By: Zack Silverberg, Associate Lawyer at Landy Marr Kats LLP
The recently elected Liberal government has pledged to legalize marijuana as a recreational drug useable by adult Canadians. As rumours swirl around what regulation surrounding production is going to look like, when looking to purchase a property, it is critical that investigations take place prior to closing with regards to the property (residential and commercial) and its potential history as a Illegal marijuana grow-operation (“grow-op”).
Illegal marijuana grow-operations are often hidden in residential homes or commercial buildings and can go on for years without detection by law enforcement. When operating in residential or commercial properties, grow-ops can significantly damage the property’s future resale value and the physical structures themselves.
Potential Damage to Properties
Grow-Ops are notorious for circumventing electricity monitoring in an attempt to avoid detection by the police for high electrical usage (required to grow plants indoors with bright lights). In order to circumvent the hydro boxes and tap directly into the electrical lines, often these grow-ops drill through foundations to access the direct electrical inputs from the grid.
Another common detection method for grow-ops is a lack of (or less) snow on the roof of a property as compared to neighbours. This indicates a larger heat signature emanating from the property and is also often caused by the excess lighting required to grow plants.
A small grow-op in a home might only function in the basement but larger scale operations have been known to fill every inch of a property with plants. There is a serious additional risk of mould developing in the walls, ceilings, attic, etc. resulting from the high moisture environment required for marijuana.
Additionally, as a result of the physical damage and potentially latent mould damage (if not properly remediated), there is often also stigma attached to properties with a storied past – especially if the properties were mentioned in the news.
Protecting Your Investment
When looking at a property, it is critical to make the proper inquiries with regards to the history of a property. Reasonable steps might include Google searches for the property’s address to ascertain if it was in the news for a drug bust, instructing inspectors to check for mould, electrical issues, and holes or cracks in foundations, along with the typical inspection points.
(Note: many inspectors attempt to exclude liability for such inspections in their contracts for inspection. This is something to be aware of and to discuss with potential inspectors when interviewing them.)
Another effective means of mitigating against risk is to inquire with the local police department, if timing permits within the closing period, as to whether or not there were any warrants.
Although vendors ought to disclose the past existence of a grow-op on the property and inquiries of the vendor should be made, these steps will help to lower (though will not eliminate) the risk of your potential investments going up in smoke.
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