New Changes to Notices of Security Interest (NOSI) Explained

By Merovitz Potechin on Thursday July 25, 2024.

The Homeowner Protection Act (the “HPA”) came into effect on June 6, 2024. Lawyers and other real estate professionals have wanted changes to the Personal Property Securities Act (the “PPSA”) for a long time. Now, the updated version finally reflects their requests.

What Is the Change in The Notices of Security Interest (NOSI)?

You can no longer put Notices of Security Interest (NOSI) on a property for consumer goods. This means companies can no longer register a NOSI on your property to secure items like furnaces, ACs, and other household equipment. The change protects homeowners from unexpected claims on their property and ensures the registration of only appropriate security interests.

Why Were NOSIs a Problem for Ontario Homeowners?

The PPSA allows creditors to register a NOSI to protect money or equipment loaned to a property owner. Traditionally, creditors used this for high-value farm or work equipment. It allowed them to recover costs if the property owner faced financial trouble and authorities seized their land. A recent trend in real estate deals shows registering personal consumer goods, like furnaces and Acs, on properties.

Impact of NOSI Changes on Ontario Homebuyers and Homeowners

Often, homeowners would only discover these Notices when they went to sell or refinance their property. A NOSI is not a lien or a mortgage, so the creditor doesn’t need to inform you when they put it on the title.

Creditors don’t need to give notice because a NOSI isn’t powerful enough, like a mortgage or lien, to let them take your house or land. Homebuyers might not know this, and mortgage companies usually want a clear title to protect their own interests.

Removing a NOSI can be time-consuming and expensive for Ontario homeowners. The prepayment terms of your rental, lease, or financing agreement can be predatory regarding early repayment. With the new change this is no longer the case.

If you have personal or household equipment on your land, like an HVAC system, the company can’t place a NOSI on your property to secure the equipment. However, if you have farming or processing equipment, the vendor or lessor can potentially place a NOSI on title to protect their interest in the equipment.

Before this change, anyone could face a surprise NOSI on title for items like furnaces, ACs, water tanks, and more. Now, only those using their land for non-personal purposes are likely to find a NOSI on title.

What Happens to Previously Registered NOSIs?

The new law also covers previously registered NOSIs. It deems all incorrectly registered NOSIs ineffective up to June 6, 2024, and allows their removal from the title. The authorities can reject registrations after that date.

Ontario homeowners can be sure that the consumer goods they buy for their property won’t be registered on title. Where there are registrations on title, a homeowner can now easily, and cost effectively have them removed.

If your lawyer finds a NOSI on a property you want to buy in Ontario, they can quickly check if they can remove it. The homebuyer can remove the NOSI without dealing with the original registering party. This provides more remedies and prevents delays in closing.

How to Remove a Disqualified NOSI from Your Property Title

The Land Registry Office (LRO) has issued instructions on how to request the removal of NOSIs from title.

Please be aware that the comments and guidance in this article are not legal advice. If you know or suspect that you have a NOSI on title, we would be happy to assist. Our experienced real estate group is ready to help you review the title and apply to have the NOSI removed.