Marijuana will be legalized on October 17, 2018, and Ontario has passed new laws on where, how and who can purchase, possess and consume marijuana in the province. The Cannabis Act will legalize marijuana and allow up to four plants to be grown in your residence. With the imminent legalization of cannabis, this has posed some concerns to potential home buyers with respect to health and safety issues regarding former grow-ops in homes for sale.

This legislation, when passed, will affect homeowners, agents, brokers, insurance companies, home inspectors and lawyers. Insurance companies, for instance, will need to review existing home insurance policies, standard mortgage terms, condominium corporation rules and nuisance law with the possibility of amending same to coincide with the new laws on marijuana use and grow-ops. 

Insurance companies with strict home insurance policies usually do not permit grow-ops on properties. A hurdle to potential purchasers will be when they are required to obtain fire insurance in order to be approved for a mortgage when purchasing such grow-op homes. Insurance companies may need to reassess and implement changes to correspond with changing marijuana laws, however, these changes may come with higher premiums for such homeowners. 

If you are considering a mortgage and when there are signs of a grow-op on the property regardless of legalities, large institutional lenders usually will not provide mortgage approval. As a result, purchasers of these properties will need to seek out mortgages from alternative lenders which may require extensive paperwork, air and mould testing and higher interest rates and lender fees.  

The concern for lenders and insurers is cannabis related damage to property and the uncertainties around repair and costs. Home inspectors will need to be trained to identify such property damage caused by the cultivation of marijuana. Some examples of the risks of cultivating marijuana in the home are the development of mould, an overtaxed electrical system due to the use of grow lamps, increased fire hazards as a result of drying marijuana in stoves, and unwanted odours from the plants. These health, safety and nuisance concerns are part of the issues attached to such properties where cannabis has been grown and consumed. Such issues can affect the property’s value and marketability.

In condominiums and multi-unit residential complexes, these risks are amplified. Condo corporations will have to reassess any new rule made which will need to be “reasonable” and promote the safety, security or welfare of the owners, or the property, or prevent unreasonable interference with the use and enjoyment of the units. A condo corporation may argue that due to these risks of growing marijuana in the units a rule banning the growth of marijuana may promote the safety, security or welfare of the owners of the property. On the other hand, the condo corporation may have a tougher time banning such marijuana consumption that does not involve smoke, such as edibles. Another issue would be special consideration given to those residents who smoke marijuana for medical purposes. Pursuant to the Ontario Human Rights Code, the condo corporation must make reasonable accommodations for residents with disabilities.

When considering purchasing a condominium, one should consult a lawyer to carefully review the condo corporation’s status certificate including its rules, declarations and by-laws relating to marijuana. 

Another dilemma with the new cannabis laws is whether or not real estate agents and sellers are required to disclose the fact of a grow-op when listing the property. When cannabis becomes legal, there may likely be no obligation for sellers to disclose such a fact. , should be a consideration of the provincial government and its regulators when implementing and clarifying rules involving residential marijuana use and growth in connection with residential properties.

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