Home & Garden

The Great Water Heater Rental Scam

  • Last Updated:
  • Dec 15th, 2017 8:30 pm
Sr. Member
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Aug 22, 2007
727 posts
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Scarborough
I recently bought a house with a 14 yr old HWT rental but it doesn't close until next month. Trying to prepare myself to not get scammed into another contract.

Lets assume the rental agreement ends in early 2018 based on assumption that it's a 15 yr contract.
1) Does that mean I now own the hot water tank or will the company take it back?
2) I'll assume at this point they'll try to convince me to sign up a new water tank rental with them? At this point this is when I deny them.
a) Will they then attempt to take back the old water tank or am I now free to take my sweet time to buy a new water tank?

Thanks!
Penalty Box
Dec 19, 2009
2556 posts
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xdragus wrote:
Nov 20th, 2017 9:58 pm
I recently bought a house with a 14 yr old HWT rental but it doesn't close until next month. Trying to prepare myself to not get scammed into another contract.

Lets assume the rental agreement ends in early 2018 based on assumption that it's a 15 yr contract.
1) Does that mean I now own the hot water tank or will the company take it back?
2) I'll assume at this point they'll try to convince me to sign up a new water tank rental with them? At this point this is when I deny them.
a) Will they then attempt to take back the old water tank or am I now free to take my sweet time to buy a new water tank?

Thanks!
You will assume the terms of the existing contract when you purchase the house if it's listed in the purchase agreement and you have to pay monthly rent to the end of the contract in 2018. If you don't like those terms then talk to the rental agent or don't buy the house ... very simple.
Deal Addict
Oct 13, 2014
1029 posts
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Somewhere, ON
^^^^^ +1

Specifically:

1 - Read the contract, is this a rental or rent to own. You are assuming a rent to own in your question.

2 - You will assume correctly.

3 - They will continue to charge you rent at the existing rate, until such time as you tell them to pick up their tank. Buy first then call for the pickup otherwise you may be without hot water until a new tank is installed.
“When you marry the right woman, you are ‘complete.’ If you marry the wrong woman, you are ‘finished.’ And, if the right one catches you with the wrong one, you are ‘completely finished.'"
Sr. Member
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Aug 22, 2007
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Scarborough
Thanks for the replies. Yes it's listed in my purchase agreement.

Just making sure I don't fall for this scummy money grab for when I try to get a new one.
Deal Addict
Jan 25, 2007
2980 posts
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Paris
pootza wrote:
Nov 21st, 2017 5:03 am
You will assume the terms of the existing contract when you purchase the house if it's listed in the purchase agreement and you have to pay monthly rent to the end of the contract in 2018. If you don't like those terms then talk to the rental agent or don't buy the house ... very simple.
Reliance told me when I bought my house I could have told them to pound salt and come pick up their water heater. The minute I paid them I was agreeing to their terms and conditions (that I had never seen... what kind of bullcrap scam is that??). I am 99% sure on a resale that the water heater contract terms are not forced on you to buy the house but my experience is now 4ish years old.

Having said that, and thinking about it, I don't know who is responsible for fulfilling the contract if its a RENTAL. If its rent to own I would imagine a different set of conversations would need to occur about payouts and so on.
Gbill2004: Thanks but I'll just smell the couch before/if I buy it.

jonnyb: I go in there like PICASSO and toss the glue everywhere, I don't care what house I'm on.
Penalty Box
Dec 19, 2009
2556 posts
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Jerico wrote:
Nov 21st, 2017 3:17 pm
Reliance told me when I bought my house I could have told them to pound salt and come pick up their water heater. The minute I paid them I was agreeing to their terms and conditions (that I had never seen... what kind of bullcrap scam is that??). I am 99% sure on a resale that the water heater contract terms are not forced on you to buy the house but my experience is now 4ish years old.

