A Toronto CEO and 12 of his companies are facing a potential class action lawsuit alleging they held their HVAC rental customers’ homeowner titles “hostage” in exchange for “exorbitant” amounts of money, according to a lawyer representing the consumers.

The lawsuit, filed on behalf of Toronto residents Goren Donev and Alga Bonnick, alleges that Crown Crest Capital Management Corp., along with at least 11 other companies run by CEO Lawrence Krimker, all breached Ontario’s Consumer Protection Act by not telling their rental customers that security interests worth thousands of dollars had been taken out against their home titles. The suit also claims that the companies’ sales representatives sold the contracts on a door-to-door basis, a practice banned in Ontario in 2018.

Security interests, which operate similarly to liens, are used as financial collateral by lenders. In this case, they were used to secure the value of the companies’ heating, ventilation, and air conditioning (HVAC) units. They’re a common practice found within the home equipment rental industry, but usually, the interests equal the approximate amount of the equipment.

In this case, the combined amounts leveraged against Donev and Bonnick’s homes exceeded $20,000.

Predatory practices are rampant in the home equipment industry, according to Mohsen Seddigh with Toronto law firm Sotos Class Action, and lenders can stand to benefit from placing costly security interests on titles, as homeowners are often left with little choice but to fork up the sums, he says.

“They may not even be aware of [the interests],” Seddigh told CTV News Toronto. “Usually they only find out when they want to sell their house or get a new mortgage, […] but eventually they have to come begging to get rid of it.”