Transcript of Video Blog:
Hey everyone! Rowan Smith at the Mortgage Centre. This week we’re doing Myth busting No. 3. This week’s myth is the old: “My bank did a former grow op property for me before so they will again.” That’s not necessarily the case. The industry hasn’t had this problem for that many years, at least not that they’ve been aware of. Properties now being branded as a former grow op in the property condition disclosure statement or in some places even on title has caused lenders to re think how their lending policies are when it comes to former grow ops. They don’t even say why, but what’s changed?
Well, they’re starting to find that some former grow ops have chemical issues with the use of fertilizers and accelerants and whatnot not all of them but some of them and lenders get worried that those chemicals may have leached into the actual property, could damage the actual property. There could have been mold and moisture that damaged the structure.
Well, don’t forget that the property is the bank’s security. Ultimately, that’s all that they have to rely on at the end of the day if there’s a foreclosure. So they want to make darned certain that those properties they’re lending their money on are in fact solid, there’s nothing wrong with them.
Former grow ops haven’t been around, at least in a documented sense, for a long enough period of time for banks to know whether or not they’re actually presenting a risk. So what we saw a few years ago was we could get former grow ops done at five or six banks and it slowly dwindled. Every year we lose one. We’re down now to just a couple of institutions who will consider it and there are pretty onerous paperwork requirements.
Environmental, air quality samples to make sure that there’s no mold or other chemicals in the air. Some of them will want even a “stage two” which could involve taking samples of drywall or this type of thing. Well, certainly they’re going to want to see that the applicant is very solid, their income and credit is very solid as a minimum, before they’re going to lend on a property which might not be quite as solid.
So, you think your bank did it before, I counsel you to check again before you go writing any such check free offers. If you know anybody in this situation who’s written an offer on a former marijuana grow op and would like some advice, get them to call me. I’m Rowan Smith at the Mortgage Centre.