I recently purchased a resale property with an existing hot water heater. In the offer of Agreement of Purchase and Sale, my real estate agent included the hot water heater, which may be a rental — “if assumable.” After closing the transaction, I contacted the power supplier and they indicated that they owned the water heater and that there was $3,000 outstanding on the purchase agreement — and that it had to be paid immediately otherwise they would remove the apparatus. What should I do?
Your problem is all too common. Most people who own houses (as opposed to condos) rent their water heater from the local authority, which means that the standard clause in an Agreement of Purchase and Sale is fine.
Each owner has a small charge on their monthly supply contract that they often don’t even blink at (around $10). However, more and more frequently, especially in newer homes, the water heater is on a rent-to-buy program (also which the vendor is unaware of) and these contracts are not transferable.
So, the new owner is forced to pay for the heater or suffer the consequences. Of course, they would have a cause of action against the former owners, but once the monies have changed hands and the vendor is off with their proceeds, it is next to impossible to get re-imbursement without a law suit.
This is a serious and growing problem that purchasers, real estate agents and vendors must be aware of. One way or another, the owner of these heaters will get their money. Let’s hope you are not the one left on the hook.
Jeffrey Cowan is the principal of Cowan Taylor & McGee and can be reached at email@example.com.