Having said that, and thinking about it, I don't know who is responsible for fulfilling the contract if its a RENTAL. If its rent to own I would imagine a different set of conversations would need to occur about payouts and so on.
I'm just a little confused on what these scumbag lawyers job is. Don't they run a search to see if there's anything owing on the house? It's pretty obvious when it's in the purchase agreement so shouldn't they be able to obtain the rental contract for you to review and find out what's owing ... or is that above their competence?
Deal Addict
Jan 25, 2007
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Paris
pootza wrote:
Nov 21st, 2017 5:38 pm
I'm just a little confused on what these scumbag lawyers job is. Don't they run a search to see if there's anything owing on the house? It's pretty obvious when it's in the purchase agreement so shouldn't they be able to obtain the rental contract for you to review and find out what's owing ... or is that above their competence?
RELIANCE couldn't provide me the terms and conditions in force when I "rented" the water heater. How do you expect some poor lawyer to get them?
Gbill2004: Thanks but I'll just smell the couch before/if I buy it.

jonnyb: I go in there like PICASSO and toss the glue everywhere, I don't care what house I'm on.
Penalty Box
Dec 19, 2009
2556 posts
922 upvotes
Jerico wrote:
Nov 21st, 2017 7:16 pm
RELIANCE couldn't provide me the terms and conditions in force when I "rented" the water heater. How do you expect some poor lawyer to get them?
Lawyers have a way of getting things ... and your trying to tell us you actually believed what Reliance told you .. lol. You must be the only one on RFD that believes anything that Reliance says.
[OP]
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Jan 2, 2012
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KINGSTON,ON
pootza wrote:
Nov 21st, 2017 5:38 pm
I'm just a little confused on what these scumbag lawyers job is. Don't they run a search to see if there's anything owing on the house? It's pretty obvious when it's in the purchase agreement so shouldn't they be able to obtain the rental contract for you to review and find out what's owing ... or is that above their competence?
I think that rental HWTs are so commonplace in Ontario that many lawyers just assume that the buyer is either aware of them, or has assumed that the real estate agent has informed the buyer about it. I'm not trying defend lawyers here, but from a legal standpoint, there are more pressing issues.
If you think about it, the agent makes 10 times what the closing lawyer would get. I'd like to think that a competent RE agent would point the presence of a rental tank, but since they are sales people, they wouldn't want to torpedo the deal in such a way.

Further to to your comment, real estate lawyers aren't necessarily scumbags. Firms like Diamond and Diamond ambulance chasing firms are scumbags.
Penalty Box
Dec 19, 2009
2556 posts
922 upvotes
MrFrugal1 wrote:
Nov 21st, 2017 9:34 pm
Further to to your comment, real estate lawyers aren't necessarily scumbags. Firms like Diamond and Diamond ambulance chasing firms are scumbags.
That's why Canada is such a great nation ... because we all get to have our own opinions.
Deal Addict
Jan 25, 2007
2980 posts
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Paris
pootza wrote:
Nov 21st, 2017 8:11 pm
Lawyers have a way of getting things ... and your trying to tell us you actually believed what Reliance told you .. lol. You must be the only one on RFD that believes anything that Reliance says.
Since they couldn't provide me with terms and conditions they took their water heater back. One would assume that they would have fought to force me to keep it?
Gbill2004: Thanks but I'll just smell the couch before/if I buy it.

jonnyb: I go in there like PICASSO and toss the glue everywhere, I don't care what house I'm on.
Newbie
Oct 23, 2017
59 posts
14 upvotes
Burlington ON
MrFrugal1 wrote:
Jan 3rd, 2012 3:19 pm
Hi Everyone!

I love this site! I've bagged some amazing deals over the years as a result.

This post is meant to be sort of an "info post", in hopes that others will stumble upon it and realise they've been hoodwinked by the Great Water Heater Rental Scam.

I live in Ontario, Canada, and the water heater rental business is, to say the least, brisk here. According to Reliance Home Comfort, 1.2 million homeowners rent water heaters here. And that's only their part of the pie, Wow. What a cash cow. You know its got to be a huge money maker when organisations like The Ontario Teachers Pension Fund get involved.

I'm not sure how the rental business evolved here. Other parts of the country seem to be less affected by this blatant money grab. One theory is, local utilities, in an attempt at conservation, (natural gas vs. electric), offered rental units to homeowners as a way to conserve, and offset the cost of a new install by offering a rental program. Many of them had a pay-to-own option. Another theory is that new home builders could drop their price slightly by including a rental w/h unit in their homes.
Then, at some point, a bean counter realised this was a huge profit centre. Thus the scam began.

