Grow Operations In Residential Real Estate
Residential Real Estate Grow Ops – Real Estate Lawyers
The legalization of marijuana on October 17th, 2018, leaves many Albertans with questions on how growing marijuana at home impacts property values. Under section 9(1)(c)(ii) of the Cannabis Act, Canadians are allowed to grow up to four cannabis plants per household. However, did you know that home cultivation of marijuana plants potentially undermines property values? Further, the physical effects of a grow operation (“Grow-Op”) can even go undetected despite a thorough home inspection.
In fact, a nationwide survey found that 47 percent of Canadians believe that knowing even just a legal amount of marijuana in a home was grown reduces their desire to purchase the property. However, do real estate agents need to disclose to potential buyers if the previous occupants grew marijuana on the property? Read on to find out more about Residential real estate grow ops. If you need help, connect with the real estate lawyers at Kahane Law Office in Calgary, Alberta.
Disclosure of Material Latent Defects
In Alberta, section 57(i) of the Real Estate Act (the “Act”) requires real estate professionals, such as real estate agents, to disclose all ‘material latent defects’ of a property to prospective buyers. The Act defines material latent defects as those that make the property unfit for habitation, unfit for the purpose that the property was acquired for or dangerous or potentially dangerous to occupants. Examples of material latent defects include:
- structures, such as a garage, built by the seller without acquiring proper permits;
- house leaks that the seller knew about;
- large cracks in the wall that the seller covered up;
- properties used for the production of illegal narcotics, such as fentanyl, may contain remnants that can be extremely dangerous when touched or inhaled; and
- properties used as residential real estate grow ops not remediated create an ideal environment for the growth of mould, mould spores and other fungi rendering the property unfit to live in.
Accordingly, in each of the above situations, sellers are prohibited from hiding defects or misleading buyers regarding the property’s conditions. Sellers must disclose all known material defects to the buyers.
However the residential real estate contract use by real estate agents defines these defects differently. It also includes defects that affect property values.
Why Growing Cannabis Cause Material Latent Defects?
Although legally growing cannabis plants provides you with a low cost supply of marijuana, the downside is that growing marijuana can be tricky. Cannabis plants require a precise amount of water, light, and fertilizer. This means higher power bills and, of course, a pungent stench when plants are budding.
Apart from being illegal, large Grow-Ops can damage property beyond repair. Growers often cram hundreds of plants in compact areas. They also devise high-voltage wiring that bypasses electrical meters leaving pesticide residue, mould and fungus in their wake. The obligation to disclose material latent defects exists to reduce the risk of passing on properties damaged by Grow-Ops to unsuspecting buyers. If a home used as a former large scale Grow-Op is not professionally remedied, the property would constitute a material latent defect that legally must be disclosed to buyers.
Remediation Of Former Grow Ops
If homes used as former residential real estate grow ops were professionally remedied, disclosure as a material latent defect may no longer be required. But it is extremely important to be certain that no further material latent defect exists. Under Section 62(1) of the Public Health Act of Alberta, Executive Officers of Alberta Health Services can issue an Executive Order. These orders get registered against properties used as Grow-Ops. They register a Notice of Health Hazard (the “Notice”) on the property’s title.
After the property has undergone remediation, a discharge removes the Notice. However, even if you do not disclose that your home was a former Grow-Op, prospective buyers that review your property’s title may see previously registered Notice of Health Hazard on title. Therefore, even if your property was professionally remedied, it may be best to disclose that your property was a former grow operation. Disclosing this upfront to buyers, may avoid feelings of deception down the road.
Do I Need to Disclose Growth of the Legal Amount Of Marijuana Plants?
In Alberta, the question exists on disclosure of legal residential real estate grow ops seller. If the cannabis growth does not cause damage, make the home uninhabitable or place future occupants at risk, disclosure requirements may change. Under the contract the most real estate agents use, it cannot affect the property value either. Further, most home owner’s insurance do not cover any damage to the property caused by growing marijuana. The risk of non-disclosure means that if a buyer endures any damages, they may sue the seller. Disclosing the growth of a legal amount of Cannabis plants, means sellers limit buyers with respect to potential lawsuits.
Landlord and Condo Restrictions
If you rent a home or live in a condo, your ability to grow (and consume) marijuana in your home is subject to the landlord’s rules and the condominium corporation’s bylaws. Some property owners have even converted their apartments into condominiums. They do this to to restrict or ban the use or cultivation of marijuana in units. Consequently, before you grow or use cannabis in your home or shared spaces, check your rental agreement or condominium bylaws for any restrictions. Failure to comply with existing regulations may result in your eviction.
As A Buyer, What Should I Pay Attention To?
In Alberta, because sellers are not legally obligated to disclose a legal amount of cannabis cultivated on the property, some sellers may conceal the fact that marijuana growth occurred. Therefore, property buyers must thoroughly inspect the property prior to buying the home. Here are a few things to look for:
- modified or damaged air vents;
- mould spores on walls, particularly, in the attic and crawlspace;
- rotting wood from irrigation;
- electrical wiring tampering;
- bypasses of the electric and water meter;
- contamination from fertilizer use; and
- uncommon holes for ventilation and/or electrical access.
You should also be sure that your mortgage lender will lend to you. Additionally, you should be sure your insurance company will insure your home. It takes time to determine how lenders and/or insurers will treat legal amounts of cannabis grown in a home. There is no set definition for residential real estate grow ops between lenders and insurers.
Help With Residential Real Estate Grow Ops and Cannabis Law
In light of legislative changes to cannabis growth and consumption, it is crucial that those who are buying, selling or leasing real estate stay informed of legal developments to protect themselves. What people considered residential real estate grow ops, will change. If buying your first home and you have concerns related to cannabis growth, we can help. We also offer help to Condo boards seeking to regulate cannabis growth and consumption. Connect with our real estate group at Kahane Law Office today at 403-225-8810 locally in Calgary, Alberta or toll-free at 1-877-2278 or email us directly here.