Pot grow-ops: clues not to be overlooked
The OACIQ Syndic has investigated the actions of real estate brokers in transactions involving properties used for marijuana grow operations. These inquiries, conducted simultaneously with police investigations, have led to the filing of complaints before the Discipline Committee.
Hundreds of homes have already been 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 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 unfavourable factor that must be disclosed when known. The real estate broker 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 broker must make sure that the parties to the transaction are informed from the beginning. He must also recommend to the buyer to have an inspection and further air and mould testing done. The immovable could have suffered damage, and as a result the creditor may withdraw his financing offer and 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
A visual inspection of the immovable, done by a qualified building inspector, could reveal a number of clues indicating that the immovable has 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. Here are some clues:
- 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;
- chimney not connected in the attic.
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 serve to identify an immovable intended for a grow-op. Since brokers 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 buyer’s broker;
- 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.