In Canada, despite the current process of legalizing marijuana well underway, Grow-ops remain a property no banks will finance – not even after they’ve been remediated and deemed safe and liveable.
Once a property is flagged as a grow-op, or for having had any gang or drug-related criminal activity attached to it, the house won’t get a mortgage because no one will insure it. It’s cash only at that point.
Interestingly, the flag is generally public, but not always. Sometimes it catches you by surprise.
That’s what happened to a client of mine about a year ago. They had wanted to see a particular property so, as usual, I did my research ahead of time. Look up its sales history, and see that it’s not flagged. No flags turned up in the database, and all looked fine.
We arrived at the property and my senses confirmed what I had researched. Had there been a history of drug-making, my body would have let me know the way it always does. Because of my asthma, I’m a fantastic natural detector of mold, spores, ozone, and some other environmental toxins. My nose drips, I have trouble breathing, I get itchy all over my face and ears, and my face can turn red. Trust me, if there’s mold in the house, I’ll know about it. At this property, like I said, my Spidey senses confirmed the research – this was clearly not a grow op.
My client went ahead with the mortgage approval after the offer was accepted and was well on the way to buying the house. Then the bank came back with more information than we expected. The mortgage was declined with the slightest hint that it was due to criminal activity related to the property.
My client was shocked. So was I. It was bizarre – Nowhere in police listings and the multiple lists and even Google searches I conducted did that property’s apparently sordid history ever show up.
Here’s the other thing: Once a property is listed as a grow op, it’s a grow op forever. Even after remediation (restoring it to habitable), the property remains on the list. I heard once that a house that had been flagged was demolished. The owners then applied to the city to change the address number of the property because the address itself was flagged. Even though the house itself was removed and a new one built on the site, the address itself remained flagged.
I don’t generally recommend people buy grow ops – there’s a long list of expensive things to repair and restore (as I wrote about here), but then again, there was the time I did help my client buy an X-grow op and it worked out really well.
Bottom line is, if you’re considering buying a grow op, perhaps tempted by the low, low price tag, bring cash, remember there is a lot more cash needed for the repairs, and make sure you get a knowledgeable real estate agent to help you cross all the Ts and dot all the I’s before you commit to the major overhaul.
Have you ever considered buying a grow op?