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Marijuana has implications for real estate investment

by Jennifer Paterson on 10 Nov 2014

Illegal marijuana growing operations in apartments, homes and commercial spaces are increasingly a challenge not just for homeowners but also for Canadian real estate investors, say experts.

Pauline Aunger, a Realtor in Ottawa and a member of the Canadian Real Estate Association, says investors could face property damage and legal risks from their tenants' growing activities.

She recomments that property managers and owners make planned visits to their leased properties on a frequent basis to ensure tenants aren't violating marijuana laws.

She also says Realtors should disclose to potential buyers if a property was used for growing marijuana. "Realtors need to ask questions of sellers if they suspect the home was ever used for the growth of marijuana," she adds.

Canadian law permits the possession and use of medical marijuana. However, a production license is required to grow marijuana for medical purposes.

Meanwhile, an increasing number of U.S. states are decriminalizing or allowing for some legal use of marijuana. The National Association of Realtors says there could be legal and financial implications for real estate transactions.

Megan Booth, senior policy analyst at the association, says: "While the legalization of marijuana has more obvious implications for residential and commercial property managers who have to deal with a variety of landlord-tenant issues, it's also creating challenges for community and condominium associations and federally assisted rental housing."

According to Booth, as laws change, multi-family properties and condos may be required to add lease addendums or modify their association rules to clarify policies on marijuana cultivation, distribution and use.

There are also additional considerations for properties where marijuana is being grown, such as potential impacts on neighbours, tenants and properties, including smoke and odours, mold from the high humidity levels needed for growing, expensive utility costs for lights and water, and even the possibility of explosions during manufacturing of related products.

 

 



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