Let's do the numbers. Even a poorly maintained W/H will last 8-12 years. For example, a new power vent water heater costs about $900. The current rental rate from Reliance, one of the many companies offering rentals, is $25 per month, as of January 2012. Do the math. Where else, in this economy, can you double your investment in six years.

Some background on my situation: We moved into our house 4 1/2 years ago, and, at the time, had a number of large expenses, and typically, didn't want to shell out for a water heater.
After reading about some companies allowing customers a buy out option, I contacted Reliance and was told that the buy out would be $800. I almost choked. "$800 for a six year old tank?" "Well", the man said, "It's a heavy duty tank, you know. We can't just rent out ordinary tanks. These are special." I asked if he thought I fell off a turnip truck the previous night, and told him I'd get back to him on the details in regards to the removal process.
Weeks turned into months, and I ignored that bloody rental water heater, that money vacuum in my basement, as much as I could. A home mortgage is one thing, but getting it in the ear for a friggin' home appliance was another. I'm not renting my stove, my dish washer, nor my fridge...Grrr...

Finally, it was Reliance's rate increase, starting January 2012, that broke the camel's back.


GO BUY A NEW WATER HEATER, THEN LOOK AFTER IT. Don't get shafted by these rental companies, and definitely DO NOT sign a long term rental contract.

I have talked to many people this past while, who have rental units. There seem to be many misconceptions about water heaters. For example:

i) They are VERY expensive to buy.
Uh.,.what? Most cost less than that plasma TV you recently purchased. And probably will last longer too, if you maintain it. Now, a new hot water heater isn't nearly as sexy as a new 55" TV, but I guarantee, after five days of abstinence from both, and a choice was offered between the two, priorities would become crystal clear.... I digress.
ii) They are expensive to service, and the Rental Company pays for the service.
Again,..Uh, duh, what ? No, YOU are paying for the service. You just don't want to acknowledge it. Think about it. Even if you hired a plumber annually for $80 to inspect the water heater you own, you'd still be coming out ahead.
iii) The Rental Company will insure against damages caused by their tank leaking.
Are you kidding?? They cover nothing aside from keeping the tank limping along. You had better make sure your insurance policy is updated and includes water damage.

As a final note, my 'Reliance Notice Of Rate Increase' states some lovely double-speak gems such as:

"Free replacement should it be un-repairable as a result of normal use"
Really? You mean it if it pisses water all over my possessions and causes thousands of dollars in damages because you don't maintain your water heaters in any way, shape, or form, you are still willing to give me a new water heater? How charitable.

"Guaranteed service - our large network of qualified, licensed technicians provided gauranteed support."
Now that's a doubly-duty gaurantee, if I ever read one. Whatever it means.

"All repair, parts, and labour, as a result of normal use, are included through the life of the equipment".
Once more, uh, duh... It's a rental, NOT a lease. It's their equipment. If you rent a house, do you need to pay to have it re-shingled?

As a final insult, the Reliance letter states that "1.2 million homeowners...trust us...and why we've saved our customers over $80 million on water heater repairs last year alone."

Holy Crap! $80 million dollars! It costs $80 million dollars to repair a water heater??
I want to save $80 million dollars! I want to rent one now! I'm going to save enough for me, my wife, and my child's retirement just by renting from your company!

Not.

I just called Reliance Home Comfort, the company which has been renting me the water heater. It turns out that they have a $40 contract cancellation fee, and want me pay and additional $65 to pick up their tank unless I drop it off at their depot. I got a bit angry, and told the CSR that they could pick it up, or i'd call a scrap guy to take it away. She said I'd be charged $730, the "buy out price" for the tank if I did that. I told her, "It's a 2004 model, how in the hell is it worth that much? I can go buy a new one for $900", to which she replied the same old "These are Special Heavy Duty models, build just for Reliance"
Ya right.
So now I need to somehow get that friggin' tank back to them in my Ford Focus. I told the CSR that Reliance Home Comfort just bought $105 of serious bad publicity.

