Grow Ops can knock on real estate’s door

Whether you sell real estate, invest in it or just buy it for pleasure, you’d be hard-pressed to not have heard about that class of criminal who hides out in the anonymity of residential or industrial neighbourhoods producing multi-million-dollar marijuana crops and chemical drug operations.

Drug lords get rich, addicts get high and the negative repercussions for society carry on. Once these illegal operations are uncovered or abandoned, they fall to the hands of housing professionals, many of whom are left in the awkward, risky and potentially dangerous position of selling, appraising, financing or inspecting a former grow op.

“I get a lot of calls,” says Re/Max Dynasty sales rep Tom Sachdeva, who is considered something of an expert on grow houses. “It’s not an easy field to be in. A regular house takes a week to sell and these properties take a month.”

While he will not disclose how many grow-op real estate deals he’s been involved in, Sachdeva said his Markham real estate office currently has two such listings. While these properties will likely never shake the stigma of being illegal grow houses or chemical drug labs, there is a definite advantage to buying them, says Sachdeva, and that has to do with the fact that they sell for 20 to 25 per cent below market value.

Your average homebuyer may have difficulty securing a former grow op, though. Mortgages are difficult to obtain on these properties and insurance can be difficult to assume as well. Sachdeva has seen buyers with 50 per cent down be refused a mortgage.

Sachdeva warns that former grow houses can be difficult to spot especially if its illegal drug production was some years in the past. Although a major overhaul is generally in order after a grow op is shut down, many are given only a superficial cosmetic touch-up before being put on the market.

If you suspect a house may be an undisclosed former grow op, Sachdeva recommends having the home inspected and, in some instances, having the dwelling’s structure checked by a professional engineer.

Here are some signs to look for:

•    Mould in corners where the walls and ceilings meet.

•    Unusual number of roof vents or signs of roof vents.

•    Fresh paint on window frames to cover damage caused by the high levels of humidity.

•    Painted concrete floors in the basement with circular marks where pots once stood.

•    Evidence of tampering with the electric meter (damaged or broken seals) or the ground around it.

•    Unusual or modified wiring on the exterior of the house.

•    Brownish stains on the underside of beams or arches that bleed down a wall.

•    Concrete masonry patches, or alterations on the inside of the garage.

•    Patterns of screw holes on the walls.

•    Fireplace alterations.

•    Denting on front doors (from police ramming the door).

The prevalence of these grow houses and chemical drug labs are hard to measure. According to police reports, CREA estimated in 2004 that there were 50,000 grow operations across the country. Given the age of that number, it has likely increased, perhaps significantly.

In 2010, for example, 248 grow ops were uncovered mainly in the inner suburbs of Toronto by police. That’s a hike of 77% more over 2008, when police busted 140.

Regardless, they are an unpleasant fact of life these days with plenty of negative consequences. Because these operations involve significant alterations to the structure and electrical system, this can compromise the building’s structural integrity and pose fire and safety hazards.

Perhaps one of the worst consequences of owning a former grow op is the opportunity for mould growth. Because marijuana plants are heated by grow lights and watered regularly to make them grow bigger and faster, this produces abnormally high levels of humidity which settles in the house’s cooler spots  such as the gap behind the drywall just inside of the outer walls of the home.  Mould flourishes in this environment and can become toxic to future habitation.  The only way to ascertain how serious it is would be to take all the interior walls off and inspect the area within the gap.

According to the Canadian Home Inspection Corporation, the cost to remediate a former grow-op is between $60,000 to $80,000.

Many housing professionals are hindered by the lack of a central registry, which is considered crucial to protecting homebuyers from the potential health and safety hazards of properties formerly used to manufacturer illegal drugs. While some police departments such as Toronto and London have posted the addresses of grow houses, the practice is not consistent.

The Ontario Real Estate Association (OREA) supports a private members bill introduced by MPP Lisa MacLeod last fall that would establish a registry for marijuana grow operations and clandestine drug laboratories.

“Grow-ops are major problem for homebuyers…and we have been urging the Ontario government to establish a registry to protect consumers for almost ten years,” said OREA president Barb Sukkau. “We will continue to urge the government to protect homebuyers by setting up a registry to deal with this issue.”

The Association of Saskatchewan REALTORS is pushing its department of justice for a provincial registry as well.

“We think it’s a positive step,” says Bill Madder, executive vice president of the association. “We can’t just say all of these houses are bad so you should never buy them. We need to be aware of the concerns and let them make their own inspections and investigations.”

While REALTORS® are obligated by law to disclose to potential homebuyers if a home has been used as a grow operation or a drug lab, the registry raises the thorny issue of privacy violation.

But perhaps more dramatic is a recent B.C. ruling in which a landlord was stripped of the houses he owned by a provincial court after renting them to tenants who later turned them into grow ops.

The February decision was the first decided under B.C.’s new Civil Forfeiture Act. The Act permits the seizure of property that is either proceeds of unlawful activity or an instrument of unlawful activity. Ontario’s equivalent law is called the Civil Remedies Act so this, too, could also happen in Ontario.

Have you had experience in working with these kinds of homes? Please share them with us using our comments section below.