GROW-OPS A DOWNER FOR REAL ESTATE AGENTS

Groups Seek Clear Policy to Deal With Repercussions on Sales

Canada's realtors are quietly waging war on former marijuana
grow-ops.

While there's not much they can do to stop a grow-op from launching,
realtors are banding together locally, provincially and nationally to
offset the repercussions that can result when a former grow-op is
resold to an unsuspecting buyer.

"The key part of it is that the house speaks for itself, so that these
houses can be assessed - and need to be assessed," says Brian Walker,
president of the Ontario Real Estate Association (OREA).

His group, which represents realtors across the province, has formed a
task force to look at the issues surrounding grow-ops.

But developing a clear policy on the issue has been
difficult.

"In some ways, we're struggling with which way to cope with it,
because, what is a grow-op? That's one of the big questions. Is a
house a grow-op if you had 10 marijuana plants growing in the
basement?" says Walker, a broker who operates an agency based in
Richmond Hill, Ont.

The Canadian Real Estate Association (CREA), provincial real estate
associations and local real estate boards are also offering their
members training and workshops with police and industry groups.

They have introduced mandatory or voluntary disclosure requirements
for sellers and are doing as much as possible to increase public
awareness about the potential pitfalls of former grow-op sites.

Among other concerns, former grow-ops pose health risks, structural
damage due to mould or water, or changes to the foundation as a result
of growers trying to bypass electricity meters or obtain power illegally.

All these things can ultimately reduce a property's
value.

OREA has developed a consumer property information statement that it
distributes to its members, which includes a disclosure on whether a
property was a grow-op.

Some groups, including the Calgary Health Region and Winnipeg Police
Service, have started publishing former grow-op addresses online.

The registries list properties where police have scuttled operations
and charged the occupants.

OREA doesn't have a clear policy on a registry of former grow-op sites
because the association is not sure what defines a grow-op.

"Does that mean that a house that had 10 plants growing in the
basement will be stigmatized?" says Walker. "In some cases, it could
have been the tenant running the grow-op.

"Those are the cases where it's clear that the house speaks for
itself. There could have been no damage arising from that activity, so
it does seem unfair to stigmatize a property like that."

Lorne Weiss, a Winnipeg realtor who serves as vice-chairman of the
CREA federal affairs committee, says "the very bold move" by his
city's police department to publish former grow-op addresses online
has assisted the caveat emptor (or buyer beware) process.

He says most realtors believe a seller should disclose former
grow-ops, and real estate associations and boards across the country
have done a good job of informing their members about the risks and
implications of marketing them.

"It's not something you can easily apply the principle of caveat
emptor to, because in many cases the home was cosmetically well
repaired," he says.

Winnipeg realtors are ethically obligated to disclose former grow-ops,
although there is no disclosure form required.

If a seller instructs a realtor not to disclose, or the realtor knows
a site was once a grow-op, the realtor must refuse the listing.

If a seller does not inform a listing agent that a house was a
grow-op, he can't be held accountable, says Weiss.

Similar disclosure rules are in place across the country. Some real
estate boards require disclosure forms to be signed, while others do
not.

Critics of the idea of a national grow-op registry focus on the hazy
definition of a grow-op.

"If you have three plants in your house and you're arrested, your
house is a grow-op," says Weiss. "That throws you into the same
category as somebody who has a house or a farm property or a garden
and is raising hundreds of plants.

"I think (Winnipeg) has a pretty good system in the sense that, if
somebody is charged, their house goes on the registry. It's incumbent
upon the buyer or his agent to investigate as to what the nature of
the grow-op was."

He notes the industry has worked hard to raise the level of
professionalism among its members and supports government efforts to
increase penalties for grow-ops and identify grow-op houses.

Weiss, who has sold and visited former grow-ops, says the role of the
realtor is to make sure that buyers are properly informed and have all
the facts and advice to make a decision.

"They're definitely stigmatized and (the grow-op history) has an
impact on value. But there's always a buyer."

The Calgary Real Estate Board (CREB) participates in a grow-op task
force that includes fire, police and health officials, as well as
banks and mortgage brokers.

A majority of CREB members also take courses and workshops provided by
the board and city police during the past two years.

"Realtors are strongly encouraged to check all the properties they're
selling or listing to make sure they're aware of potential problems,"
says CREB president Ron Stanners.

Stanners says Calgary police are busting about 300 grow-ops per year,
or almost one a day. CREB requires that realtors have sellers sign a
disclosure form regarding a property's grow-op status.

Realtors who do not disclose could be held liable for
damages.

Stanners, a broker who owns and operates his own agency, says some of
his realtors have refused to list homes they suspected were former
grow-ops, even though they weren't busted by police or listed on the
Calgary Health Region's site.

"There wasn't the same problem five or 10 years ago that there is
now," says Stanners. "There's no doubt there's more today than there
was back then.

"The realtors have been very well educated - unless they've been well
hidden - in recognizing the signs and symbols.

"They're making their knowledge available to the buyers (and) I would
say the public is being protected as best they can from our end of
it."

He advises buyers to instruct their agents to insert a condition in
the sales contract whereby the seller warrants the property was never
a grow-op or drug-manufacturing house.

Ron Esche, CREB executive vice-president and CEO, says former grow-ops
that have not been busted by police can pose a health hazard.

The City of Calgary requires that a condemned former grow-op's
remediated heating, electricity, plumbing and air quality be inspected
and approved before it goes back on the market.

Esche praises Calgary's city council for creating new bylaws that give
municipal officials more authority over the remediation process.

Calgary, he says, is probably "slightly ahead of the curve" than other
municipalities on grow-ups because it tackles the problem collectively
and came up with some good recommendations.