Cannabis is legal: What you need to know

Real Estate

Starting October 17th, 2018, growing cannabis at home is legal.

The industry buzzing about the impacts this law will have on home owners, buyers, sellers, and every profession involved in a real estate transaction.
 
There is no shortage of information out there on this subject. Yet, consumers and REALTORS® still have a lot of questions.

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HOME CANNABIS CULTIVATION

Federal legislation (C-45) stipulates that up to four plants per dwelling house can be grown per residence (indoors or outside). Please note that legislation stipulates “per residence” not per person. Former cannabis grow operations, even on a small scale, can pose significant health and safety issues (i.e. mould, fungus, unsafe wiring, chemicals) for unsuspecting home buyers. These risks are often masked by owners of existing grow operations when the property is sold, making it difficult for home buyers and REALTORS® to detect.

 

AS A HOME BUYER

Every negotiation is unique between the parties and specific to the particular property. A buyer could add conditions to confirm the availability of insurance or financing for a property that was used as former cannabis grow operation. In addition, a condition on review by a home inspector and other contractors would be appropriate to ensure that the home has not sustained damage that would affect the buyer's decision to purchase.

 

AS A HOME SELLER

Before listing your property, it's important to discuss with your realtor any issues with the property that may be relevant to the sale. According to the Real Estate Council of Ontario, “if growing marijuana has damaged the property to the point that the home is unsafe to live in, and the defect is not obvious to the naked eye, it's a latent defect that must be disclosed.”

 

HOME INSURANCE & CANNABIS CULTIVATION

Although large-scale grow-ops will remain illegal and void most homeowner’s policies that are faced with related claims, there remains uncertainty with the home cultivation of cannabis. According to the Insurance Bureau of Canada, questions about home-grown marijuana will become routine when applying for or renewing policies. For renters, growing cannabis could be risky if the landlord's insurance does not cover that activity, or if the landlord may not know the tenant is involved in that activity. Home owners should check with their insurers before making significant modifications to their properties, and tenants should let their landlord know if they are going to grow cannabis in a rented home or apartment.

 

CANNABIS CULTIVATION AND MORTGAGE FINANCING

When it comes to obtaining mortgage financing approval for a former cannabis grow operation, consumers should speak with their financial institution prior to making an offer on a property. It is also important to note that legal cultivation of cannabis in a home could breach rules of a home owner’s mortgage agreement with their financial institution. Before a home owner grows cannabis in their property, they should consult with their financial institution to ensure they are not violating rules under their mortgage agreement.

 

CONDOMINIUMS

Once proclaimed, Ontario’s Bill 36, the Cannabis Statute Amendment Act, 2018 will allow condominium occupants, aged 19 years and older, to use recreational cannabis in their unit or on common element space and grow up to four plants for recreational use per residence/unit (not per occupant). Bill 36 prohibits, the smoking of cannabis in any indoor common area of a condominium, including parking garages, party or entertainment rooms, laundry facilities, lobbies and exercise areas. Condominiums do have the authority to regulate the use/production of cannabis under section 58 of the Condominium Act to promote the safety, security or welfare of the owners/occupants and prevent unreasonable interference with the use and enjoyment of the units, common elements and assets. This could include a ban on the use and cultivation of cannabis inside of units. Medical cannabis is not affected by this legislation. If a condominium corporation does not accommodate use of cannabis for medical reasons authorized by a healthcare professional, the corporation may be subject to a human rights complaint.

 

LANDLORDS

A landlord can include provisions restricting the legal cultivation or consumption of cannabis in a lease agreement, which might provide the landlord with grounds to evict a tenant. It would also be prudent to have any lease agreement reviewed by an appropriate professional, such as a lawyer.

 

QUESTIONS

Questions or comments please contact KOSTA at info@kostahomes.com