Warning over former grow-op homes
Homes that have been used for growing marijuana are becoming more difficult to buy and insure.
The Financial Post reports that mortgage lenders and insurance companies are increasingly declining applications for properties that have been used as grow ops due to the potential damage to the property.
Mould in the walls and chemicals that have permeated carpets and walls can cause costly issues and buyers may find that insurers and lenders insist on expensive tests before agreeing to proceed.
Brokers report that lenders will often refuse a loan even where there has been a single marijuana plant in the property and that, along with the potential damage, lenders are concerned that a criminal past of a property could affect its future resale value.
How will I know the property I’m buying is a former grow-op?
In British Columbia, the property disclosure and/or MLS listing will indicate the property has been a former grow-op. Not all provinces in Canada require a property disclosure. Ask Team Penley McNaughton, your trusted Realtors, who will research the property and help find out if it was a former grow-op.
Where can I get a mortgage for a former grow-op?
The truth is, not very many places.
Over the past few years the majority of lenders in Canada no longer finance former grow-ops. There’s a good chance that if you walk into your local bank branch they’ll turn you away. There is only a handful of lenders left that will even consider lending on a former grow-op and for the most part are made up of local Credit Unions.
Since there are fewer mortgage financing options for a former grow-op, be prepared to potentially pay higher rates at origination and renewal. Make sure you thoroughly review the terms & conditions of the mortgage and make sure they fit with your current and long-term goals for the property.
While you might be getting a “deal” on the purchase price of a former grow-op, you may find it ends up costing you more in the long run since you are pigeon-holed into one lender.
When will a lender loan on a former grow-op?
Lenders will only provide financing to a former grow-op if it has been fully remediated. In British Columbia whenever a property disclosure and/or MLS listing indicates that a home has been declared a grow-op, lenders will require a satisfactory Phase 1 Environmental Assessment and a re-issued occupancy permit by the applicable municipality.
If you are thinking of purchasing a former grow-op, the listing REALTOR should have both on hand. Ask to see them. Without both a satisfactory Phase 1 Environmental Assessment and occupancy permit in place you will not get a mortgage.
How does buying a former grow-op affect value?
Since former grow-ops were once a hazard to the surrounding area they can contribute to a decline of the market value of the property.
Should I have other concerns when buying a former grow-op?
Absolutely! Since the property was once used for criminal activity you need to aware that your property may still be viewed as such by other criminals, and you may be more susceptible to home invasions and break & enters.
– See more at: http://www.rew.ca/news/think-that-former-grow-op-is-a-deal-think-again-1.1342233#sthash.Iss7FAX2.dpuf
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