Home » Blog » A Few Words About Hot Water Tank Rentals

A Few Words About Hot Water Tank Rentals

Follow us! twitterrssinstagramby feather

A Rant After Paying My Monthly Bill & Hot Water Tank Rentals

So a head’s up that I’m writing this a bit hot under the collar; just need to get this off my chest.  That is one of the wonderful things about blogging – it can be just as therapeutic to the writer as it is helpful to the reader.  So, that being said – here is a bit of a rant.

In December of 2012 Sarah and I moved into our new home.  It was a magical time with a ton of paperwork on closing and several delays before that.  If you have bought a home (new or resale) you know the house often includes a hot water tank rental.  The term hot water tank rental can be quite deceiving though.  The practices of the “service supplier” can be shady at best.  I’m not going to talk about the company by name but feel free to DM on Twitter or email me if you are curious.

The Deal

As I said, we moved into our house in 2012.  The builder had a deal with a certain supplier to provide the tank and installation.  This agreement was in exchange for making a rental contract with them a condition of the sale.  The actual details of that contract were not provided.  I’m not sure if that is the fault of the builder or the supplier but quite simply…not cool!.  What we had entered into was one of the worst contracts I have ever laid eyes on.  Here are the details.

Snippets from the Terms and Conditions

  1. The contract is a minimum of 7 years. If you want to cancel any time within the 7 years you have to pay to have the equipment removed.  Moreover you have to pay the full value of the equipment plus the original installation.  That is somewhere in the range of $3,000-$4,000.  Then you’d need to buy a new unit and pay for installation (unless you are super handy).  The cost of a comparable unit to the one we have is about $900. Let’s call it $600 for installation.  So to “get out” of this horrible deal before the 7 years would cost around $5,500.
  2. After the 7 years, all you’d need to pay is the fee to remove and return the equipment (plus the cost of a new unit and installation as noted above). So now the total cost is around $3,000 to be free of their tyranny.
  3. During the contract, they automatically increase the monthly cost by 3.5% every year and reserve the right to increase any of their fees at any time without voiding the original contract. We started off paying about $31/month.  By the end of 7 years we’d be up to around $38.50/month.  Our total cost at the expiration of the contract would be just shy of $3,000.00.  At that point, if we didn’t want to pony up the $3,000 the rates would just continue to go up and up with no cap or end.  Even if the unit stops working, you’d still have to pay for removal and for a new unit.
  4. If you want to play tough and say, I’m not paying you any more so pick up your heater, you will run into TROUBLE. If you don’t pay them they can put a lien on your house.  You definitely don’t want that.
  5. The terms also state that they can register (at our expense) their interest in the tank against us and/or our house and that we waive our legal right to receive a copy of this registration.

There are a number of other clauses that ensure that any issues that come up with the equipment are our fault and not the equipment itself.  That way any warranties on the equipment are essentially meaningless.

So What Are My Options?

With all that said, I still have this horrible rental agreement and a need for the equipment.  The choices are to continue renting, buy out now or buy out after the 7 years.  There is tons of math that went into these options.  Here are 2 charts.

If I wait until the 7 years are up then buy it out, it will take until around 2025 to reach the break-even point.  If I act now, it’ll take until 2027 to break-even (unless they jack their rates on a whim like that have entitled themselves to in the contract).  Between those 2 options, it makes a lot of sense to stick it out until the contract is done, return the unit and buy a new one.

The Straw That Broke the Camel’s Back

After nerding out on doing 2 charts I decided to do one more that ended up really irking me.

 

So if the day after we moved in we had bought out the agreement right away and paid for a new unit we would start benefiting from that decision a year earlier than we will now having to wait until the rental agreement is done.

A Word Of Warning

If you are buying a house (new or resale) make sure you are completely sure what you are signing up for.  If you still proceed, that is completely your decision.  We didn’t have a choice since it was part of the sale agreement for our house.  Even if you do end up being forced into a rental contract – do the math and see if it makes more sense to break the contract immediately if you can.  Coming up with an extra $5,500.00 with all those new house expenses would have been really tough but had I done the math at the time I may have figured out a way to make it work.

Have you had any bad experiences with the hot water tank rental or other utility services?  Misery loves company so please share your stories!

Scott

Like what you read?  Wanna be in the know? Sign up for our weekly newsletter that comes out every Wednesday.  Also when you sign up you get our free communication guide – Talking Money: 3 Tips to Improve Communication.  Click here to subscribe!

 

2 comments

  1. Jena says:

    I have never heard of hot water tank rentals… Every place I’ve owned has just had a hot water tank installed… The whole rental thing seems like a big money grab. Sorry to hear about the crappy contract, but thanks for sharing. It’s good to know what could be a part of a new home, not that I’m planning on moving, but I can share with anyone I come across that might be in that situation.

    • Couple of Sense says:

      You are very lucky to have not had to deal with it, especially as a home owner. You are 100% right though, it is a big money grab.

Leave a Reply

Your email address will not be published. Required fields are marked *