Widow alleges Toronto company duped her dying husband into selling their home
Couple was first contacted about getting rid of HVAC contract debt, lawsuit says
Cathrene Coombes hasn't fully mourned her husband's death, because the day after he died she found out she might get kicked out of the only home the couple ever owned.
"This was my dream house," she told CBC News. "We worked really hard for this place. My grandchildren were raised here, my great-grandchildren are raised here … this is my life here."
The 65-year old is suing to regain ownership of the Kitchener, Ont., house from the Toronto company that bought it from her and her husband, Mark Coombes, less than two months before he died in March. In summer 2020, he had been diagnosed with terminal lung cancer, which had spread to his liver, bones and brain.
The lawsuit alleges that Municipal City Housing Corp., Exit It Contract Consulting and two company directors preyed on the couple and duped them into selling their house for under market value by telling them that they would be able to live out their lives at the property for free.
The statement of claim also argues that the defendants took advantage of Mark's "diminished capacity" in the late stages of his illness and of Cathrene's lack of involvement in the couple's finances.
Municipal City Housing and Exit Contract Consulting and the company directors declined to comment for this story, and have yet to file statements of defence in the case. The lawsuit has not been tested in court.
"All I want is my house back," said Cathrene. "And to have these guys stopped because there's other people out there, they're going to get stung like I did."
Cold call about liens
She says the situation started in January when she received a cold call from Exit It Contract Consulting, claiming the company could help get rid of the couple's outstanding debt from HVAC equipment rental contracts. Cathrene says she referred the caller to her husband, who agreed to let the company send someone to their home to talk about its services.
The Coombes had previously entered several door-to-door rental contracts for equipment including a furnace, air conditioner and water softener — the kind of contracts the Ontario government later banned because of the aggressive sales tactics and scams that were typically used to sell them.
For each of their rental contracts, a notice of security interest was registered on the title of the Coombes home for the value of the contract, which ranged from $4,000 to nearly $8,000.
It was those liens and associated contracts that Jeffrey Drutz, a representative of Exit It Contract Consulting, came over to discuss with Mark in late January. Drutz provided a copy of a contract for the company's services and came back to the house soon after with another man named Elliot Kasem, according to the statement of claim.
On Jan. 21, Mark signed a contract with Exit It Contract Consulting with a $13,500 deferred fee for its services assisting the couple in reducing or eliminating the amounts they owed through their HVAC contracts. The same day he also signed an agreement of purchase and sale for their house with Municipal City Housing.
"[Mark] said he wanted me to be debt free — didn't want me to worry about anything," said Cathrene. "He wasn't doing good … at that time [the cancer] was in his brain."
Sold for $191,000
In the sale agreement, the Coombes agreed to sell their semi-detached house for $191,000. A few months later, real estate records show a similar semi-detached house on the same street in Kitchener was listed for $419,000 and sold for $535,000.
Drutz and Kasem are both listed as directors of Municipal City Housing, according to the company's incorporation record.
CBC News requested interviews with Drutz, Kasem and the director of Exit It Contract Consulting, but all three declined to comment because the matter is before the courts.
WATCH | Coombes reflects on what her home means to her:
Ownership of the house was transferred to Municipal City Housing on Feb. 24 and Mark died less than a month later on March 17. The next day, the couple's longtime friend Dee Hughes came by to comfort Cathrene and was told the couple had sold the house.
"Right away I was like, 'What? Mark sold the house? What do you mean? Why would he do that?'" Hughes told CBC News.
Hughes works in real estate and says she quickly asked to see the sales agreement.
"There was no condition stating that she had a life lease," she said. "So I said, 'Cathy, there's a problem here.'"
Hughes has since helped Cathrene connect with a lawyer who in September filed the lawsuit in Ontario Superior Court to try to get a court order transferring ownership of the house back into her name.
"I know what this home means to her, and what it meant to Mark," said Hughes.
"We're going to keep her house, we're going to find a way. This is wrong and it has to be stopped, and so I'm going to bat for her and Mark's memory."
Property records show Municipal City Housing owns four other houses in southern Ontario which had HVAC equipment liens on title under the previous owners.
In at least two of those cases, former owners and their family told CBC News that Exit It Contract Consulting cold-called the owners soliciting the company's services to get rid of those liens and associated contracts before a representative of the company connected them with Municipal City Housing, which then bought their house.
None of those previous owners are disputing the sales in court like Coombes.
Industry depends on property liens, lawyer says
For years Dennis Crawford says he's seen clients pay off $10,000 to $20,000 liens for HVAC rental contracts so they can sell or refinance their house.
The Stratford, Ont., lawyer, who is not involved in the Coombes case, argues that those liens are largely to blame for the continued victimization of vulnerable homeowners.
"This entire ecosystem would not exist if it were not for the fact that the law presently allows these liens to be registered on title to people's homes without the homeowner's permission and without the homeowner being notified," said Crawford.
"If it were not possible to register those liens … that entire industry would disappear overnight."
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Crawford says it's unclear what legitimate commercial interest the liens are protecting.
"The [government] ban on door-to-door selling ultimately wasn't effective," Crawford told CBC News. "They should have made it illegal to register these liens against people's houses."
Cathrene's only valuable asset was her house, so she says she doesn't know what she'll do if she's forced to move.
"I'm hoping to get my house back."
With files from the CBC Reference Library