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Marihuana Grow Operations

and Synthetic Drug Labs:What REALTORSNeed to Know

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Drugs in Canada:

a real estate reality checkMarihuana grow operations (MGOs) and synthetic drug laboratoriesmay seem like they belong on television crime dramas, but realityplaces them much closer to home. Today, in Canada, drugs arebeing cultivated and manufactured behind the facades of any type of

building that REALTORSmight come into contact with in the courseof regular business. They pose both potential health and safety risks,and significant legal and ethical responsibilities.

This publication is produced in cooperation with the Royal Canadian Mounted Police.

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Marihuana Grow Operations and Synthetic Drug Labs:What REALTORSNeed to Know 1

About MGOsAn MGO can look like any otherproperty, at least at a cursory glance.

By definition, an MGO is any buildingthat has been leased or purchased andconverted into a nursery or hydroponicsoperation to grow marihuana plants. In2011, the RCMP dismantled 4,367iactivegrow ops in Canada, and indications arethat the number is growing. This doesnot include busts made by local andprovincial police forces.

While the size of this illegal industry hasshown a slow but steady increase insome provinces, police say the problemis reaching epidemic proportions inother parts of the countryespecially inBritish Columbia, Ontario, and Quebecii.Marihuana cultivation has becomepopular over the years due to its highprofitability. MGOs are becoming major

businesses, with small, independentgrow operations gradually being takenover by large, international criminalenterprises. Marihuana is by far the mostpopular and widely available illicit drug in

Canadaiii, and law enforcement agenciesbelieve it is unlikely that the current trendwill change in the near future.

The radical modifications made tobuildings that house MGOs can create

a number of potentially dangeroushazards. Diverting electricity andtampering with electrical wiring canlead to house fires, and the use of extraexhaust fans in the grow operation canexacerbate the danger. This hazardextends to surrounding homes in theneighbourhood. The re-venting of thefurnace to circulate the air to feed themarihuana plants can also circulateexhaust fumes from the furnace backinto the house. There can be a buildupof poisonous gases from the chemicalnutrients used in the production of themarihuana crop. These poisonousgases are also vented outside andreleased into the neighbourhood. Thecombination of solvents and oxygenfrom the exhaust fans can cause anexplosion.

Marihuanagrow operations

Which of theseproperties wasused to cultivatemarihuana?

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2 Marihuana Grow Operations and Synthetic Drug Labs:What REALTORSNeed to Know

No community is immune from MGOs;they are located in every province andterritory in Canada. The majority arefound in residential neighbourhoods,but they have also been discoveredin commercial and industrial areas.

They operate in Canadas largesturban centres and in its smallest ruralcommunities. It is also not uncommonfor police to find a number of MGOs inthe same neighbourhoodeven on thesame street.

Operators are becoming increasinglysophisticated, sometimes having families

live in the homes as crop sitters. Theymay also place interior lights on timersin other MGOs to make them appearlived in. While some MGOs are in rentedunits, police have detected a growingtrend toward owned, single-detachedhouses, where there is less likelihood ofbeing discovered.In June 2013, what looked like anordinary hobby farm in Langley, BritishColumbia was actually the front for anelaborate underground bunker made

out of shipping containers that oncehoused approximately 430 marihuanaplants. Buried just below an idyllicpaddock complete with grazing farmanimals, the sophisticated operation,which police say would have required

significant capital, expertise and timeto set-up, roused no suspicion. Noone seems to recall having noticed theequipment, including backhoes, cranes,semi-trailers and massive excavatorsor the countless workers required tocomplete a project of this magnitude.The bunker was powered by anindustrial-sized natural gas generator

connected illegally to a nearby naturalgas pipeline.iv

MGOs can range in size and scopefrom a few plants in an apartment orcondo to more than 10,000 plantsthat occupy an entirebarn or warehouse.In 2008, police ineastern Ontarioseized 40,000plants, farmingequipment,

and an elaborate irrigation system froma 40-plus-hectare farm in LaurentianValley Township, just outside Pembroke,Ontario. The plants were found amongcorn stalks on the farm and in an above-ground pool. A pond with plastic piping

that lead through the fields was usedas the irrigation system. A double-cargarage was set up with drying racks.v

According to the RCMPs MarihuanaGrow Initiative Annual Report 2012,the average size of MGOdismantled by the RCMPin 2011-12 contained

727 plants.

