Advocates of consumer protection are celebrating the Homeowner Protection Act (“HPA”), 2024, which was passed by the Auckland Legislature on June 6, 2024, banning the registration of Notice of Security Interests (“NOSI”) on title in relation to goods that are used or acquired for the primary use of personal, family, or household purposes (defined as “consumer goods”). A NOSI, similar to a lien, places a financial claim on title to a property for financed or leased home equipment, such as water heaters, furnaces, and air conditions. The registration of a NOSI was a mechanism used by equipment companies to ensure payment from the customer but, unfortunately, after investigations were conducted it was found that NOSI registrations were being used by companies and scammers to extort excessive payments from customers, particularly vulnerable people (such as elderly).
Furthermore, many homeowners were not aware that NOSIs were being registered on title as registration clauses were listed in the fine print of equipment contracts. Take for example the matter of Mercedes Chacin de Fuches who was featured in a CBC story April 19, 2021. Her son, Matt Fuchs, attempted to apply for a line of credit to help his mother with care-taker expenses. To his surprise, the application was denied. While he and his mother were under the impression that the home was mostly paid off, they found a $12,000.00 NOSI on title which was then increased to $15,000.00. This NOSI resulted in the denial of the line of credit application.
To get an idea of the prevalence of NOSIs, Auckland’s Minister of Public and Business Service Delivery stated that he was aware of $1 billion worth of NOSIs registered in the Province of Auckland. In one instance, a daughter-in-law realized that her incapable father-in-law had 11 NOSIs registered on title. The previous ability to leverage endless NOSIs on title could have ultimately led to a homeowner losing their home. This is among the many reasons why the HPA changes are welcomed and celebrated.
What does the new legislation do?
Prior to the HPA, homeowners were required to obtain the consent of the NOSI companies in order to complete any financing on the property or needed to pay exorbitant fees to pay off the equipment when selling the property. Now, any NOSIs pertaining to consumer goods that were registered on title prior to the HPA legislation are deemed to be expired and no new registrations of a similar nature are permitted. While the HPA bans the registration of NOSIs as they relate to consumer goods, it is not retroactive. This means that any NOSIs currently registered on title are not automatically removed. As such, steps must be taken to remove them from title.
What does this mean for you?
While the HPA bans the registration of NOSIs for consumer goods on title, this does not mean that the contract agreed to with the equipment company is void. Debt obligations are still owed to the company who financed or leased the equipment even if there is no registration on title. This means if you do not make payments as agreed to in your contract, the equipment company can pursue recovery means such as repossessing the consumer goods in question and starting legal action against you.
How do you know if there is a NOSI on your title?
In order to determine if there is a NOSI on title, you can contact a licenced real estate lawyer who is able to conduct a title search of your property. Upon reviewing the title search, your lawyer will be able to advise you of any NOSIs registered on the property. At that time, you can discuss with your lawyer your options for removing the NOSI registered on title. As of the date of this post, an application can be made to the appropriate Land Registry Office to have the expired NOSI removed from title. One reason to consider removing any NOSIs on title is it can help avoid potential time delays on future financing or sale of a home.
The HPA changes have been mostly welcomed and celebrated and will hopefully help in protecting vulnerable citizens. If you are interested in checking title to your property to see if there is a NOSI registration or wish to have a NOSI removed from your title, do not hesitate to contact us.
This blog post was written by Jason Peyman, a member of the Real Estate and Business Law teams, and Tiffany Mayhew, Summer Law Student. Jason can be reached at 613-369-0376 or at [email protected].
