Roseman: New homeowner has a $980 problem with rented water heater – Business
21 January, 2011 7:43 PM
by Ellen Roseman

Roseman: New homeowner has a $980 problem with rented water heater

January 21, 2011 00:01:00

When Robert Weaver and his wife took ownership of their new home last November, they received a nasty shock.

The previous owner had changed the rental water heater three days before the deal closed, choosing an updated model from Direct Energy.

They decided to have it removed because it didn’t fit their renovation plans. But when they called Direct Energy, they were told to pay a termination fee of $980.

Weaver said he had no information about the rental terms and conditions. But as a precaution, he had checked the company’s website to see if he could run into problems.

“Unlike other water heater rental companies operating in Ontario, as a customer of Direct Energy you are not bound by a fixed-term service contract, not for six months, not for 15 years,” the website said.

“In addition, as a customer of Direct Energy (and once again, unlike other water heater rental companies in Ontario), you are not subject to possible termination fees if for some reason you exit your contract.”

By the time he learned about the termination fee, it was too late. The tank had been drained and disconnected by his heating contractor.

Weaver spent a frustrating six weeks trying to deal with Direct Energy.

In early December, he was told he could drop off the tank himself at no cost. He arranged to borrow a friend’s pickup truck, only to get a call later, saying there had been a mistake.

“I had to call off the favour with my friend, who was already on his way to my house and had rearranged his schedule to help us out,” he says.

He called Direct Energy until he reached a supervisor, who said she’d try to work out an agreement. Two weeks later, she told him nothing had happened but she’d keep trying.

“She continued to say that Direct Energy would not bill me and she’d have the fee for the hot water tank removal waived.”

He never spoke to the supervisor again. At least six times, he was promised a call back from her the next day.

Last Wednesday, he contacted me after another fruitless call. He didn’t like being told to sue the previous homeowner, who was in his 70s and was only trying to help.

Direct Energy dropped the fee within a day.

“The situation was unique, as the previous homeowner changed the tank without consulting with Mr. Weaver after he purchased the house,” says spokeswoman Crystal Jongeward.

“We appreciate the situation this left him in and we’re sorry for the time it took to get this done.”

So, what happened? Why did he have to fight so hard to avoid a fee that wasn’t supposed to exist?

In 2002, Direct Energy signed a consent order with the federal Competition Bureau that protects customers from long-term contracts and exit fees.

The consent order runs out in 2012. But the company asked for relief, saying it faced intense competition from door-to-door rivals using those tactics.

The Competition Bureau said it could usse long-term contracts and exit fees with water heaters installed after Sept. 16, 2010, or in new homes built after Jan. 1 of this year.

Direct Energy has now removed the outdated language that Weaver found. But its new contract refers to “a buy-out schedule located on our website.”

I couldn’t locate the buy-out schedule. So, I’m issuing this warning.

When offering to purchase a home with a rented water heater, ask for a copy of the contract.

Find out if there’s a termination fee to get out early. Then, adjust your offer so that the seller pays the fee.

Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman.


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