Marihuana Grow Ops - Related to Real Estate
In terms of real estate, a marihuana home grow operation is a house or any other building of which has been retrofitted in order to grow marihuana or commonly called pot, cannabis, marijuana, or grass. Homes are modified with sophisticated changes sometimes structurally in order to supply required light, water and ventilation for the plants to grow for maximum potency and growth. These structural changes may make a house uninhabitable for any future owners without major repairs. Marihuana home grow ops can be found in all types of neighborhoods within the Windsor-Essex County Ontario region. Isolated large homes are preferred because they can provide larger grow capacity.
Often referred to as grow ops and/or grow houses, marihuana grow operations can result in severe mold growth resulting in major structural damage throughout the home making the house unfit for any future human habitation until conditions are remediated. Sometimes the damage is so extensive the house cannot be repaired and the house would need to be demolished.
Once there has been a police arrest and/or conviction at the house or dwelling for a marihuana grow operation, the home is permanently registered with the local police and health authorities. From a real estate point of view, the financial impact is devastating to the home owner. Even if the home has been repaired back to its original state by a certified mold removal contractor. If the home owner decided to sell the home, the home owner would have a legal fiduciary responsibility to disclose to buyers in writing that the house was formly used as a marihuana grow operation. Failing which the new home buyer can sue the home owner for damages. If a realtor was used in the sales transaction, the realtor could be sued as well. As of today, there is no set statute of limitation, this stigma is registered for life. Additionally as of today, even if the plants are only found in the backyard, with no evidence of a grow opt in the house, the police would still register the address. Once registered, full disclosure would be required whether sold privately or through real estate. From a real estate market valuation point of view, once disclosed to Buyers that the address was formally used in a marihuana grow operation, your home will be worth pennies on the dollar.Your buyers will be limited to cash buyers only, banks will not finance homes that are registered as - "formally used in a marihuana grow operation".
Here's the scenario..... You are a part time real estate investor with a rental property. You have done your homework and performed background checks on your perspective tenants. You lease them your rental property. Three months later you are notified by the police there was an arrest at your rental house, the home was used as a sophisticated marihuana grow operation, and the home is now registered. You visit the house and find the electrical has been bypassed, extensive structural and mold damage everywhere. You call your insurance company................ They will advise you, you have no insurance coverage because the home was used in an unlawful event.
Generally, home owners with mortgages let them go back to the bank as a bank owned power of sale foreclosure. Bank repossessed homes commonly referred to as Bank Repo's are common with homes registered as a former marihuana grow operation. As well when banks attempt to sell, banks have a legal fiduciary responsibility to disclose to buyers in writing, homes with a history of marihuana grow operations.
Buyers need to understand that a home formerly used for a grow-op will definitely hold a stigma when it comes to resale. There is a life-long legal fiduciary label with the property regardless of remediation.
Here is a clause you may wish to consider including in your offers:
“The seller represents and warrants that during the time the seller has owned the property, the property has not been used for the growth and/or manufacture of any illegal substance, and that to the best of the seller’s knowledge and belief, the property has never been used for the growth and/or manufacture of illegal substances. This warranty shall survive and not merge on the completion of this transaction.”
Tips for Spotting Marihuana Grow Operations:
Exterior of home is untidy, garage bags filled with soil;
Windows concealed, bright light can be seen;
Hydro meter has been tampered with;
Occupants only attend home for short periods of time, they leave through the garage to conceal their identity and activities;
Construction and/or ventilation fans can be heard.
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