Broker: demolish marijuana grow-op houses

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A potential home owner bumped an older MBN discussion to ask about former grow-op homes and one helpful answered her question.

"Unfortunately the "Grow Op" disclosure will always have to be reported when selling which scares many potential buyers, and yes, many lenders simply won't finance an ex grow op, even after full remediation, at least here in BC," one anonymous broker replied to an inquiry. "In my own opinion a fully remediated grow op property should be like any other house: no issues or concerns but the stigma still remains and people/banks have fears of incomplete remediation. Just like a car repaired after an accident."

Brokers across the country are calling for complete disclosure when it comes to former marijuana grow-ops and one industry leader believes any house known to have formerly housed a grow-op should be demolished.

“I think it should be disclosed at the very least but they should be torn down,” Mark Goode of Dominion Lending Centres Mortgage Man told MortgageBrokerNews.ca.

And in the province of Ontario, some townships have been doing just that.

“Some municipalities are tearing the buildings down because they’re worried about the recourse,” Goode said. “If someone in the building gets sick or gets cancer, they’re worried about that.”

Problems arise, however, when it is a rental house being used as a grow-up. Often, the owners aren’t made aware that their tenants are illegally growing marijuana and it is the owners who bear the brunt of any recourse.

“In the future, going forward, Realtors and lawyers are suggesting to those buying rental properties that they make sure the renters put utilities in their name so they aren’t liable for any recourse for hydro if it’s been stolen for a grow-op,” Goode said. “If the utilities are in the homeowner’s name they will be responsible for paying the funds for any stolen hydro.”

For his part, Goode pulled out of a personal deal as soon as he found out the house had formerly been used to grow marijuana. He cited concerns about unknowns pertaining to long-term ramifications.

“I personally looked at a former grow up house, myself and I turned it down,” Goode said. “I found out about it after; I wouldn’t be able to live with myself if my son got sick when I tried to save a little money on a house.”

As for communities that are home to a government sanctioned grow-up, Goode feels that property prices shouldn’t be negatively affected.

“It doesn’t do much damage outside – it dissipates in the air; I don’t think it will devalue property prices in the area.”

Currently, grow-op houses are red flagged in CMHC’s database and “the lender, the broker, the purchaser should all be made aware if it is a former grow-op,” Goode said.

  • Dale Koeller on 2013-08-28 10:09:42 AM

    I am absolutely for full disclosure of houses being formerly used as marijuana grow operations. However one should not throw the baby out with the bathwater: in Alberta busted grow ops are fully documented, and there is a secure process in place to ensure the house is fully remediated and must be proven to be habitable. Housing has to be safe and secure for buyers. Alberta is an example of how the process is done right, and preserves a large part of the value of the house. Not all buyers will be comfortable moving into the house even with an established remediation, so I do believe the remediated house will lose some value. The problem with recommending that these houses be demolished is that this will come at a loss to someone, whether it be the insurer or the lender: our industry should be cautious to recommend that our lender partners and insurers take unnecessary losses which will necessarily translate to larger costs for all consumers.

  • Craig Pritchard on 2013-08-28 10:15:58 AM

    I would have to agree with Dale, very well said.

  • Christopher on 2013-08-28 10:20:33 AM

    There are a good number of old communities that would not conform to the new code if torn down. Many are also deemed to have historical value and are subject to all sorts of renovation regulations.

    I've seen grow-ops in person, and what's usually needed is new ceilings, drywall, replacement of everything in the attic and sealing the basement or crawlspace.

  • Alessandro Monteferrante on 2013-08-28 10:25:54 AM

    In Quebec we are OBLIGATED to declare if the house was ever used for a grow-op, don't understand why Ontario would not follow suit.

  • Okanagan Broker on 2013-08-28 10:42:31 AM

    I financed a dozen remediated grow ops last year here in the Okanagan, and NONE warranted being torn down. Once properly remediated they were as good, if not better purchases than other houses on the market. Yes, that ex grow op has to be disclosed in BC, and the stigma may hinder future sale of said property, but with proper disclosure and remediation that should be the only risk facing a prospective purchaser and/or lender...What kills me is lenders trying to sell a foreclosed upon ex grow op without it being remediated...You won't finance it without being remediated, but you expect someone else to obtain financing to buy it?

