To Disclose or Not To Disclose?

The Real Estate Council of Alberta (RECA) often fields questions about the disclosure requirements of former grow-op properties, both from real estate industry professionals and consumers.

The fact that a home was used as a former marijuana grow-op would be a material latent defect that  has to be disclosed if the property has not been professionally remedied. The growing conditions for marijuana create an ideal environment for potentially dangerous mould and mould spores. Some of these dangers may linger after the grow-op has been shut down and though some damage may be covered up with fresh paint or new flooring, damage that is not visible can make a property unfit for habitation and therefore, such a material latent defect would have to be disclosed.

In Alberta, Alberta Health Services, through its Environmental Health program, will attend some marijuana grow operations with law enforcement agencies when those agencies have identified a premises as containing a drug operation. Alberta Heath Services can issue a Health Inspection Order, which means the residence is closed to the public until required remediation work is completed to the satisfaction of the Executive Officer of Alberta Health Services.

How are real estate professionals to handle listing former grow-ops that have been professionally “remediated” or remedied?

Once a property has been professionally remediated, it is unlikely that a material latent defect remains. As such, the seller and his or her listing brokerage are not required to disclose that the property was once a grow-op as long as it has been professionally remediated. Nothing prevents a buyer or a buyer’s representative from asking a seller’s representative if a property was once a grow-op, but the seller and seller’s representative are not required to answer. That being said, if they choose to answer – they must do so honestly.

Some brokerages may be leery about listing former grow-ops as they have concerns about future civil legal issues. When representing a seller with a professionally remediated grow-op, you need to discuss with the seller whether he or she wants to disclose it. Of course, it might make a seller happy that you sold the remediated property without disclosing it, but it could lead to bad will (or worse) with a buyer who finds out after the fact.

The fact is, while a material latent defect likely no longer remains – a remediated grow-op may have a stigma associated with it and that poses a different set of considerations for buyers and sellers. This post up to this point has only considered former grow-ops from the perspective of material latent defects. For the issues surrounding former grow-ops as stigmatized property, you should review RECA’s Information Bulletin on Stigmatized Properties.

When representing buyers, do you typically inquire as to whether a property was once a grow-op? Are there any tools/websites you use to help ascertain whether a property was once a marijuana grow-op?