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Modified ductwork that doesnt seem to make sense.

Circular holes in floor joists or roof trusses from venting(look for holes that have been patched).

Chunks of brickwork on the exterior that have beenreplaced.

Brown stains in soffits, created by external venting, orbrand-new soffits.

Stains on basement floors caused by containers that satunmoved for long periods of time, or stains in laundry tubs.

Modified wiring and electrical panel. Sometimes, live wirescan still be in the insulation.

New plumbing for water supply and drains.

Foundations and concrete walls cored or breached to get

wiring around the hydro meter.Warped/rotted wooden structures due to excessivemoisture.

9 Warnings you are showing a former MGOvi

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The Marihuana Medical AccessRegulationscame into force in 2001,establishing a framework to allow

access to marihuana by individualssuffering from grave or debilitatingillnesses that cannot be relieved withconventional treatments. Canadianslicensed under the regulations canaccess the government supply ofdried marihuana, grow their ownsupply or have a designated persongrow it for them. This created the

reality of legal MGOs. Since 2001,Health Canada has issued some12,000 licences, but these legal MGOsare not captured in any publiclyaccessible databases.

While the new regulations, theMarihuana for Medical PurposesRegulations, which comes into

force April 2014, will phase outPersonal Use Production Licencesand Designated Person ProductionLicences in favour of commercialproducers, a trail of damaged homeswill remain, and Canadians will haveno way of knowing the history of thesehomes prior to purchase.

While legal, few medical MGOscomply with fire, building, plumbing,electrical codes and other regulations.They often contain the same safetyand health risks as those outlined forillegal MGOs.

Legal MGOs

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Synthetic drug laboratoriesAbout synthetic drug labs

Although fewer in number (the RCMPdiscovered 48 in 2011vii) synthetic druglabs located in domestic residencesand other buildings represent adangerous situation for REALTORSand potential buyers. That does notinclude those discovered by local andprovincial police.Used to manufacture drugs suchas methamphetamine, MDMA (alsoknown as ecstasy, E or X) andgamma hydroxy butyric acid (GHB),

synthetic drug labs can containserious explosive, flammability,and inhalation hazards due to thepresence of chemicals and precursormaterials used in drug production.

Errors and accidents in the processof manufacturing synthetic drugscan generate a wide range of toxicsubstances. For example, inaccuratemethamphetamine production canresult in phosphine gas, which can

cause severe lung damage andpossibly death. Poor ventilationincreases the risks of explosions andtoxic fume inhalation.

Synthetic drug labs are not just thestereotypical rundown or abandonedproperties in major cities; labs havebeen found in upscale single- andmultiple-family dwellings, motelrooms, campgrounds, mini-storagebuildings, and motor vehicles,including rented trucks. These illegal

facilities are found in both urban andrural locations. Labs located in homesor apartments expose family membersand neighbours to the hazardousmaterials inherent in the drug-cookingprocess.

In recent years, Canada has beenidentified as a source country forillegal synthetic drugs, with organizedcrime groups playing a leading rolein this expanding trade.viiiBarriersto entry are low. The production ofsynthetic drugs is relatively simple,and recipes and cooking instructionsare easily found on the internet. Inaddition, the key ingredients arereadily available in drug and fitnesssupplement stores. The drug trade

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is attractive to criminal enterprisesbecause ecstasy pills, for example,can be produced for less than $1 andsold for up to $30 on the street.ix

In November 2011, more than 1,000

police officers from across Canadaconducted raids against a syndicateof organized crime that includedmembers with ties to the Hells Angelsin British Columbia and other gangs.

Authorities said the searches andarrests were conducted in roughly30 municipalities in Quebec, Ontario,and British Columbia. A total of 128

arrest warrants were issued and lawenforcement seized 400 firearms,1,468 sticks of dynamite, $255,000 incash, as well as various quantities ofcannabis, cocaine, and other drugs.They also seized 35 vehicles and fivehomes worth about $1.5 million.x

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On the outside, MGOs and syntheticdrug labs look like any otherproperty, but former MGOs and

synthetic drug labs may not besafe for human occupancy due totheir compromised structural andmechanical integrity, as well as hazardsfrom mould and/or chemical residue.

