Broker: demolish marijuana grow-op houses

Broker: demolish marijuana grow-op houses

Broker: demolish marijuana grow-op houses

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.

32 Comments
  • Dale Koeller 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.
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  • Craig Pritchard 2013-08-28 10:15:58 AM
    I would have to agree with Dale, very well said.
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  • Christopher 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.
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