’t simply be left there indefinitely, as a cloud on the homeowner’s title. There are strict limitation periods and, in BC, the owner can give the lien claimant a 21-day notice. Either the action is commenced or the lien gets struck off after 21 days. As well, there are penalties for wrongful filing.

My feeling here remains that the OP should give serious thought to playing hardball. The CBC article he cited described the situation of the victim thus:

_She's now living with a rental contract with Enercare that lasts for the "useful life" of the appliance (an average of 14 years), paying $56.43 per month for the water heater. She can get out of it if she buys the equipment outright at $3,600 — three times the cost of lower-efficiency models offered in some stores, but less than she'd pay for the same model she currently has in her home.
_
In the OP’s case, apparently he is told he must pay $100/mo. That could end up costing $16,800 over 14 years. I would be slow to agree to that. I’d prefer the fight. 

I am also of the view that neither Ripoff Rentals nor Corrupt Construction will have much appetite for litigation. In the overall scheme of things, there’s not much here to make engaging a lawyer worthwhile. Would it be worth $400 an hour or so to slug this one out? If prosecuted in BC as a builders’ lien action, it would have to be litigated in Supreme Court, even though the matter is within the monetary jurisdiction of the Small Claims Court. Ontario is likely the same - not a small claims matter. I think most lawyers would advise against the cost of Supreme Court litigation unless the amount involved is at least $100,000.


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## Newby1983 (Apr 9, 2015)

I bought a new home in 2009 and was forced to take on a water heater contract...although it was only for $25/myth. Still didn’t like renting. I contacted the rental company several times, each time speaking to someone different. Found someone who finally “forgot” to mention the buyout fee and so I cancelled. When I got the bill in the mail several months later, I called and complained saying they never mentioned the buyout fee. And voila they waived it.


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