POST-BUST, HOUSES CAN CULTIVATE SWEET DEALS

Getting a deal on a property once used to cultivate marijuana in the
basement isn't a problem as long as you know the house is safe, say
purchasers of former Whitehorse grow ops.

In a series of interviews Tuesday with the Star, purchasers of homes
that contained marijuana grow operations shut down by the RCMP in the
fall of 2005 said they had their houses inspected before they bought,
and are confident the properties are safe.

Lindsay Schneider, who lives at 208 Falcon Dr., said she and her
husband were told by the real estate agent that the house had been
used as a grow op and didn't have a problem with it.

"We ended up getting it as a good deal because it was labelled a drug
house; we were happy," Schneider said.

She said the bank she and her husband received financing from required
the couple to have the home inspected before they could get a mortgage
and the property came out with a clean bill of health.

"When we told the bank which house we wanted, they said, 'No, forget
it because we know it has been used as a grow operation.'

"Well, we phoned another bank and they said we were approved no
problem as long as we had an engineering company, I can't remember
which one, come in and inspect the whole house for mould. It had to be
certified basically before they put a mortgage on it," she said.

"It came back as there was no problem. We had looked at the other grow
houses but there was serious mould and damage and we were lucky they
weren't in this for very long."

In the fall of 2005, the RCMP raided 23 Black Bear Lane, 22 Tigereye
Cres., 86 Falcon Drive, and 208 Falcon Dr. in Copper Ridge.

The RCMP also shut down 41 Grouse Cres. in Arkell and 16 Sitka Cres.
in the Spruce Hill subdivision.

Schneider said the former property owner paid for the engineering
report and the fact the house was used as a grow op was listed as an
item on the property disclosure form at the time of sale.

According to documents on file at the Yukon Land Titles Office,
Schneider and her husband, Wayne, purchased 208 Falcon Dr. on Feb. 16,
2006 for $255,000, with a mortgage from the Canadian Imperial Bank of
Commerce (CIBC).

The property was formerly owned by Xiu Yun Leung, who purchased the
property on May 18, 2005 for $235,000.

Leung took out a $166,000-mortgage for the property with TD Canada
Trust (TD).

Schneider said she doesn't know if it's necessary for the city to put
grow op information on land titles.

"If we were to try to sell it again, we would have to disclose that
information on our real estate agreement," she said.

"If they put it on the title, it doesn't really make much difference
to us because we have to disclose it anyway."

Earlier this week, city council discussed a controlled substance
properties bylaw. It would give municipal workers the authority to
enter and inspect properties that have been investigated by
territorial Safer Communities and Neighbourhoods Act investigators
and/or the RCMP for drug purposes.

John Taylor, the city's manager of bylaw services, said the proposed
bylaw would give the city the authority to bar landlords from renting
out their properties until they were remediated (fixed up to safe standards).

He said he would also like to see the fact the house was a grow
operation listed on property titles.

Bil Roberts purchased 22 Tigereye Cres. on April 12, 2006 for $250,000
with a mortgage from CIBC.

The house was formerly owned by Zheng Qui and Zhi Wei Lu, who
purchased the house on Dec. 31, 2004 for $240,000 with a
$180,000-mortgage from the Royal Bank of Canada (RBC).

Roberts said Tuesday that he has no problem with the fact that his
home was used for the production of marijuana because he had several
engineering reports done on his property and is confident it's safe.

"(I have no problem with it) whatsoever. I don't buy something if it's
junk. It doesn't bother me a sweet tweet.

"I had three engineering reports and we had all of the surveys and all
of the aspects in terms of safety and presence of mould," Roberts said.

"We were lucky, I don't know if you know about this house but this
particular place only had an operation for a very few months and it
was all in tents. All of the hydroponics were managed and the air flow
was managed. I don't know about the other houses."

According to information at the land titles office, 41 Grouse Cres. in
Arkell was purchased by Drew Philipsen for $195,000 on June 14, 2006
with a mortgage from RBC. The previous owner of the house was Mei Yui
Li, who purchased the house on July 29, 2005 for $172,000 with a
mortgage from CIBC.

The home at 16 Sitka Cres. was bought by Robert Lariviere on Jan. 2,
2007 for $299,000 with a mortgage from CIBC. The house was formerly
owned by Cui Ping Su, who bought the house on July 14, 2005 for
$281,000 with a mortgage from RBC.

