A Notice of Security Interest (“NOSI”) is a lien against personal property or equipment that is secured against the title to your home to secure outstanding payments.
Often homeowners will consider purchasing equipment for their home from a company under contract with a payment plan, such as:
- water filtration and/or purification systems
- heating, ventilating, and air-conditioning equipment
- carbon-recapture, carbon-scrubbing, and/or de-carbonizing equipment
- solar electricity panels and other alternative energy equipment
- home security or alarm systems
- built-in pest detection and deterrence equipment
- custom kitchen cabinets
- similar built-in equipment designed for improved home comfort and functionality
What such companies often fail to explain to homeowners is that they will be registering a NOSI on the title to your property to secure their interests. The contract is essentially a rent-to-own contract which requires monthly payments and, in many cases, a cost to buy out the contract.
Most homeowners are not aware of the registration of a NOSI until it is time to sell their property or refinance their mortgage with the bank. Often the language informing the homeowner of the company’s intention to register a NOSI is buried in fine print of the contract and is undetected by the average layperson.
A NOSI prevents a property from being sold or refinanced unless the contract is paid out in full or “postponed”. A sale will require payment of the NOSI, as the potential buyer will not likely agree to purchase the property with a lien on title that does not belong to them. While a refinance transaction may only require a “postponement” of the NOSI – allowing the new mortgage to sit in first priority ahead of the NOSI – the NOSI will remain on title. Some mortgage lenders may agree to this, but others may not, requiring the NOSI to be paid out.
In the end, the NOSI is an extra expense for the homeowner. It can add an extra layer to selling or refinancing and can be very upsetting if the homeowner was not aware that the NOSI existed.
To avoid registration of a NOSI, whenever possible, purchase equipment outright. If a rent-to-own contract is desirable or necessary in your situation, keep in mind the ability of the company to register an interest in your property and ask any questions you feel need to be answered before proceeding.
If you are considering purchasing property, it is important to ask the seller the right questions regarding any rental or financed equipment serving the property, helping to avoid unwanted complications when it comes time to close the deal.
More information? We’re here to help – [email protected]
This WARDS LAWYERS PC publication is for general information only. It is not legal advice, nor is it intended to be. Specific or more information may be necessary before advice could be provided for your particular circumstances.