As noted, the presence of explosiveand/or toxic materials may also posea threat to adjacent property. MGOsand synthetic drug labs represent

public safety concerns to theneighbourhoods or communities inwhich they exist not only for futureowners or occupants of the premisesbut also for the other residents ofthese areas.The rapid increase in the numberof MGOs and synthetic drug labs

across Canada has raised questionsabout the disclosure responsibilitiesand potential liabilities of real estatepractitioners in dealing with these

propertiesas listing agents, buyeragents, dual agents, and propertymanagers. A separate issue has arisen

concerning the ability of real estateBoards to publish the addresses ofknown drug production sites.

Indoor MGOs require massiveamounts of water and hydro. In orderto prevent detection, growers re-directthe systems that bring these servicesinto the house and tamper with the

meters that measure consumption.

The cost to cover the higherconsumption of electricity and water ispassed along to all consumers.

In addition, these illegal operationscan bring criminals, weapons, andviolence into neighbourhoods thatnormally wouldnt be exposed to thistype of activity. Home invasions, drugrip-offs, burglaries, assaults, andmurders, are only a few examples ofthe dangers that are common when

dealing in drugs.

Why REALTORSshould care

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It is illegal to steal electricity, and theannual theft of power in Canada isvalued in the hundreds of millionsof dollars, and can add as muchas five percent to the power bills ofCanadian families.Largely driven by MGOs, theft ofpower underpins illegal activity,

creates safety hazards, damagescritical national infrastructure, anddiverts power away from productiveand legitimate use. Each of theseimpacts is unacceptable to theelectric utility industry, which haslong worked with law enforcementagencies to develop effective toolssuch as data-sharing practices. New

technologies such as automatedmetering infrastructure and smarttransformers are also being usedon a trial basis to better identify

and shut down incidents ofpower theft. By taking awaythe ability for MGOs to hidetheir power consumption,Canadian electricity utilitieswill make site identificationeasier for law enforcementagencies, helping to turn informationinto action.

The Canadian Electricity Associationis a member of the newly formedNational Council Against MarihuanaGrow Operations & ClandestineLaboratories, and through increasededucation, awareness, andcollaboration, the Association hopesto combine existing approaches

with new technological opportunitiesto reduce the public threats andnegative economic costs of MGOsand clandestine labs.

Utility costs for Canadians What is hydro theft?Electricity theft involves usingelectricity while bypassing

either totally or partiallythepower metering system. It alsoincludes tampering with a powermeter to change its reading.

How much electricity is stolen

by an average grow-op?The average bypass steals

electricity worth between $1,100and $1,600 per month.xi

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Remediating MGOs and synthetic

drug labsThere is no national standard ofremediation for either MGOs orsynthetic drug labs. Remediationprocesses vary from municipalityto municipality, and in generalthere is a lack of follow-through ordocumentation. Prior to making anoffer, potential home buyers shouldbe aware of the risks and costsassociated with a property that has notbeen repaired or has been improperlyrepaired.

To repair an MGO, it is often necessaryto remove all materials down to theframing to gain access to the mouldspores. Restoration requires newdrywall, insulation, vapour barrier,

and flooring throughout the house.According to the Insurance Bureau ofCanada, the average claim to repairdamage caused by a MGO is $41,000,and in some cases the damage is

so extensive it would be morecost effective to demolish theresidence and rebuild.xii

In all cases, remediationmust comply with anyprovincial or municipalbylaws, and cleanup shouldbe completed by personnel trainedto deal with these types of hazards.Check with your local municipality tosee what remediation programs are

available.

Is it insured?Insurance companies take the viewthat illegal acts should not result in adamage payment or policy coverage.

Many companies have policy clausesthat will not cover this type of damage.Persons renting properties need to beaware of what is happening in theirunits in order to protect their assets.