  • Okanagan Broker on 2013-08-28 10:42:46 AM

    I financed a dozen remediated grow ops last year here in the Okanagan, and NONE warranted being torn down. Once properly remediated they were as good, if not better purchases than other houses on the market. Yes, that ex grow op has to be disclosed in BC, and the stigma may hinder future sale of said property, but with proper disclosure and remediation that should be the only risk facing a prospective purchaser and/or lender...What kills me is lenders trying to sell a foreclosed upon ex grow op without it being remediated...You won't finance it without being remediated, but you expect someone else to obtain financing to buy it?

  • Jeff Atlin on 2013-08-28 11:16:32 AM

    Mr Goode has obviously never had a private lender on a property that became a grow op or clandestine drug lab. In Ontario the government set up a committee which made a number of recommendations in 2010 - on of which was to register a notice of the grow op / lab on title, with the ability to have it struck (like a paid mortgage) once remediation is done and approved by the municipality. We also recommended that all landlords be required to have their properties inspected quarterly (and have that put in the lease), among other recommendations. Watch in the next few days for an announcement from IMBA on this subject.

  • Paolo Di Petta | dipettamortgage.com on 2013-08-28 1:03:35 PM

    There definitely needs to be more discussion on this topic.

    First, there definitely needs to be disclosure of some sort. That's a no brainer - buyers and lenders need to know the history of the home, especially if there are health and liability issues attached.

    Second, there needs to be a tiered rating system for properties that have been former grow-ops. I've spoken to some remediation specialists, and in some cases, the costs to remediate can be quite high.

    Remediation can work in cases where there weren't any large structural modifications, or no possibility of mold - but in other cases the damage is practically irreversible. As part of the disclosure process, the inspector should determine whether or not remediation would be an acceptable solution. Then, the property can have that tiered mark on title removed after the acceptable solution has been completed.

  • M. Robertson on 2013-08-29 11:14:31 AM

    Why is this Goode fellow getting so much press time? His comments are half baked at best and NOT representative of the industry.

  • Ron Butler on 2013-08-29 12:25:16 PM

    M Robertson, Mr. Goode is a highly respected mortgage broker with decades of achievement as opposed to a wretched internet troll like yourself. In case you did not notice CMP went to him for the quotes not the other way around.

  • M. Robertson on 2013-08-30 9:06:25 AM

    Mr. Butler, you comment on this site more than pretty much anyone else... be careful who you call an internet troll... lest you wish to be painted with the same brush. It would appear that you are all good with attacking people you do not know or like, but when someone makes a comment about a buddy...

    As for Mr. Goode, I have been in the industry for almost 30 years, and never heard of him before these articles. To have the same person comment on two different stories… well that speaks for itself.

    I was not questioning his experience, I am questioning his comments - which do not align with the legislative practices regarding grow-ops in most of the jurisdictions in Canada. To state that every grow op should be torn down is not based on research, nor obviously a fully complete understanding of the remediation policies in place for different municipalities and provincial governments. Nor do his comments consider the full implications to all parties involved, simply tear them down, is not an educated statement. Before an individual makes public statements they should endeavor to fully understand the full breadth of the subject as best they are able, this was not done – and that sir makes for half baked comments.

  • Berniebee on 2014-07-08 10:11:20 AM

    Perhaps Mr. Goode comments were taken out of context.
    He may have been speaking about criminal organization grow ops, in cases where extensive damage has been done and the cost to remediate is exorbitant.
    Obviously a "grow op" house can be many different things, from a two plant operation for personal use to a criminally organized facility where every square inch of the house is utilized. Unfortunately the article paints all cases with the same brush.
    What would be more of a health hazard: A two plant "grow op", or a little old lady house with hundreds of legal plants, and ten cats?
    Unfortunately only one of these would be red flagged.

  • Diana on 2014-07-22 2:05:53 PM

    Hello, I want to know if it is a problem buying a house which was grow op, but the house has been fully renovated and is disclosed. Everything was changed (floors, walls, kitchen, bathrooms), will be a problem if I want to buy it and then if I want to sell it? Thank you.