This is just another reason to NEVER rent a water heater. You will pay to the bitter end, and then pay some more.
Hmm. Last year when my Reliance water heater started to have erratic temperatures and appeared to be about 15 years old, I looked into my options. I decided to rent a new one from them (passive direct vent gas with 40 gals capacity). The rate is now $44.01 for 3 months, less than $15 per month. If it cost me $1200 before tax to have my own unit installed, the payback would be about 7 years! And that assumes trouble free operation. (Last winter I had to replace a $27 part on my furnace which ended up costing over $300 when it had to be done on a holiday weekend).

I don't even know if I'll be here another 7 years, so renting in this situation this was kind of a no-brainer for me.
[OP]
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Jan 2, 2012
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Dealmaker1945 wrote:
Nov 22nd, 2017 4:35 pm
Hmm. Last year when my Reliance water heater started to have erratic temperatures and appeared to be about 15 years old, I looked into my options. I decided to rent a new one from them (passive direct vent gas with 40 gals capacity). The rate is now $44.01 for 3 months, less than $15 per month. If it cost me $1200 before tax to have my own unit installed, the payback would be about 7 years! And that assumes trouble free operation. (Last winter I had to replace a $27 part on my furnace which ended up costing over $300 when it had to be done on a holiday weekend).

I don't even know if I'll be here another 7 years, so renting in this situation this was kind of a no-brainer for me.
Not sure what you mean by "passive direct vent". Your HWT will either be atmospheric venting, meaning through a chimney; or direct vent, meaning a powered exhaust fan.
If you've bothered to read through some of the 115 pages in this thread I'm sure you will find some dissenters, but the majority of people have weighed their options, done the math, and realised renting a HWT is a bad financial choice. There is a reason why there are 115 pages in this thread....

I'm not going to tell you HWT's are trouble free, but Reliance, et al, are in the HWT rental business because it's very profitable. Your (estimated) 15 year old HWT probably generated a three to four fold return for them, over it's lifespan.

The "I don't know whether I'll be in this place", argument has been brought up before, (in amongst the 115 pages of this thread, should you care to read through), and all I can say on that is, seven years goes by in a flash.

Also, while real estate values continue to be insanely high, at some point there will be a correction. If you end up on the wrong end in a buyers' market with an encumbrance such as a rented HWT, it could be one more strike against selling your property.

It's you money, do with it as you wish.
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Apr 20, 2011
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ON
MrFrugal1 wrote:
Nov 22nd, 2017 5:23 pm
Not sure what you mean by "passive direct vent". Your HWT will either be atmospheric venting, meaning through a chimney; or direct vent, meaning a powered exhaust fan.
There are two components to current water heaters.
1) vent style - chimney (up) or direct vent (side wall)
and
2) vent method - draft ("Passive" mentioned earlier) or power vent (electric fan motor induces the draft)

All chimney models are draft/passive, most direct models are likely power, but not necessarily all. They exist in both styles.
Draft/passive models use more gas, but don't require electricity. They also need to be right next to the wall if direct vent.

Power vent models are more efficient because they can shut completely off and can be further from the wall as the fan maintains the pressure required to expel exhaust. But they require electricity, are louder, and may require more service with more moving parts.
[OP]
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aqnd wrote:
Nov 22nd, 2017 6:35 pm
There are two components to current water heaters.
1) vent style - chimney (up) or direct vent (side wall)
and
2) vent method - draft ("Passive" mentioned earlier) or power vent (electric fan motor induces the draft)

All chimney models are draft/passive, most direct models are likely power, but not necessarily all. They exist in both styles.
Draft/passive models use more gas, but don't require electricity. They also need to be right next to the wall if direct vent.

Power vent models are more efficient because they can shut completely off and can be further from the wall as the fan maintains the pressure required to expel exhaust. But they require electricity, are louder, and may require more service with more moving parts.
Thanks for the further clarification of what I already stated. I know the difference, but the poster was obviously confused by the type of tank venting he/ she has. That's why I asked.
Not that it matters. Renting a hot water tank, regardless of its venting method, is just stupid.

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