Remediation

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Damage to propertyMGO Lab

In MGOs, alterations made to venting of furnaces and hot water heaters, and the presence of fertilizers andpesticides can create bio-hazardssuch as poisonous fumes and increased levels of harmful CO2. In syntheticdrug labs, chemicals can permeate the walls, carpets, plaster, and wood. The dumping of liquid and sludge waste

products down drains may contaminatesewer or septic systems and surrounding soil.Both MGOs and synthetic drug labs often have booby trapsand anti-theftdevices that can injure or kill potentialthieves, unsuspecting visitors or first responders. The devices and methods used range from very simple toextremely complex and sophisticated.

Improper wiring poses risks to the occupants and visitors. Electrical bypasses are installed to enable the theft ofelectricity, and they create the possibility for electrocutionto persons outside the home as the ground near thehome may become charged with electricity.

MGOs and synthetic drug labs often utilize a variety of corrosivechemical components that may be discardeddown residential pipes, through city drains, along roadways or with regular garbage or into surrounding soil in a

non-environmentally friendlymanner that shortens the lifecycle of municipal infrastructure - burdening taxpayers.

In MGOs, the potential for a fireis increased due to the overloaded electrical systems, improper wiring and theextreme heat generated by high-intensity light bulbs. In synthetic drug labs, flammable liquids and solids used in thecooking process are extremely combustible and can lead to explosions.

In fact, marihuana grow operations are 24 times more likely to catch fire than a typical homexiii.

Fires caused by illegal activities are NOT covered by insurance companies.

Children are particularly vulnerable to the hazards associated with MGOs and synthetic drug labs.

Modifications to a residence where an MGO is found, are very common and may affect the structural integrity.Also, high humidity can cause the warping of wood components, including staircases, handrails, floors, roof joists,and studs.

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REALTORS

must be as informedas possible in order to protectthemselves and their clients fromthe various legal issues surroundingMGOs and synthetic drug labs.

Reporting an MGO or synthetic

drug labMembers of the general public

including REALTORSshould notput themselves into any compromisingposition while obtaining informationabout MGOs, synthetic drug labs orother criminal activity.

If you suspect there is an MGO orsynthetic drug lab next to a propertyyou are showing or if you haveobserved a number of the signs thatcause you to suspect there is anindoor MGO or synthetic drug lab inyour neighbourhood, contact your

local police service or your local CrimeStoppers immediately. Any MGOor synthetic drug lab can destroy aresidence in a matter of months. Thelonger it is in place, the more damagewill be done.

You should be prepared to providea description of the house and the

reasons you believe it is the site of anMGO or synthetic drug lab.

DisclosureThe issues for REALTORSare disclosure and education.REALTORSneed to know whathealth and safety issues exist afteran MGO or synthetic drug lab has

been dismantled, and be aware of theissues surrounding these operationswhen the house returns to the resalemarket. REALTORSmust also know

if any remedial action was taken tomake sure that the house is safe.

Property managers, including realestate brokers, may be held liable forrenting houses that are converted toillegal operations.

Owners of former MGOs or synthetic

drug labs can face problems dealingwith their insurance company, andmay have difficulty selling the propertysince disclosure of the homes illegalpast may be necessary. Buyers canalso face problems, such as mould, inyears following a transaction.

The issue of disclosure is not easily

resolved. The MGO, for example,may have been in operation for onlya few weeks, in which case mould ormoisture damage would be minimal.

Legal issues

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The legal rights of anyone accusedof operating an illegal drug operationmust also be considered. There mayhave been a police raid on an MGOor synthetic drug lab, but disclosurein some cases can jeopardize the

due legal process of the individual orindividuals charged if you make publicstatements before conviction.Buyers can request that a sellercomplete a property disclosurestatement in order to determinewhether a property has been usedas an MGO or to manufactureillegal drugs. For example, British

Columbias property disclosurestatement (residential) asks, Are youaware if the premises or propertyhave been used as a marihuana growoperation or to manufacture illegaldrugs? However, property disclosurestatements are not required by law.Listing agents who have their sellerssign property disclosure statements

should ensure that the sellers realizethey may be making disclosures inthose statements that are not requiredby law to be made.

Agent liabilityThere can be potential liability onan individual salesperson or brokerinvolved in a transaction of an MGOor synthetic drug lab, whether thatinvolvement happened during the

acquisition or the disposal of theproperty.

