In most Ontario home sales a rented hot water tank stays with the house, and the buyer takes over the rental contract on closing. The other option is for the seller to buy the tank out and clear the balance before the deal closes. Which one happens gets decided in the Agreement of Purchase and Sale, not sorted out afterward.
The standard OREA Agreement of Purchase and Sale has a section set aside for rental items. The seller lists any equipment that is rented rather than owned, and the buyer agrees to assume those contracts. Water heaters turn up there more often than anything else, alongside furnaces, air conditioners and water softeners. Once an item is written into that section the buyer has agreed to take it on, and the supplier transfers the account after closing.
Leaving it out is where trouble starts. A buyer who was never told about the rental expects to own the equipment outright and instead inherits a monthly charge nobody budgeted for. Rental paperwork belongs in the pile of documents you gather before listing.
Rented is not the same as excluded
A water heater bolted into a basement looks like a fixture by every ordinary test, and under the usual rules on chattels and fixtures it would pass to the buyer without anyone thinking about it. The physical unit still belongs to the rental company, though. So the tank stays put and the contract travels with the house.
Buying out the contract
Sellers who would rather hand over equipment free of any agreement can request a buyout quote from the supplier while the sale is pending. The amount depends on how old the unit is and what the contract says. Agreements signed at the door years ago are the ones that surprise people, because the terms run long and the buyout figure can be larger than the tank is worth. Your real estate lawyer settles the payment on closing.
What changed with NOSIs
Rental suppliers used to register a notice of security interest against the property, which showed up in the title search and had to be dealt with before a sale could close. The Homeowner Protection Act, 2024 banned those registrations for consumer goods as of June 6, 2024 and deemed existing ones expired. An old registration can still sit on title, and a lawyer can apply to have it taken off. Expiry does not cancel the rental agreement. Whatever you signed is still owed.
Related reading: Chattels vs Fixtures: What Stays in an Ontario Sale?, What Documents Do You Need to Sell a House in Ontario?, and What Is an Agreement of Purchase and Sale in Ontario?
