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Mortgage-Matters

Buying a former grow-op

Few communities in Canada have escaped having a grow op found in their midst.

Here are a few things you should know if you are considering the purchase of either a remediated or un-remediated grow-op property.

Financing may be an issue (even mortgage renewals).

If you already own the property and it has become public knowledge it was a grow op, when your mortgage comes up for renewal, the financial institution holding the mortgage is not obligated to offer you renewal terms.  The lender may demand the balance in full.

Many mortgage lenders will not offer financing on properties that once housed a grow op. There is an environmental risk associated with former Grow Ops that causes concern.

Mould spores can remain dormant for years. If they were not properly eradicated, there may be a future risk of regeneration of mould. Warm, moist conditions can allow dormant spores to regenerate.

The lender may become responsible for the environmental cleanup when the mould starts up again.

There are very few lenders that will provide financing even for remediated grow-ops. Interest rates are higher, fees including mortgage insurance will be charged and there are specific documents required by the lender which includes environmental testing,

When lenders learn of an issue regarding the property after they have given an approval, if that information would have caused them not to offer an approval before, had they known, they may refuse to complete the mortgage transaction. 

Buying an un-remediated former grow op at a bargain price will require a significant investment of cash. Usually, while in its discovered state, you will need Equity financing. It comes at a higher price in lender fees and interest rates if it can be secured at all.

Additionally, you will need the cash resources to make the necessary reclamation. Once the house is inspected and found clear of mould and spores, some lenders will provide refinancing or will allow for purchaser financing.

You will need a proficient mortgage broker to lead you through the transition of purchase, improve and refinance or sale.

Here are some questions to consider should you be considering the purchase of a former grow-op: 

  • What if the future occupants have compromised immune systems or asthma? 
  • Who carries the legal and ethical guilt, if the toxicity of regenerated mould causes a death?

If you are considering the purchase of a former grow-op, please give me a call to discuss your financing options.



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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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