If it was a rental agreement, questionsmay arise over what the real estatesalesperson did to qualify the potentialtenant if the owner of the property hasrelied on the help of the salespersonin screening potential tenants.

If it turns out the tenant causeddamage to the property, it could besuggested that there was not sufficientqualification.

There may be some issues ofresponsibility and liability on the realestate professional. Did the salespersonor broker do their job in qualifying thetenant? Did the salesperson makereasonable effort to determine whetheror not the property had been an MGOor synthetic drug lab?

Care must be taken each time youare involved in the sale or lease ofreal estate. In addition to all the usualconcerns about buying and selling ahome, there is increasing MGO andsynthetic drug lab anxiety.

As a REALTOR, you take professionalagency responsibilities very seriously.When working with clients to buy andsell properties, it is your duty to makereasonable efforts to discover therelevant facts about each property.

Disclosure by the seller and/or

the listing agent may or may notbe required, depending on thecircumstances. See the Frequently

Asked Questions section at the end ofthis booklet for more details.

If you have any questions about theimplications of an MGO or syntheticdrug lab listing, it is recommended

that you obtain legal advice.

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Landlord liabilitySome indoor MGOs are set up inleased single-family dwellings. Insome cases, the operators actuallylive on the premises. The landlord isoften unaware that their property is

being used for illegal activities untilit is too late and the damages areevident: mildew-covered basement,unapproved electrical wiring, andstructural deficiencies.

If the tenants used false identitiesacommon practicethe landlordhas to bear the cost of the repairs.

In instances where the power wasdiverted, the landlord can even beheld liable for the electricity that wasstolen.

Insurers are concerned about thistrend, and some have adopted or areconsidering stricter policy wordingsdesigned to have property ownersaccountable for the maintenanceof their property. The InvestigativeServices Division of the InsuranceBureau of Canada, the Canadian

Bankers Association, and variouspolice agencies have developedprotocols to share information torespond to the emerging problem.

Municipalities are beginning to

enact tougher MGO bylaws. Someare holding landlords financiallyaccountable for their marihuana-growing tenants. In some jurisdictions,when an MGO is found, landlordsmay be required to pay fines andany costs incurred by police and firedepartments in raiding the premises.Landlords may also have to acquire

re-occupancy permits in order to rentthe former MGO to new tenants.

Tips for landlords and

property managers

Interview all prospectivetenants or renters and be wary

of anyone who wants to paycash, has no obvious means ofincome, drives a prohibitivelyexpensive vehicle, or wants torent for a third party.

Obtain a credit history, photo ID,and check all references.

Check on your propertyregularly.

Ensure you have a detailedrental agreement and that thoserenting are actually living inor (for commercial properties)using the property.

Talk to your tenants anddevelop a relationship with theneighbours to get a sense ofwhat is going on at the property.

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Money laundering can be broadly

defined as a process by which cashand other assets acquired throughillegal activity are distributed in a waythat hides the origin of the cash. Policehave identified MGOs in Canada as amajor avenue for money launderingbecause the cash from the crop canbe used to purchase or access realpropertyoften for the purpose of

creating another MGO.

In a report published in March 2004,

the Nathanson Center for the Studyof Organized Crime found that drugtrafficking represents the single largestsource of criminal records in moneylaundering investigations in Canada.Of the money laundering casesstudied for the report, 72.4 per centinvolved some form of drug trafficking,and many of those involved MGOs.

In one of the money laundering casescited in the report, a drug trafficker inBritish Columbia admitted he owned21 homes in the province that were alllocations for MGOs. The houses weremortgaged through private financingarrangements, and they were rentedout to individuals who were hired to

oversee the operations in return for apercentage of the profits. Three of theproperties were registered in the nameof the mans wife, and seven others

were registered

to companies forwhich the man wasa director. The proceeds of crimeinvestigation could not find oneproperty actually registered to theconvicted drug trafficker.

The Nathanson study said theproceeds of crime found their way

into the real estate sector throughmortgages, cash and monetaryinstruments. A mortgage wasused in 73.5 per cent of the moneylaundering cases involving real estate,and most of those mortgages wentto buy properties used for MGOs.The report said that a real estateprofessional came into contact with

the proceeds of crime in 38 per cent ofthe cases investigated. In the majorityof cases examined, the reports saidprofessionals including REALTORS

MGOs, synthetic drug labs,and money laundering

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were innocently implicated becausethere was nothing obvious to indicatethe transaction involved proceeds ofcrime.

