Cannabis Cultivation: Conversations for REALTORS® and Homeowners
On October 17, it became legal for Canadians to grow cannabis in their own homes. Still, just because it is legal, it doesn't mean it is a good idea. A lack of guidance when it comes to issues around remediation, not to mention lenders' and insurers' reluctance to take on the risk of a home where cannabis has been grown, mean that homeowners who have grown cannabis might be in for an unpleasant surprise when it comes time to sell. These new risks give REALTORS® an excellent opportunity to add value to their clients by simply having conversations about these risks. Here are some questions (and answers) REALTORS® may get from clients who want to grow cannabis.
Now that cannabis is legal, why is growing it at home different from growing any other sort of plant?
According to Fraser Valley Real Estate Board's website safegrowhomes.ca, cannabis is not like typical houseplants. If it is being grown for harvesting, its light, water and nutrient requirements are much higher than those of houseplants. It also produces a lot more of its own moisture—potentially equivalent to that of five to seven house plants. That means growing cannabis could significantly increase the potential for mold in your home.
Will growing cannabis make it harder for me to sell my home in the future?
It is quite probable that choosing to grow cannabis at home will make it harder to sell, even if only a few plants were grown.
First, there is a stigma around growing cannabis at home. Because cannabis is a demanding plant to grow and its cultivation is more likely to create mold, there's a good reason for the stigma around legal growing. To make it worse, there are no official standards when it comes to remediating a home that has been damaged by cannabis cultivation. The British Columbia Real Estate Association (BCREA) and the provinces 11 regional real estate boards have all called on the BC government to implement province-wide remediation standards. You can learn more about BCREA's recommendations here.
But it’s not just about stigma. Many lenders and insurers have said they may avoid homes where cannabis has been grown. That means potential buyers might have trouble getting financing or pay higher premiums for home insurance—all factors that will impact the purchase price they are willing to pay.
Some buyers may just walk away and opt for a house without these risks. According to a Zoocasa 2018 housing report, 48 per cent of British Columbians say they would think twice about purchasing a property where cannabis was grown, even if there were only four plants.
Do I have to disclose if I’m growing cannabis at home if I want to sell?
Homeowners are only asked to declare whether cannabis has been grown on the property illegally on the Property Disclosure Statement (PDS). Still, if cannabis has been grown legally and this has resulted in a material latent defect, like mold, this must be declared. The PDS has recently been updated to reflect legalization of cannabis. Find out more here.
Will growing at home impact my mortgage?
It may. Ahead of legalization, some lenders have reported that they will not offer mortgages on homes where cannabis has been grown. A Dominion Lending website reviewed by BCREA notes that as of October 11, they only had one lender willing to finance such a home and with a one per cent additional premium. This won't just impact resale prospects; homeowners may face problems when their mortgage comes up for renewal.
Even if growing at home causes some damage, that’s what I have insurance for, right?
No. The Fraser Valley Real Estate Board’s safegrowhomes.ca website says this:
"The BC Automobile Association (BCAA), which offers home insurance as well as automobile insurance, says home insurance in Canada does not cover any loss if the premises are used for cannabis activities."
That’s not all. BCAA flat-out will not cover any loss to an insured home if the home or another detached structure or property is used to grow cannabis, even if the loss is completely unrelated to cultivation. Homeowners and buyers need to have frank conversations with insurers if they intend to grow at home or buy a property where cannabis has been grown in the past.
Is there a safe way to grow?
Right now, there are no guidelines on how to safely grow at home, just as there are no guidelines on how to remediate a home where cannabis has been grown. BCREA and the province's 11 regional real estate boards have asked the provincial government to provide peace-of-mind for homeowners and buyers by clarifying what makes a grow home a safe home.
For more information on issues related to cannabis cultivation for homeowners and renters, visit Fraser Valley Real Estate Board’s website: safegrowhomes.ca.
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