The day has finally arrived for law-abiding cannabis fans in Canada.
But anyone who suddenly decides to light up in the living room of their rental property or try their green thumb at growing marijuana plants in the basement, they might want to take a moment to ponder some real estate issues.
Kevin Brown manages the HomeLife Glenayre Realty office in Chilliwack and he’s spent considerable time over the last few months training realtors and investors about cannabis growing and legal disclosure during real estate transactions.
Under marijuana prohibition, a seller was required to disclose if a marijuana grow operation had every been in the home. There is nothing new with that.
“It negatively affects property values,” Brown told The Progress. “Realtors deal with this all the time.”
Much of the negative affect stems from stigma, but Brown says the practical considerations of moisture, mould, and structural and electrical damage lead to the stigma.
But now with cannabis suddenly becoming legal, the new federal law allows for personal growing of up to four plants inside a home. Now that a small grow-op isn’t illegal, some homeowners might decide to take advantage. What Brown is teaching realtors and investors is that legal or illegal, a home buyer might still ask the question so even if legal growing has occurred, that could still lower a property’s value.
As for landlords and property investors, they might have agreements in place about illegal substances, not legal ones.
”Those tenancy agreements usually prohibit the growth of illegal substances like cannabis but Oct. 17 the growth of cannabis up to four plants is no longer illegal,” Brown said. “One of the pieces of education that we are giving to realtors and investors is to have them seek legal advice on the effects of disclosure.”
Speaking for HomeLife, Brown said realtors at his company representing buyers will be asking the question of a seller: Has cannabis been grown in this home?
“I’m going to force you as a seller to disclose,” he says. “HomeLife agents want our buyers to know, was there any growth or consumption of cannabis on this property.”
Brown’s approach is a legal one for realtors, investors and homeowners, but he is far from someone opposed to cannabis legalization.
“There is a serious lack of education on the benefits of cannabis,” he said, adding that someone might find their way to it medically to deal with arthritis or other conditions, smoke some out on the back deck of the townhouse, and next thing they know there is a complaint and it makes it into the strata minutes.
And then property values can be affected.
People need to be careful, and investors should talk to a lawyer about putting addendums on cannabis use and growth onto tenancy agreements.
While legalization is now upon us via the federal government, Brown is concerned that the provincial government and most municipal governments aren’t ready.
The Cannabis Act that comes into effect on Oct. 17 means Canadians can grow four plants at home. But the government of B.C. has done nothing to update building codes. Brown thinks if the province finally gets on board with updating the B.C. Building Code, cannabis legalization could be a boon for builders creating designated grow rooms that are permitted and built by licensed contractors, with certified HVAC technicians, electricians and plumbers.
“We may just see the stigma of a grow room turn into a selling feature if all goes down the way I think it will.”
He thinks once the stigma is gone, a properly constructed grown room could be a selling feature.