**note**-I was visiting the site of a former grow-op in my neighbourhood and decided to film this video there. Please excuse the poor background and setting =
A Popular question I’ve been fielding over the past little while, that I’d like to shed some more light on, is former marijuana grow ops in British Columbia-and whether they can be financed
Well, short answer: Yes you can finance them.
However typically there is a little more work involved as far as due diligence goes on the part of the lenders’ mortgage underwriting team and of course not all banks are going to be willing to jump through these extra set of hoops so to speak.
What are you going to require? First and foremost you will need an air quality test conducted by an environmental firm. At the time of this blog, the environmental firm that is most widely regarded by lenders in the Greater Vancouver area is Medallion Homes.
So the environmental firm enters the premises and takes an air sampling in an area where the grow op was actually situated and an area of the house where there was no grow-op, in order to have an ambient and a control comparison and so that they may provide you with a breakdown or a readout of mold content or chemical content, if any.
In most cases, the reports come back fine without any issues. However if there had been significant moisture problems, the test may not come back so good and in these cases, some additional remediation will be required before the bank will feel comfortable enough to finance.
I mentioned Medallion Homes earlier. Generally this is the firm that most of the lenders in Vancouver want to see conduct this air quality test and report. There are some other firms whose reports are accepted by certain lenders but for the most part you want to stick with the popular choice which is currently Medallion Homes wherever possible because it will give you the most flexibility as far as choice of lenders go.
Another important point of consideration: which lenders are actually financing former grow-ops right now?
One of the most common questions from potential buyers is “Are these lenders that are financing grow-ops going to charge me some astronomical rate?”
Absolutely not. There are credit unions and chartered banks that will finance grow-ops and offer similar going rates.
Some lenders, your bank for example, of course simply will not look at your deal if the property is a former grow op under any circumstances, even if it was a grow op 2 owners ago and everything has been reported to be fine. That is the unfortunate reality of the banks and their policies. But do not fear, you do have options through the use of the services of an independent Mortgage Professional =)
In any case:
Step 1 is the air quality test and
Step 2 is a full appraisal, in most cases, the lender will want to ensure the market value of the home has not been adversely affected as a result of it being a former grow op. Like it or not, there is a stereotype that’s attached to the home now.
And Lastly, Step 3: depending on the local municipality where the property is located, you will need either confirmation from the city that occupancy is still in place, or that the occupancy permit has been re-issued or even a letter from the city stating that the property is conforming to all bylaws. Essentially what the letter is saying is, “Yes, we know it was a grow op, but the current owner has taken the steps to get the property back to the level where it’s safe for human habitation.”
I had a couple a few weeks ago shy away from a property when they found out that it was a former grow op but really, in most circumstances former grow ops actually aren’t as bad as portrayed on television.
It is not always like they show on the news with black mold and chemicals running rampant throughout the property. Oftentimes, the grow op was confined to a single room.
Regardless, they still require the same level of due diligence. It doesn’t matter if it was 1 plant or 500 plants if it’s a busted grow op, the stereotype or stigma if you will-will remain forever, or at least until the home is torn down and rebuilt from the ground up..
Now, if you or somebody you know is looking to finance one and having problems getting financing, that doesn’t mean it’s impossible. It just means you’re going to need the three things air quality, appraisal and a comfort letter from the city or the occupancy permit, depending on the municipality.
Not all municipalities pull the occupancy permits… but some do. So if you’re in Surrey, or Mission, or you’re in Vancouver or Coquitlam, the rules and regulations will vary. This is why it’s important to be dealing with somebody who knows what the rules are in that unique market and can get a bank that will finance it as well..
Thank you.
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