The home at 23 Black Bear Lane, bought in April 2005 by Chang Huan He
and Feng Zia When for $240,000 with a $220,000-mortgage from CIBC, and
the home on 86 Falcon Dr., bought by Lan Bich Tang and Van T Tran in
June 2005 for $239,000 with a $220,000 mortgage from the TD-Canada
Trust bank, have not been sold.

Roberts said he didn't feel there was a problem with putting the drug
house stamp on land titles but felt it may not be necessary because
people selling their house were required disclose that information at
the time of sale.

Mike Racz, president of the Yukon Real Estate Association, said houses
purchased through real estate agents required sellers to disclose the
grow op information on a disclosure form.

"When we list a property, its one of the questions on the disclosure
form.

"It's a legal document. It's a way of getting a history on the
property," Racz said.

"By law we are required to disclose everything we know about a
property."

He said those selling houses privately are not required to disclose
that a home may have been a grow op.

"The vendor doesn't have to if they're selling privately. They don't
have to tell you anything because they don't fill out a property
disclosure form. It's buyer beware."

Racz said the fact a house was used in a marijuana grow operation
often stigmatizes a property leading to a discount on sale price of as
much as 10 per cent.

"You can lose $20,000, $30,000 or $40,000 off the selling
price."

Other things that can stigmatize a property, he said, were things such
as violent deaths that occurred in the home or other illegal activities.

Racz said banks also often require engineering reports before they
will provide bank financing for a property.

"The impact may be not so much economic as it would be for them to get
a mortgage."

Maura Drew-Lytle, a spokeswoman for the Canadian Banking Association,
said there are no set policies on people getting bank financing for
the purchase of former grow ops.

"Banks set their own policies.

"Banks are looking at the borrowers and they're also looking at the
property. They want to make sure if you're looking to borrow $200,000
from them, the house is worth $200,000," she said.

"They want to make sure the house is valued at what the person is
buying it for, because if a person can't pay the mortgage, the house
is the collateral."

Each mortgage, she said, is dealt with on a case-by-case
basis.

She said the situation of who is responsible for fixing up grow houses
in cases where borrowers have defaulted on their loans varies across
the country.

"It varies from place to place. It's not always the bank that would
look after it. It could be the municipality that looks after it."

Mark McInnis, vice-president of insurance underwriting, servicing and
policy with the Canada Home and Mortgage Corp. (CMHC), said his
organization has a policy of paying insurance claims to lending
institutions such as banks that have issued mortgages for houses that
end up becoming grow operations.

"We believe the lender who made the loan had no idea it was going to
be used for grow op purposes.

"We pay all the claims of those grow ops," he said.

McInnis said after paying the claims to lending institutions, they
then pursue court action to retrieve the money from the individual who
borrowed the money.

"If we didn't do that, we're worried the lender may not disclose it
was a grow op and sell the property as is."

McInnis said the CMHC was not the only organization that issues
mortgage insurance and that he was aware that some competitors were
selling former grow ops that have not been fixed up.

"CMHC is not the only mortgage insurer in town. Our competitor is on
record that they sell houses as is."

According to a March 2007 study by the Canada Home and Mortgage Corp.,
grow operations are an increasing problem across the country, leading
several cities in Alberta and B.C. to enact their own grow op bylaws.

The study of 12 grow op homes in Canada showed that many properties
suffered electrical, structural and mould damage that on some
occasions had to be paid for by unsuspecting home buyers.

"In all of the the subject houses, the investigators stressed the need
to gut the basements and all other rooms used for growing, and to
ensure that there was no mould in the insulation or wall cavity after
the drywall was removed. Contractors specifically trained in mould
remediation were recommended for this purpose," the study states.

"One subject in the study was a home purchased by a family who were
unaware that their home was a former marijuana grow operation until
they spoke with neighbours several months after they took occupancy.

"At the time of the study, no avenues of recourse for the new owners
had been identified and they had to assume responsibility for the
total cost of remediation. CMHC has since been contacted by several
home buyers in similar positions."

The CHMC report recommended several measures, including national
remediation requirements, grow op specific environmental assessments
and that detailed records of the required work be kept by mortgage
lenders.

Spokespeople for CIBC, RBC, TD-Canada Trust and ScotiaBank could not
be reached for comment for this article.