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May 27

Grow Ops: What’s Up in Smoke?

Few communities in Canada have escaped having a Grow Op found in their midst.

Once busted, the cost to clean up the consequences of having a Grow Op in the home varies from community to community, depending on how active local authorities have become against drug trade.

The cost of Reclamation is growing!

The Canadian Real Estate Association publication “Grow Ops – What Realtors Need to Know” of December 2004 quotes the Insurance Bureau of Canada that $41,000 is the average cost for damages due to a Grow Op.

 

So, if you were thinking that former Grow Op listed at a discount of the normal price is a bargain: “buyers beware.”

For example, in Calgary, Alberta, the Health Inspector soon follows the Police Inspector into a Grow Op home. In order to test for mold toxicity, the drywall is punched in many places in all rooms, the trim is pulled from the walls, and the ceiling is pulled. So, it is not just a matter of bleach washing and re-painting over the mold stains left by the Grow Op.

Oh yes, the Health Region also puts a charge against the property title. The charge will not be removed until a Reclamation specialist has completed the clean up and renovation then provides clean air reports. A recent reclamation done by a Financial Institution who had a Grow Op in foreclosure had a bill for $65,000. The sustained humidity from the Grow Op caused some structural damage.

 

Will your insurance cover damages?

It is important to confirm with your insurance provider what damages may be excluded from damage claims. Losses due to drug operations are an insurance concern.

This is also important to check your insurance coverage if you are not occupying the property. If someone else is living in the property and is engaged in a criminal activity that results in damages to the property – your claim maybe denied even if you are innocent of participating in the production of drugs.

Financing may be an issue (even mortgage renewals).

If you already own the property and it has become public knowledge it was a Grow Op, when your mortgage comes up for renewal, the financial institution holding the mortgage is not obligated to offer you renewal terms.  The lender may demand the balance in full.

 

Many mortgage lenders will not offer financing on properties that housed a Grow Op. There is an environmental risk associated with former Grow Ops that causes concern. Mold spores can remain dormant for years. If they were not properly eradicated there maybe a future risk of regeneration of mold. Warm, moist conditions can allow dormant spores to regenerate. The lender may become responsible for the environmental clean up when the mold starts up again.

 

When lenders learn of an issue regarding the property after they have given an approval, if that information would have caused them not to offer an approval before, had they known – they may refuse to complete the mortgage transaction. This means that obtaining an approval on a former Grow Op does not mean the mortgage will go through. Where will you obtain an alternative mortgage source?

 

Buying a former Grow Op at a bargain price will need significant investment cash. Usually, while in its discovered state, you will need Equity financing. It comes at a higher price in lender fees and interest rate. Additionally, you will need the cash resources to make the necessary reclamation. Once the house is inspected and found clear of mold and spores, some lenders will provide refinancing or will allow for purchaser financing. You will need a proficient mortgage broker to lead you through the transition of purchase, improve and refinance or sale.

 

What if the future occupants have compromised immune systems or asthma?  Who carries the legal and ethical guilt, if the toxicity of regenerated mold causes a death?

 

Community Costs:

The Grow Op requires modifications to a property’s electrical system. This may result in mistakes that will create a fire hazard. In addition to burning the property containing the Grow Op, there will be fire, smoke and water damage to neighbourhood properties.

In addition to the fire hazards associated with faulty wiring completed to by-pass the electric meter and to set up the Grow Op equipment, the average Grow Op steals about $15,000 in electric power. In 2002, Grow Ops were estimated to have cost Ontario nearly $100 million.  This cost is passed on to you the consumer.

 

However, in Mississauga, Ontario, in 2003, a landlord was ordered to reimburse $26,000 to the hydro company for the electricity that had been stolen by his tenants.  Not all costs are passed on to the community.

 

Personal Danger

Former Grow Op home occupants are often the victim of mistaken identity by competitor criminals. How many home invasions, break-and-enters, and kidnappings are caused by criminals attempting to grab the proceeds of a Grow Op, only to find there are new innocent occupants? Never mind shots maybe fired. In BC, RCMP figures that one in eight homicides is related to Grow Ops.

So, how can you protect yourself?

The Canadian Real Estate Association offers good advice.

As a potential home buyer, look for:

  • Mould in corners where the walls and ceilings meet.
  • Signs of roof vents
  • Painted concrete basement floors, with circular marks
  • Damaged or broken seals on the electric meter
  • Unusual wiring on the exterior of the home
  • Brownish stains that bleeds down along the siding around the soffit.
  • Patterns of screw holes on the walls
  • Alternation of fire places
  • Evidence of patching on the basement ceiling leading to the ground floor

 

Ask your realtor to protect your interests against the purchase of a former Grow Op with a Buyers’ Condition. Seek a competent home inspector who has experience identifying former Grow Ops.

 

As a potential landlord, look for:

  • Does the potential tenant inspect every room?
  • Obtain identification
  • What are their references and have they been checked?
  • Did the potential tenant complete the rental application in front of you?
  • Does the potential tenant review the rental/lease agreement?
    • And if so, will they take exception to clauses that say-
      • Applicant will provide reasonable access to the premise
      • Allow for inspection of hot water tanks and furnace every two months
      • No extra tenants without landlord permission
      • Criminal activity will result in immediate suspension of the lease.
  • Did the potential tenant spend more time looking at the breaker-box, plumbing and basement

 

In BC, a landlord eviction was upheld even in the case of a tenant who had a Health Canada certificate to have marijuana for personal medical use.

 

Additional landlord protective activities:

  • Let neighbors know the property is being rented and how to contact you;
  • Record make, model, year and license of tenant vehicles
  • Reconfirm verbally with the tenant the clauses in the rental agreement that provide for internal and external inspections of the property
  • Ask to pick up monthly cheques, not cash.

 

 

 

To protect your neighbourhood, watch for:

  • Next door is moving in with unrecognizable equipment and not many household furnishings
  • They move in with copper and/or PVC pipe, soil, halogen lamps, ducting and plastic sheeting
  • They come and go but never seem to stay overnight
  • Little or no garbage is brought to the curb each week
  • Windows are dark, and may be secured with metal bars, blacked out or heavily draped
  • A strong odor similar to skunk cabbage comes from the building
  • Power meter spins at high rate of speed or is stopped but the lights are on.
  • Heavy condensation on the inside of windows
  • Humming sound of fans or generators
  • Condensation or discoloring on the roof
  • Unusual amounts of steam coming from vents in the house in cold weather.
  • Rooftop with no snow on it when everyone else has snow on the roof
  • Individuals come to do exterior maintenance (shovel snow, mow lawn) but do not stay
  • People entering and exiting from side entrances or through the garage only.
  • Excessive security such as guard dogs, “Keep Out” signs, high fences, heavy chains and locks on gates.

 

In all cases, if you suspect something, please report it to police. Take no other action. Stay safe.

 

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