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So you want to buy a house that had a grow op!
October 24, 2023 | Posted by: Andrew Wade
All you need to know about buying a home that had or still has a grow op in it!There are certainly a few things we need to warn you with up front as buying a home like this is no easy task! Luckily I still have one lender that doesn't surcharge the rate but does require default insurance at best rates with CMHC to purchase these types of properties.
In B.C. there seems to be a huge number of homes that are used for the legal and illegal cultivation of marijuana. Usually a neighbour complaining will alert the bylaw officers to come check this out and deem it to be legal or illegal based on permits and licenses produced. If it is deemed as an illegal operation then it would be shut down by the authorities (likely the police will be involved), then it becomes VERY difficult for the owners to sell or finance the property-even if it was tenanted!
Then the “stigma” of the property being deemed a former grow-op, this would stay with the property FOREVER in B.C. It must be disclosed on the Property Disclosure Statement by the seller regardless of how much time has past. This is the major issue about purchasing a property like this even if the grow op was in the garage not connected to the home, it stays with the property as a whole and Occupancy can be lost until it is tested for air quality and mold to gain back occupancy!
Now when it comes time to finance such a property there are many lenders that will not provide mortgages on them knowing what they were previously. As it stands right now most of the major banks will not lend on these types of properties. Also, of the two major mortgage insurers (Canada Guarantee and Sagen) will not insure a mortgage on former grow-ops. They will only if the dwelling is bull-dozed and rebuilt from the ground up.
Luckily, there are still lenders and CMHC that will finance these properties. Generally we allocate a Credit Union for these situations, but expect a surcharge on rate and a lot more documentation!
Here is what is generally needed:
Purchases and Refinances will be considered, if you already own the home like this.
Primary residences only (no rental properties or recreational properties)
Property must be fully remediated with proof given
Copy of the Property Disclosure Statement
Copy of the Occupancy Permit-
- If the property was shut down by the authorities, a new occupancy permit must be issued by the city/municipality. Normally this would require that the property be brought back up to building code.
Copy of a post remediation Home Inspection
Copy of the Level 1 Environmental Assessment, including an Air Quality Test
- An Environmental Phase 1 Assessment, which is an air quality test to ensure that there are no toxic mould or other harmful contaminents in the property.
The above two items are generally what are required. However, some lenders and also in some cases, an Enviromental Phase 2 assessment may be required. This is a much more extensive review of the property and would involve taking drywall samples, flooring samples, etc. Again to ensure no toxic mould or other harmful contaminents are present in the property.
A minimum 1.00% interest rate surcharge on best Member rate
Copy of RCMP/police report
If members do not meet the above qualifications no exceptions will be considered.
Obviously properties of this type require a lot more work and documentation in order to obtain financing but it is still quite possible.
If you would like to discuss this further or have a comment I would love to hear from you. If you are looking for financing for a Commercial Grow Op this is also something I can assist with
Sincerely
Andrew Wade