Pursuant to the Proceeds of Crime

(Money Laundering) and TerroristFinancing Actand regulations,REALTORShave record keepingand reporting requirements, such assubmitting a suspicious transactionreport to the Financial Transactionsand Reports Analysis Centre ofCanada (FINTRAC) when they havereasonable grounds to suspect that

the transaction is related to a moneylaundering offence. Therefore, if youhave suspicions that a transactionmay be an attempt to launder moneyfrom an MGO or synthetic drug lab orthat you are dealing with an MGO orsynthetic drug lab operator, consultyour brokerages compliance officerand money laundering compliance

policies and procedures. You mayalso report any concerns aboutthe conduct of an individual, orthe ongoing safety of a home or

commercial building, to your localpolice or anonymously by callingCrime Stoppers at 1-800-222-TIPS.

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National Council Against Marihuana Grow

Operations and Clandestine LaboratoriesThe real estate industry has a new ally in the fight against MGOs andsynthetic drug laboratories. On November 29, 2012, a new national councilcomprised of community-based representatives from a variety of industrysectors and governmental entitiesincluding municipalities, real estate,insurance, the financial industry,electric utilities, and fire and policedepartmentswas announced at

RCMP headquarters in Ottawa,ON. The council is working toreduce the social, environmental,and economic consequencesassociated with former drugoperations.

Pauline Aunger, (on left) aREALTORand director on theCREA board of directors waselected co-chair of the council.

National

National registry

The RCMP maintains a nationalregistry that lists MGOs or syntheticdrug labs that were dismantled bythe force under the authority of asearch warrant. The registry is notan exhaustive list of all former MGOsor synthetic drug labs. Propertiesonly remain on the registry for twelvemonths.

http://www.rcmp-grc.gc.ca/drugs-drogues/mgi-ircm/

Resources for REALTORS

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During the councils inauguralmeeting, Ms. Aunger presentedfeedback gathered from real estateBoards and Associations advocatingfor initiatives to protect homebuyersincluding: establishing disclosuremechanisms and registries,standardizing remediation, andaction to limit/reduce licensedMGOs.

CREA looks forward to theopportunities the council willoffer for raising awareness and

addressing nationwide problemsassociated with MGOs.

VisionTo stop illegal MGOs and syntheticdrug laboratories to reducevictimization and to foster saferand healthier communities inCanada.

That the council be a national, multi-disciplinary group that is recognizedas an informed and trusted advisorto all levels of government, publicsafety and private sector partners,and Canadian communities.

MissionTo provide national leadership andguidance to reduce the negativesocial, public health and safety,economic, and environmentalimpacts of marihuana andsynthetic drug labs.

Every day over 100,000 REALTORSare out meeting families,exploring neighbourhoods and seeing up close the impact andhazards of former drug operations. The public needs to knowabout these properties and how they can be fixed up to besafe to live in again. Its going to take the will of many toaddress this important community issue. Were proud to bepart of the solution.

- Pauline Aunger, Council Co-Chair

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Provincial associationsMGOs and synthetic drug labs area major concern for REALTORSacross the country. This is an issuethat is both national in scope andmulti-jurisdictional. Therefore, from a

legislative and regulatory perspective,mechanisms for change rest at alllevels of government.

Several provincial Associations havebeen front and centre promoting theREALTORposition on disclosureand remediation in their respectiveprovinces. Among them:

Alberta Real Estate AssociationThe Alberta Real Estate Association(AREA) has long advocated that theGovernment of Alberta establishconsistent, province-wide remediationand air quality standards in relationto illegal drug operations, whichplace at risk those who purchase and

habituate properties previously usedas marijuana grow-ops.