  • Okanagan Broker on 2014-07-22 2:13:23 PM

    Hi Diana, unfortunately the "Grow Op" disclosure will always have to be reported when selling which scares many potential buyers, and Yes, many lenders simply won't finance an ex grow op...even after full remediation, at least here in BC. In my own opinion a fully remediated grow op property should be like any other house...no issues or concerns, BUT stigma still remains, and people/banks have fears of incomplete remediation etc...just like a car repaired after an accident...

  • Jonathan Askew The Mortgage Store on 2014-07-27 11:52:56 PM

    What no one seems to realize is that There are no Federal remediation laws, only provincial and banks are a federal Charter and until the Federal Governments gets involved and sets up federal rules for all of Canada , we will always have this problem. Time to lbby the federal Govt.

  • Jonathan Askew The Mortgage Store on 2014-07-27 11:53:44 PM

    Sorry, meant Lobby the Federal Govt.

  • Toronto Agent on 2014-12-13 7:06:44 PM

    I think the definition of a "Grow Op" need be better stated as well. For instance, I am dealing with a property right now that is being sold as a former grow op, and in the official police documentation provided by the former owner (was renting the basement of his home) showed two measly plants in the basement washroom. The house ended up going power of sale (Due to the tenant being evicted leading to a loss in the home owners income) and TD went on to perform a full blown remediation; I am talking stripped down the entire home from the attic to the basement and down to the framing and replaced absolutely everything in the home. The only negative found and disclosed in the remediation report as a result of the grow op was a statement claiming the "presence of aerosolized mold spores collected in one main floor air sample".

    My question is further to the statements made above by Jeff Atlin; how long does this Stigma affect the property? A full remediation contracted by TD Bank themselves surely made this home completely new aside from the foundation which is the only part of the home they did not rebuild. As you can in the event of certain criminal and related charges receive a pardon or have records "expunged" is such a solution in place for former grow op properties?

  • Mike on 2014-12-28 6:29:04 PM

    Dear Toronto Agent - I would really appreciate your time if I can get your professional opinion on a grow op home I currently own in Ottawa.

  • Hal on 2015-03-21 6:45:20 PM

    Am considering buying waterfront acreage where barn was used as grow op, house burnt down and planning to tear down barn and rebuild house, do I still have to declare it as grow op after taking these measures. Cariboo British Columbia

  • Okanagan Broker on 2015-03-23 12:21:44 PM

    Hi Hal,
    I would say NO...as no affected structures remain, BUT never encountered this scenario...anyone else want to chome in BC real estate law? I will ask one of my contacts and confirm for you!

  • Okanagan Broker on 2015-03-23 12:21:46 PM

    Hi Hal,
    I would say NO...as no affected structures remain, BUT never encountered this scenario...anyone else want to chome in BC real estate law? I will ask one of my contacts and confirm for you!

  • OkanaganBroker on 2015-03-23 2:22:31 PM

    Just talking to realtor...says grow op registered on title, which I can confirm) so it will always be there..BUT you can put notes on title saying original burned down etc...still waiting for "official word" though

  • lori on 2015-05-12 1:18:27 AM

    when we purchased our home in the fall of 2004,,,our realator didn't disclose anything to us but did suggest we go to city hall and check for any recent permits,,,it turn out it just was in the beginging stage,the niegbour across the way called the police,,,we had it checked out and all was good,,,11 years later, we are selling and found the big banks don't like to give mortgages,,,thats what our realator told us,,regardless of living here with our four grown kids and absolutely no health problems or house problems,,its a 5000 square foot house,rancher with walk out basement on 2/3 of an acre,swimming pool,very well kept yard with a lot of pavement,,at a reasonable price,835,000..we have been on the market since late fall and still haven't sold,,,,any suggestions,,,getting names of any brokers or leanders who wouldn't have a problem leanding to buyer,,,weve bought 19 acres across the river and are building a new home but sure would like this one to find a new family...any help would be great...

  • John Greenlee on 2015-05-18 1:20:04 PM

    The comment above by Toronto Agent is very similar to something that happened to a Realtor I deal with. She was trying to sell a "Former Grow-op" where the previous tenant (12 years before now) was found to have had two or three plants growing in the bathroom. No modifications were made to the building like a traditional grow-op. For all intents and purposes, other than the plant being illegal, it wasn't anything different than someone growing a lemon tree in their living room.

