The property I bought was a grow-op. Now what to do?

Whether you like it or not, recreational cannabis was legalized in Canada by the federal government on October 17, 2018. Home shoppers are growing concerned about the possibility of purchasing a property that was a former marijuana grow-op. The use of the property as a marijuana grow-op increases risk of mold and electrical damage and the cleanup and repair costs can be exorbitant. Moreover, most banks are reluctant to provide financing for a property that was used for a grow-op. With a strategic gloss-over, it is not always easy to discover this part of the property history in home inspection. Unfortunately, in Ontario, there is no central grow-op registry that home buyers can access and rely on to find out if the property was used for this purpose. So, what is your remedy when you discover that your newly purchased home turned out to be a clandestine drug lab in the past?

The case Fischer v. Volpe presents such a scenario and the court has stated that “[the house’s] use as a grow-op, not being visible, was a “latent defect” of a kind that vendors and realtors, if they have knowledge of it, have a duty to disclose to buyers” . In Ontario, a vendor may be liable to the purchaser of a property which is not new only if he knows of a latent defect which renders the premises unfit for habitation or dangerous in itself and does not disclose it to the purchaser. As such, the threshold to hold a vendor liable for failing to disclose the past use as grow-op is quite high as the premises have to be “unfit for habitation or dangerous in itself”.

Moreover, to establish negligent misrepresentation on the vendor or the realtor’s part, the claimant has to meet the requirements identified by the Supreme Court of Canada in Queens v. Cognos Ltd.,
“a) There must be a duty of care arising from a special relationship;
b) The representation must be false, inaccurate or misleading;
c) The representer must have acted negligently;
d) The representee must have reasonably relied upon the representation; and
e) Reliance must be detrimental to the representee”

With respect to the fifth element, the detriment that a home owner has to prove is that damages resulted from the misrepresentation.

Therefore, it is always advised to talk to a lawyer before you make the move to purchase your dream home. An experienced real estate lawyer will help you be alerted to the red flags in the transaction and make sure your interests are well protected. If you found yourself stuck with a marijuana grow op, we suggest that you reach out to us immediately for a free consultation to find out your options.

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