Watch for the proliferation of pot grow-ops!
Article Number: 5120
July 11, 2005 - 00:00
Notice to reader
Please note that the following article has not yet been updated since the coming into force of the new Real Estate Brokerage Act on May 1, 2010. The OACIQ positions which are conveyed in this article may have evolved since the date of its publication. It is your responsibility to ensure, at all times, that you are acting or that you are exercising your rights or recourse in accordance with the Real Estate Brokerage Act, its regulations or any other applicable law.
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The ACAIQ Syndic has investigated the actions of real estate agents in transactions involving properties used for marijuana grow operations. These inquiries, conducted simultaneously with police investigations, have recently led to the filing of complaints before the Discipline Committee. The Office of the Syndic has confirmed that several cases exist.
According to police authorities, hundreds of homes, in various municipalities, are already identified as being used or having been used to grow marijuana. Given the extent of the damage that excess humidity can cause to buildings, real estate brokers and agents must take special steps when selling, buying or leasing immovables that have been used or could be used for this purpose.
The fact that a house has been used to grow pot is an unfavorable factor that must be disclosed when known. A real estate agent must recommend to the seller to indicate this in the Declarations by the Seller form and to add any helpful details. Failing this and in case of doubt, the agent must make sure that the prospective buyer is informed before making a promise to purchase. He should also recommend to the buyer to have an inspection and further testing done. The immovable could have suffered extensive damage, and as a result insurance companies may want to limit or even refuse coverage.
It is not always public knowledge that a house has been used to grow pot. In this case, what clues should a real estate broker look for in order to act with diligence and avoid inconvenience and major financial losses for his clients? There are two types of clues, i.e. those related to the immovable, which a visual inspection can reveal, and those related to aspects of the transaction itself.
Clues related to the immovable
According to police, several of these houses are sometimes found in the same neighborhood or on the same street, especially in new developments. A visual inspection of the immovable, done by a qualified inspector, could lend a number of clues indicating that the immovable may have been used to grow marijuana. However, since houses are never used for this purpose for very long, the damage is not always apparent and work may have been done to repair or conceal it. A few clues, including the presence of mould, will suffice to suggest that a closer inspection or further testing are required. The most common clues are:
- the home is put back on the market very quickly;
- the home has very little furniture;
- electricity bills are high or show a significant variation;
- electric meter has been tampered with, e.g. roof mast has been sectioned before the meter;
- new roof mast;
- signs of high humidity, including in attic space (waterlogged insulation, blackened deck);
- ice forms outside vents or chimneys;
- presence of dehumidifiers in unusual and inappropriate locations;
- traces of humidity in fireplace;
- signs of corrosion on electrical outlets or switches, metal post bases, etc.;
- spongy floors;
- perfume to mask the smell of rot;
- lifted wallpaper or peeling paint;
- newly painted ceilings and window frames;
- need to measure ambient humidity rate (with bulb hygrometer) or in walls (with hygrometer);
- very strong, unusual smell;
- mould spores forming on north wall or in unventilated spaces (mould is caused by the presence of humidity, heat and cellulose [wood, cardboard, skin]);
- mould stains on walls;
- repaired holes about a foot in diameter in closet floors and ceilings, basement dividing walls or near roof mast;
- Drywall bulging, recessed nails in ceiling.
Clues related to the transaction
The clues related to the immovable help identify homes that have been used to grow marijuana. Clues related to the transaction can serve to identify an immovable intended for a grow-op. Since the broker and agent play a central role in any real estate transaction, they are in the best position to observe these clues and advise their selling clients to act with prudence. The most common clues are:
- Date of signing of the act of sale on the PP is far into the future with pre-occupancy. When the time comes to sign the act of sale, the buyer has disappeared and the tenant has vacated the premises. The seller finds himself with a contaminated immovable;
- the purchase or lease is done by a third party or under an assumed name;
- single-level house with attached garage purchased as an investment property;
- buyer lives out of the country or province;
- cash deposit may be high;
- a deposit is done in cash or through a collaborating agent;
- unusual financing sources;
- mortgage approval subject to signing of leases;
- buyer does not negotiate;
- buyer does not have the building inspected by a building inspector or does not seem to care about the size of the rooms or other features, but does care about the electricity, the size of the garage and basement;
- buyer has recently been involved in several transactions;
- Transaction is notarized separately, i.e. the parties do not meet.
Real estate transactions on immovables that are intended or have been used as grow-ops are conducted by very well organized networks. Several similar transactions can take place on the same territory over a rather short period of time. Marijuana grow operations in homes is a national problem. Already in 2002, the Royal Canadian Mounted Police estimated at 50,000 the number of properties being used for this purpose. According to recent articles in the newspapers, this number has increased dramatically.
If you're looking for a real estate broker who takes his clients interest and security at heart and will guide them through the proper procedures of all transactions, contact. :
Robert Clark Century 21 Max-Immo. Cell.: (514) 660-1678