    Her clients though, cannot sell the home because not one single lender will lend on it due to it being stigmatized as a grow-op. The incident happened 12 years ago (before they bought it) and they've been living in the house ever since (financed by one of the big 5 banks).

    I think there needs to be clarity on what a grow-op is so that people that get stuck in situations like the above don't have to suffer.

  • Kim on 2015-06-18 9:42:03 PM

    Hi, reading through these comments has been interesting to say the least. We own a home that is a remediated former grow-op, a few plants in the corner of the unfinished basement, 12 years ago. We have owned for 8 years, with full disclosure provided to us upon our purchase, but did not know at the time that this would stay with the house. We are now trying to sell this home, wanting to downsize, and are finding NO banks are willing to finance potential buyers. This does not seem fair, as we had full "ok to occupy" by our city building department, and have since completely finished the basement, with no hint of anything ever happening. What are we supposed to do? Our property assessment from our city isn't any lower than other houses in the area, so why should we "give" our house away? What would the bank that owns our house do with it if we walked away? I don't know if any of you will respond, but any help or advice would be much appreciated.

  • Kim on 2015-06-18 9:42:35 PM

    Sorry, we live in British Columbia.

  • Dale on 2015-06-19 10:14:52 AM

    In BC the stigma stays with the property until the home has been removed from the property.
    The Federal Gov't requested a study on how property values are affected due to grow-ops.
    It was submitted to them late last year.
    Cities in the lower mainland maintain a record of any grow-ops that have been busted, so you can check with them initially. Also Coast Capital CU will finance them providing that they have be remidiated (again the city or municipality will have a record of it). As a realtor I have gotten info from the city, the police and from the credit union mentioned. I submitted info for the study and recommend like others here that there should be a tiered system such that the scenario's referred above where one or two plants vs hundreds will have different resulting affects on value. Typically, whats happening is people "property values" are being affected by those who have little or no interest in the home (tenants and or lenders). This also becomes a Residential Tenancy issue as a number of Acts do not always allow the landlord to re-inspect the property to ensure compliance by the tenant. This crosses an number of legislative issues. Like someone who rents their property with the requirement that the tenant will not own a "dog" so the carpets and urine to ruin the value of the home, yet the tenant brings an animal into the residence yet the owner can't get it removed through the legal system or tenancy board which causes damage and lost value to the owner. Hope this helps.

  • Diana on 2015-07-06 9:45:58 PM

    Hello I am looking at a residence that was a former grow op (small) that has now gone into foreclosure with the bank. Should the bank be disclosing this information once I submit my bid to purchase? How do I find out if the proper remediation has been done? This home is in BC.

  • OkanaganBroker on 2015-07-06 10:55:41 PM

    Hi Diana, Unfortunately banks DON'T remediate foreclosed upon grow op properties here in BC, they just sell them "as is"...so purchaser financing is pretty much out of the question. If it was actually a grow op, or even just a suspected grow op the listing realtor should be noting that in the MLS listing. I have financed many "remediated" grow ops and the damage done, and repairs required to remediate them so they could be financed was extensive. I even had clients who purchased a fully remediated grow op only to find 5 years later the whole attic covered in black mold, all traceable back to original grow op...and company who did remediation had disappeared. Unless this is your absolute dream property and you know all the risks, and have the cash I would steer clear...

  • Diana on 2015-07-06 11:00:54 PM

    There was no mention in the listing that this was in fact a grow-op, it was only disclosed after having some conversation. I wonder if a person could bid on "land only" and approach the bank that way, as this is a prestine location for sure., but perhaps the house would need to be replaced at a future date.

  • OkanaganBroker on 2015-07-06 11:07:27 PM

    hmmm...doubtful...the banks must get the property appraised so it can be listed for fair market value, our courts prevent lenders from unloading property for just what is owing like they can do in the USA...they want to protect the owners "equity" even though they are the ones who defaulted on the mortgage...If grow op is NOT disclosed anywhere then regular financing should be available.. but then someone isn't disclosing the truth and could be liable if (when) the lender found out down the road.

  • Alicia on 2016-06-20 6:13:52 PM

    So I read further down that if the area that had the grow op is torn down then it's no longer considered a stigmatized property and can be listed without disclosing??
    So that would mean a property could be bought and the house lived in and then sold at regular market value as the grow op was never in the house ??

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