Legislative changes will soon usher in a new era of cannabis legalization across Canada.

How does this affect REALTORS^®? What do you need to know? How can you support and protect your clients with the right information?

CREB^®'s Member Practice team breaks down some of the home growing red flags in this week's edition of CREB^®Talk.

Grow-ops

The term grow-op is currently used to describe a residence where marijuana is cultivated, but does not differentiate between legal and illegal activity. 

Make sure to ask sellers direct questions. For example, "do you know if cannabis ever been grown in or on the property?" This will help to gather more specific information and minimize miscommunication.

We also recommend asking this question in writing so there's a record of the seller's response. Email likely works best.

Mortgages

Financial institutions are still determining how to deal with the new legislation on marijuana, but it's been suggested that each mortgage application will be reviewed individually. 

Some financial institutions may not fund mortgages for homes where legal cannabis growing has taken place without further property inspections. Buyers should be made aware of this and be advised to speak with their mortgage broker or lender directly. 

Insurance

Since rates and policies vary among insurance companies, buyers should speak with their insurance agent directly if cannabis has been grown in or on the property. This will help your clients avoid being denied coverage at closing or having their rates greatly increased.

Home inspections

Many home inspectors in Alberta have voiced concerns over the damage that cannabis growth can cause in homes. Depending on how an indoor garden is ventilated, mold growth can be a major concern. 

According to the RCMP, some home owners will try to avoid high energy bills by bypassing their meters with unpermitted and dangerous electrical work. 

REALTORS^® should always recommend that their clients get home inspections to ensure the dwelling is safe for occupation. A thorough home inspection can detect many of these issues and help buyers make informed decisions.  

Multi-family homes

With a drive towards densification of inner city neighbourhoods, developers are building more multi-unit dwellings such as duplexes, triplexes and quadraplexes.

Home inspectors have identified illegal activities connected to legal grow operations, such as syphoning electricity from a neighbouring unit, as a problem for home owners.

Commercial real estate

The impact of legal cannabis is not limited to residential properties. REALTORS^® who work in commercial real estate should ensure they understand provincial and municipal restrictions around the growth and sale of cannabis in retail stores and manufacturing plants.

To view marijuana red flags identified by CREA and the RCMP, click here.

If you have further questions, please contact CREB^® Member Practice at mp@creb.ca.