Don't EVER rent a hot water heater

[Argus]

I've complained before about other industries, where fraud seems to be endemic and the police show little or no interest in even investigating, much less punishing thievery. The auto repair business is high among the industries involved, as are contractors for home repairs. The police like to take the position that anything you do with such people which dissatisfies you is a civil matter. It's not. Fraud is fraud. When someone tells you you need a new part, and then pretends to replace your existing part, and charges you for it. That's fraud. When someone promises to fix your house and doesn't, nor had any intention to, that's fraud.

In Ontario, as I understand it, being new to this subject, a large percentage of complaints to the Ontario Consumer Protection agency is due to hot water heater rentals.

I've recently become trapped in a hot water rental contract and people should learn and beware. I never signed a contract with Direct Energy, but I was aware that the tankless hot water in my new house was a rental. When you're buying a house and selling another, such things can seem like minutia. I hadn't heard much of anything about tankless hot water heaters, but hey, how much could the rent be? And if i didn't like it, I'd just get rid of it and buy one. My fault. I admit. I should have paid more attention.

The first clue you have to the unethical behaviour is when you go on Direct Energy's web site and look up the contract. The first page, which is filled with boxes for people to input information, is in black. The second page, which has the actual terms of the contract, is in gray, and smaller print. That ought to be a big flashing warning light for anyone. Ethical companies don't do this sort of cheapass stuff.

Anyway, it seems that Urbandale, the people who built the house (home builders themselves are generally unethical) put in these tankless hot water heaters for no other reason than they get them for free. Once you buy the house, however, you're locked into the contract Urbandale signed -- which appears to be for the life of the device, which in this case is 25 years. Yes, that's right. 25 years!

Just got my first bill, and it's for $40 a month. Over the life of this water heater I'd pay over $12,000 in rent. That's three times as much as renting a regular hot water tank, just to begin with. But if you go on line, which i did, you can find the same hot water tank for sale for $1500. Or you can buy a regular hot water tank for half that. As for getting out of the contract, I can do a buyout -- for $4,000. I find it absurd that Ontario allows this kind of thing, a 25 year contract with ridiculous buyout fees. It's like we don't care at all about the unethical behaviour of businesses. I'm still exploring other means of getting out of this ridiculous contract.

And by the way, tankless hot water tanks suck. Don't believe the salespeople. They save very little, if any energy, and waste a ton of water since you'll be running the water a lot waiting for it to warm up.

Edited May 16, 2015 by Argus

[Topaz]

Was't the tank listed as a rental on the real estate listing? I just read a couple weeks ago about the tankless wasn't as good as they say it is. I believe a normal gas-fired hot water tank last about 7 years before the bottom leaks but 2003, we bought a new one for the house when we moved in that year and its still going,( touch wood).

[Argus]

Was't the tank listed as a rental on the real estate listing? I just read a couple weeks ago about the tankless wasn't as good as they say it is. I believe a normal gas-fired hot water tank last about 7 years before the bottom leaks but 2003, we bought a new one for the house when we moved in that year and its still going,( touch wood).

It was listed. I admit I didn't pay a lot of attention. It was.. minutia, given the massive amount of paperwork involved and the money involved, and I should have paid more attention. I just found out about this today, and have no contract to refer to, and of course, everyone is closed. I'll be calling them on Tuesday to find out what options aren't in what I could find on-line.

You can get a normal gas-fired hot water tank for a thousand bucks that will last you 12 years with no maintenance and probably no problems. More to the point, since this thing takes almost sixty seconds to warm the water, you wind up wasting a lot of water. Plus, try doing your laundry in hot water... won't work. It will draw from the hot water pipe and get cold water for a full minute. You can run the hot water in the kitchen sink ahead of turning on the dishwasher, and that will let you get your first rinse in hot water once the machine kicks in. But the thing about the tankless is once the machine stops drawing that's it. When it starts to draw again it will be cold water.

Edited May 16, 2015 by Argus

[Smallc]

For the record, you can buy a regular electric 40 gallon hot water tank for less than $350.

[kimmy]

When I read the title, I was wondering "why on earth would anybody rent a hot water heater?" but now that I've read the explanation, this sounds like the scammiest scam that ever scammed a scam.

-k

[Argus]

When I read the title, I was wondering "why on earth would anybody rent a hot water heater?" but now that I've read the explanation, this sounds like the scammiest scam that ever scammed a scam.