In 2009, AREA commissioned adetailed study by local indoor airquality experts, which recommendedprovincial standards for the assessmentand remediation of properties formerlyused as illegal drug operations. The

current government is using AREAsReport, based on this study, as aresource to develop new legislation tosafeguard Alberta consumers, which ithopes to introduce by fall 2013. Viewthe Report here.

http://www.areahub.ca/AREA/media/Main/About/News/Media%20

Resources/AREA-2009-Report-on-Illegal-Drug-Ops.pdf

In spring 2013, the Governmentof Alberta launched stakeholderconsultations, in its pursuit of a Grow-Op Free Alberta. AREA is an activeparticipant in this process, attendingmeetings being held throughout

the province. Other AREA initiativesinclude a Call to Action encouraging

AREA members to complete the

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governments online public survey, aBackgrounder advocating minimumprovincial remediation standardsto protect consumers, and a newsrelease welcoming the federalgovernments announcement of

proposed new regulations to helperadicate grow operations fromresidential areas.

To view a list of ways to spot illegalgrow-ops, see this link.

http://justice.alberta.ca/programs_services/safe/growop/Pages/spot/pdf/

HOW-TO-IDENTIFY-A-GROW-OP.pdf

British Columbia Real Estate

AssociationThe British Columbia Real Estate

Association (BCREA), building on thesolid foundation established by theFraser Valley Real Estate Board, haslobbied the provincial government

and worked with stakeholders on theissues of disclosure and remediationof properties used in drug productionsince 2011. BCREA believes potential

homebuyers, renters and theREALTORSwho assist them shouldbe able to determine fairly quicklywhether a property has been involvedin drug production, and should havepeace of mind that the property is

safe. For the latest information onBCREAs actions, please visit www.bcrea.bc.ca/government-relations.

Ontario Real Estate AssociationSince 2006, the Ontario Real Estate

Association (OREA) has been astrong advocate for the creation ofa province-wide registry of former

MGOs. The registry would helpprotect home buyers by creatinga mechanism to alert REALTORSand other licensed professionals if aproperty was a former MGO.

OREAs advocacy on the issue hasled to the introduction of two privatemembers bills in the Ontario legislature.

OREA was also invited to sit on a policyadvisory group (PAG) to the Ministerof Community Safety and CorrectionalServices on the issue of MGOs and

clandestine drug laboratories. Thegovernment is currently reviewing PAGsrecommendations, including a proposalto create a registry of former MGOs.OREA also commissioned aconsumer-focused research study that

found a large majority of Ontarians areconcerned about former MGOs. Thestudy also found that an overwhelmingmajority of Ontarians support theproposed registry. For the latestinformation on OREAs actions, pleasevisit www.orea.com/mgo.

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AlbertaReal Estate Council of Alberta

British ColumbiaReal Estate Council of British Columbia

ManitobaManitoba Securities Commission

New BrunswickDepartment of Justice and AttorneyGeneral

Newfoundland and LabradorDepartment of Government Services,Consumer and Commercial AffairsBranch

Northwest TerritoriesGovernment of the NorthwestTerritories, Municipal and Community

Affairs

Nova ScotiaNova Scotia Real Estate Commission

Nunavut

Government of Nunavut, Departmentof Community and GovernmentServices, Consumer Affairs

OntarioReal Estate Council of Ontario

Prince Edward IslandOffice of the Attorney General

QuebecOrganisme dautorglementation ducourtage immobilier du Qubec

SaskatchewanSaskatchewan Real Estate

Commission

YukonGovernment of Yukon, Department ofCommunity Services

Provincial/territorial

Provincial/territorial regulatorsIf you have any questions about the disclosure requirements in your jurisdiction, contact your provincial regulator or

Association.

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Calgary: http://www.calgaryhealthregion.ca/

publichealth/envhealth/inspection_orders/illegal_drug.htm

Durham Regional Police Service:http://www.drps.ca/internet_

explorer/whatsnew/whatsnew_view.asp?ID=2025 Guelph Police Service: http://

www.guelphpolice.com/indoor-marihuana-grow-operations/

London Police Service: http://www.police.london.ca/d.aspx?s=/Newsroom/London_Marihuana_Grow_Ops.htm

Niagara Regional Police Service:http://www.nrps.com/morality/growops.asp

Ottawa: http://www.ottawapolice.ca/en/servingottawa/

sectionsandunits/drugs/index.aspx

St. Thomas Police: http://www.stps.on.ca/index.php/Reports/CrimeStatistics

Windsor: http://www.police.windsor.on.ca/Public%20Safety/

marihuana_grow_ops.htm Winnipeg: http://winnipeg.

ca/police/drug_awareness/publicnotices.stm

Municipal

Municipal registriesREALTORSshould contact their local police force to see if they have a registryand how it can be accessed. It is important to know the limitations of registries,such as how long addresses stay on the registry.

