What does NOSi mean?
A Notice of Security Interest (NOSI) is a notice that may be registered on the Land Registry by a business when it rents, finances or leases certain goods or equipment installed on a property – such as a water heater, furnace or HVAC unit.
What is a NOSI’s purpose? Originally, it was meant to protect providers of in-home appliances, such as heaters and air conditioning units, from customers who fell behind on payments.
These units, which become a part of the home, can be registered on the title of the property if they are not purchased outright (for example, in leasing or rent-to-own situations).
The original intention of a NOSI was to ensure that the suppliers of these units would be paid for the product that they were leasing or selling.
NOSIs in Ontario: positive news for homeowners
On June 5, 2024, the Ontario government passed Bill 200, the Homeowner Protection Act, 2024. This crucial legislation will protect retirees and other homeowners from NOSI scams in the province, because it has effectively banned new NOSIs in respect of consumer goods from being registered and has deemed existing NOSIs to be expired, with immediate effect (they will all be removed from the land registry).
The goal of this new law is to prevent NOSIs from being used to scam unsuspecting homeowners out of thousands of dollars. While this only applies to Ontario at the moment, the hope is that other provinces will follow suit.
Banning consumer Notices of Security Interest registrations
The ministry has seen an increase in the number of consumers impacted by having these registrations on title, which is often discovered when they try to sell their home or access additional financing. Since the early 2000s, the number of NOSIs registered on the Land Registry has risen from approximately 2,000 registrations per year to more than 58,000 registrations in 2023. There are approximately 350,000 consumer and commercial NOSIs registered on the electronic Land Registry in Ontario.
In cases where the business misuses the registrations, consumers are often pressured to negotiate a buyout of the contract for the equipment and services in its entirety – which can result in exorbitant payouts.
NOSI vs lien
A notice of security interest is similar to a lien in that it’s registered against the title of the property. However, it doesn’t allow the holder to receive money from the sale of the property to pay off the debt, which is the case with a lien.
Instead, a notice of security interest is simply a notice to interested buyers of the property (or financial institutions), informing them that the home has this security tied to it. It’s often only when they try to sell their property (or refinance it) that the victims of NOSI scams become aware that there is a NOSI attached to their home.
The new homebuyer or financial institution providing the refinance will typically insist that the notice of security interest is discharged (paid off) before going through with the purchase or refinance.
How NOSI scams work
NOSI scam artists use a notice of security interest to force their victims to pay outrageous sums of money for their HVAC, air conditioning or other fixtures.
Who are NOSI scammer’s preferred victims?
NOSI scammers typically target people whom they feel they can easily confuse and trick into signing documents they don’t understand, usually for products they don’t need.
For this reason, they often target low-income, vulnerable older adults, new Canadians whose grasp of English is not so good and people who have cognitive difficulties. These scammers often return many times to get the victim to sign up for more products that result in NOSIs.
In some instances, these NOSI scams go even further; the scam artist will trick the homeowner into taking out a mortgage to pay off all of the outstanding NOSI debt (which can often be for hundreds of thousands of dollars), charging interest rates as high as 25 per cent. Sometimes, the homeowners default on the mortgage and are forced to sell their home to pay off the debt.
How do I know if I have a NOSI on my home?
Unfortunately, most people only find out about the NOSI when they try to sell their home or refinance it. The only other way to find out is to pay a property lawyer to carry out a search on the title of the property to find out if there is a NOSI attached to it.
What is a NOSI scammer’s typical approach?
NOSI scammers usually turn up at their victims’ homes uninvited, posing as legitimate appliance company representatives. They often offer deals that don’t exist (such as rebates to pay for free renovations) to persuade their victims to sign up. Once the victim signs up for one appliance, the scammers will often return to try and get them to sign up for more, each time applying a new NOSI to their property.
How to identify NOSI scams
NOSI scammers typically approach their victims with unsolicited offers of home improvements or appliances. They use extremely high-pressure tactics to get their victims to sign up and have extremely complex contracts that have the details of the NOSI buried in the fine print.
There are several steps you can take to avoid becoming the victim of a NOSI scam:
Don’t answer the door to anyone you weren’t expecting.
Never sign a contract with someone who appears at your door without an appointment.
If you do need an appliance or renovation work, only use a company recommended to you or one that has good ratings with the Better Business Bureau.
Don’t sign any contracts without consulting a trusted friend, family member or lawyer.
If you feel that you were pressured into signing a contract, you have 10 days to cancel it for no reason.
How to report NOSI scams
If you think you may have become a victim of a NOSI scam, or know someone who has, you should contact your local police department and report it to them. You can also report it to the Canadian Anti-Fraud Centre via its website, or call the organization directly at 1-888-495-8501.