-k

I actually read a piece on this by someone who lives in Alberta but comments on Ontario. Weird. And he said those out west might be confused because they don't do water heater rentals out there. And to people who wonder why anyone would rent a hot water heater, he said, well, for the most part, almost every new home built in the last fifty years comes equipped with a rented hot water heater. You get sucked into these contracts, and then it's just easier to go along. It makes no economic sense except in the shortest of terms. That is, you can pay a smallish monthly fee instead of a large fee to buy and install one. Short sighted people just go along with it, and the rental doesn't even appear as a separate bill. It's part of your gas bill or electric bill, depending on what kind of heater it is.

One of the big issues here has been aggressive door to door salesmen for the water heater rental companies. They try to convince the homeowner his water heater is on its last legs and he/she will wind up paying a fortune to get a new one installed, or to keep repairing their existing hot water heater, then offer them this monthly rate thing with no install charges. They take your water heater away and immediately 'recycle' it so that if you change your mind when you get the bills it's too late to get it back. Then you're left paying a thousand bucks for a new one or staying with their rental.

Edited May 16, 2015 by Argus

[Argus]

For the record, you can buy a regular electric 40 gallon hot water tank for less than $350.

Well, to begin with, I wouldn't buy electric now given the very high costs of power in Ontario. I didn't see any that didn't look super cheap, at lower prices either. Given installation charges it makes more sense to buy one of the 12 year gas fired tanks which cost $700-$1000, plus install.

[WWWTT]

Beware tankless HW heaters!!!!!!!!!!!!!!!!!!

They're expensive and not very reliable (lots of hot and cold flashing)

Last house I built I went with an electric HW heater that requires a separate 120amp breaker and at least a 200 amp service to the house.

The electric version also has some problems but is still better than the gas version.

Smallc is right. Go with an electric!

40 gallon is a little undersized in my opinion. Go with a 60 gallon.

As far as the rental goes, you're a sucker for going for it!

WWWTT

[Smallc]

Well, to begin with, I wouldn't buy electric now given the very high costs of power in Ontario. I didn't see any that didn't look super cheap, at lower prices either. Given installation charges it makes more sense to buy one of the 12 year gas fired tanks which cost $700-$1000, plus install.

No gas here, so I wouldn't know about that. Electricity is still relatively inexpensive, though I have a stubbornly high bill for some reason.

[Argus]

No gas here, so I wouldn't know about that. Electricity is still relatively inexpensive, though I have a stubbornly high bill for some reason.

Well, this is Ontario, thanks to the Liberal Party soon to be home of the most expensive electricity in North America, and that's without taking into account the new cap and trade scheme the Liberals have just announced.

[Freddy]

Direct Energy is definitely one of those fraudulent companies. They try to sell you natural gas at a fixed rate. That's a other scam they had going.

[bush_cheney2004]

If the water is already hot, why is a "hot water heater" needed at all ? We just call 'em water heaters.

[WWWTT]

If the water is already hot, why is a "hot water heater" needed at all ? We just call 'em water heaters.

Mistake on our part.

Thanks for correcting.

WWWTT

[The_Squid]

That is absolutely bizarre.... I can see how you missed it. That sucks.

I've never heard of renting a hot water heater. The entire concept makes no sense.

[Argus]

That is absolutely bizarre.... I can see how you missed it. That sucks.

I've never heard of renting a hot water heater. The entire concept makes no sense.

I spoke with a friend last night who says he pays less than $10 a month for his water heater. A that rate, I suppose it could make as much sense as renting anything else.

[GostHacked]

Argus, a solution would be to install your own hot water tank and remove the other one. Tell them to come pick up their unit because you are not using it anymore. They cannot deny that simply because you have no business with them, regardless of what deals the developer made. You have no obligation to that whatsoever.

I think I pay about 15/month for mine. But then again I rent my condo unit, so any real costs will come from the homeowner down the road.

[Argus]

Argus, a solution would be to install your own hot water tank and remove the other one. Tell them to come pick up their unit because you are not using it anymore. They cannot deny that simply because you have no business with them, regardless of what deals the developer made. You have no obligation to that whatsoever..

Evidently I do. I've already been on the phone with them, and with Ontario's Consumer Protection ministry. The agreement Urbandale entered into with Direct Energy is binding on me, and is for the life of the unit (25 years). There is no termination clause. The only way to stop paying rent on the unit is to buy it from them at, from what I can garner looking it up on the internet, is more than double the cost of buying one new.

