Reviewing the Agreement of Purchase and Sale: Rental Items (Including Lease and Lease to Own)

This is another post in our series related to understanding the Ontario OREA version of the Agreement of Purchase and Sale (“APS”). This is Form 100 or 101. Please make sure to review the other posts already completed in this series. 

In Ontario, many residential homes include rental items that are not owned outright by the seller but instead leased from a third-party company. These items must be clearly disclosed in the APS so that everyone knows exactly what is being assumed. The APS contains a dedicated clause where sellers list all rental equipment, they can also include the supplier and the monthly costs here. This ensures transparency and prevents future disputes over who is responsible for the equipment after closing.

Not all equipment visible on the property is an owned item. Some common rental items are: hot water tanks, hot water tankless systems, HVAC units (furnaces, air conditioners, heat pumps), propane or oil tanks, water softeners, and security systems or solar power equipment. Anything that is not owned by the seller should be declared. If a seller fails to list a rental item in the APS the buyer could have an argument they are not obligated to assume that contract, leaving the seller responsible for both the contract and any associated buyout costs.

Some rental contracts have lengthy fixed-term agreements or substantial buyout fees, so buyers should carefully review any rental contracts provided by the seller before removing conditions. Understanding the financial and contractual obligations tied to these items is vital for budget planning and long-term homeownership.

Not all rental equipment contracts are assumable though. Sellers should be reviewing any contracts associated with their property carefully and, if needed, contact the rental company to confirm what options they have now that the property has been sold.

Some contracts require formal signed assumption agreements before the assumption can be finalized. If this is the case, sellers should be bringing this up to either their real estate agent or lawyer to ensure the correct documents are obtained and signed by the Buyers prior to the closing date.

In summary, the rental item clause in an Ontario APS requires careful attention from both buyers and sellers. Clear disclosure, review of rental agreements, and informed negotiation can prevent problems while ensuring each party understands their obligations. Whether you’re buying or selling, taking the time to confirm which items are owned versus rented—and documenting them properly—can save significant money and avoid misunderstandings long after the deal closes.

The content on this post is for information purposes only and is not legal advice, which cannot be given without knowing the facts of a specific situation. You should never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. The use of the website does not establish a solicitor and client relationship.