A Change In Water Heater Rentals in Regina

In Regina, rented water heaters are a pretty common occurrence. I would say I see them on about a third to a half of purchases that I close in the city on used residential property. There are a few key suppliers of leased water heaters and they will provide the heater and annual maintenance for an annual fee. However, there has been a bit of a shift in the marketplace that agents, buyers and sellers should be aware of.

At least one of the water heater rental companies have updated their processes it appears. They now require that the new owner(s) sign an agreement agreeing to take over the existing contract. If the new owner fails to do so, then the old owner will continue to be responsible under the terms of the deal. If the contract is not taken over, the existing owner will need to terminate the contract prior to possession, and then there is the possibility of some additional charges for early termination.

The term of the agreement, in some cases, has also been extended. It appears linked to the installation of a new water heater in the affected property. They take the cost and installation of the new water heater, include an installation charge and financing charge, and make the term sufficient to pay for that expense. The early termination in those cases can be even more substantial.

This change is not totally unexpected. The casual nature by which these rental businesses operated surprised me. When properties were sold, there was just a basic understanding that the new owners would pick the terms of the contract up. If they did not, then the water heater company appeared to be comfortable with the expectation that they would be able to pick up their equipment. There was no assignment of the lease or new agreement done up. An invoice sent to the new owners, and the arrangement would continue. The agreement was year to year, and with the exception of the rarest of cases, most people would continue to rent without concern.

However, this change creates a shift in expectations for home purchases:

(1) Real estate agents for the vendor should confirm as a term of the purchase agreement that the purchaser is agreeing to take over the rental agreement, and shall complete any necessary assumption agreements required by the rental company and provide confirmation of the same prior to possession.

(2) Vendors should be cautious of any agreement that they are entering into dealing with a rental of these types of fixtures. Long-term deals may not be acceptable to new buyers.

(3) Buyers should be aware of the terms of the transaction as well. Is it a year to year deal? Or something longer term? What is included in that rate? What happens if the unit needs to be replaced? Reach out to the company providing the water heater, and ask those questions.

As always, if you have questions, please reach out. I would be happy to discuss.