[Bryan]

Forward the bills to Urbandale. They're the ones who signed the contract, not you.

I also have never heard of renting your water heater. That sounds like a scam right from the outset, without even knowing the terms. And a 25 yr contract? Get out of town. Who signs ANY contracts for services to your home? I certainly never have. Being able to change providers if one is not giving you what you need is pretty important.

[Michael Hardner]

Argus, thanks for the warning - I appreciate it. I wish that someone had advised me not to buy a timeshare when I was young and dumb and had money years ago.

[Je suis Omar]

I've complained before about other industries, where fraud seems to be endemic and the police show little or no interest in even investigating, much less punishing thievery. The auto repair business is high among the industries involved, as are contractors for home repairs. The police like to take the position that anything you do with such people which dissatisfies you is a civil matter. It's not. Fraud is fraud. When someone tells you you need a new part, and then pretends to replace your existing part, and charges you for it. That's fraud. When someone promises to fix your house and doesn't, nor had any intention to, that's fraud.

In ...

This brings to mind, "There's a sucker born every minute, ... . "

What have you got against the free enterprise system, Argus?

Edited May 20, 2015 by Je suis Omar

[Argus]

Forward the bills to Urbandale. They're the ones who signed the contract, not you.

It absolutely is a scam, and seemingly unique to Ontario in the way the builders have conspired with the water rental companies to put these things into new homes. It appears to be something that's almost standard now, and even those who catch this in the contract find it very difficult to get builders to not include rental water heaters. One person I read was told by his builder they'd need to change plans and blueprints which would cost him $1200 if he refused to have the rented water heater.

That this is unheard of in other provinces indicates either their builders are much more ethical (unlikely), that the folks behind the water heater rentals couldn't be bothered to move into those provinces (unlikely) or that other provinces have better, more comprehensive laws against scams like this.

I had a maintenance guy from Direct Energy over today. He said the unit was operating as it was supposed to. He also said he wouldn't have one in his home, and that tankless water heaters were a technology that had not yet developed to the point where installing them was either economically or environmentally smart.

So the reason they're being put in by builders isn't because they'll actually save you anything, but because they cost more and their lifespan locks you into a contract for a quarter century.

Edited May 20, 2015 by Argus

[Je suis Omar]

I had a maintenance guy from Direct Energy over today. He said the unit was operating as it was supposed to. He also said he wouldn't have one in his home, and that tankless water heaters were a technology that had not yet developed to the point where installing them was either economically or environmentally smart.

Do you rely on Larry the Cable Guy for all your science questions?

An inline water heater is no different than a tank heater. It is all a matter of science, of sizing capacity to expected demand.

[Mighty AC]

I've recently become trapped in a hot water rental contract and people should learn and beware. I never signed a contract with Direct Energy, but I was aware that the tankless hot water in my new house was a rental. When you're buying a house and selling another, such things can seem like minutia.

I had a similar problem when I recently moved, though I was only tied into a reasonably priced tank based heater. The single line about agreeing to the terms of installed rental equipment is easy to miss in the reams of paper. Plus, my previous newly constructed house came with a rental heater from Reliance that I was able to cancel with a single phone call and no fees, so the rental clause in the my purchase agreement didn't sound very important.

Despite the hard water in my area, purchasing a heater is still far more economical than renting. So after moving in I called National Home Services to cancel the rental agreement and found out the previous owner had signed a 10 year deal. I don't understand why people would buy anything from door to door, high pressure sales people. Anyway, Reliance has recently bought National Home Services so I'm hoping I their usual policy will apply to customers gained in the purchase and I can get out of the rental agreement early.

[Bonam]

Sounds like good business if you can get it. Offer builders an incentive to install your product and have them pass on the lifetime absurdly expensive contract to unsuspecting buyers who are unlikely to notice the footnote on page 1384 of 2120. Bet that generates some good cash flow.

Seems like this is something that any real estate agent worth their salt should be on the lookout for and warning their clients about.

Also, pretty sure that a 25 year contract, that the buyer is unlikely to have been aware of, with no reasonable termination clause, and a demonstrably overpriced buyout option, would not stand up in court. Kinda screams for a lawsuit.

[dre]

Kinda screams for a lawsuit.

Yup! Better call Saul!