Some municipalities with registries include:

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Frequently asked questions

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As a listing agent, am Irequired to disclose toa customer buyer that a

property housed an MGO orsynthetic drug lab?

Under the common law, the disclosureobligations of a listing agent are thesame as those of the seller. If the selleris required to disclose, so too is theagent. Sellers (and therefore listingagents) are obligated to disclose that

a property was an MGO or syntheticdrug lab when:

There is an actual material latentdefect of which the vendor knowsor ought to know, or;

The buyer asks a specific questionor expresses a specific concern,or;

The agreement of purchase andsale contains representations thatthe property was not used as anMGO, synthetic drug lab, or for

criminal activities, or; There is some statutory or

regulatory requirement that this

disclosure be made.

If none of the above criteria are met,there is likely no obligation to disclosethe fact that the property was anMGO or synthetic drug lab. Note,however, that provincial regulationsand codes of ethics may impose ahigher obligation of disclosure on a

REALTOR. In particular, regulatorsin Ontario and Manitoba havetaken the position that REALTORSshould always disclose the statusof property as a former MGO. InQuebec, REALTORSare required tohave sellers complete a form entitledDeclarations by the seller of theimmovable, which includes a question

as to whether the property has beenused for drug production. The formmust be completed for all transactionsinvolving the sale by a natural person

of a chiefly residential propertycontaining less than five dwellings,and is provided to the buyer.

CREA is not aware of any higherdisclosure obligations for REALTORSwith respect to MGOs or syntheticdrug labs in Alberta, British Columbia,Saskatchewan, Nova Scotia,Newfoundland and Labrador, PrinceEdward Island or New Brunswick.

If you have any questions aboutthe disclosure requirements in your

jurisdiction, it is recommended thatyou seek legal advice or contact yourprovincial regulator or Association.

Under these circumstances, it isimportant that the listing agent clearlyexplain to the sellers that while they

may have no legal obligation todisclose, the listing agent does havesuch an obligation.

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As a buyer agent, am Irequired to disclose to mybuyer client that a propertyhas been used as an MGO orsynthetic drug lab?

Yes. There is absolutely no questionthat you are responsible for makingsuch a disclosure to a client. If youare a buyer agent and the propertythe buyer is looking at was, to yourknowledge, used as an MGO orsynthetic drug lab, you have anabsolute obligation to disclose thatfact in accordance with your duty of

full disclosure, which is owed by anyagent to a client. In fact, as part ofyour obligations as a buyer agent,you should take reasonable steps toensure that the property has not beenused as an MGO or synthetic drug lab.

As a dual agent, do I have anobligation to disclose to my

client buyer that my listing isor was an MGO or syntheticdrug lab?

Yes. If you are representing both thebuyer and the seller as dual agent,you have an agency obligation todisclose all pertinent informationto both parties. In this case, youmust disclose to the buyer that the

property has been used as an MGOor synthetic drug lab. As the sellermay have no such obligation in law, itis extremely important that sellers bemade aware of this obligation beforethey agree to the dual agency.

As a buyer agent, how doI protect my buyer from

inadvertently purchasing aproperty that was once used asan MGO or synthetic drug lab?

A buyer agent should be aware thatthere may be no obligation on thepart of sellers to voluntarily disclosethat the property has been usedas an MGO or synthetic drug lab.

Recognizing this fact, the buyer agentshould be proactive in protecting thebuyer by:

Specifically inquiring of the listingagent or seller as to whether theproperty has been used as anMGO (legal or illegal), syntheticdrug lab or for other criminalactivities.

Specifically inquiring as to whetherthe sellers have knowledge of anydefectslatent or patent.

Ensuring that the agreement ofpurchase and sale contains arepresentation on the part of thesellers that the property has notbeen used as an MGO or syntheticdrug lab or for criminal activities.

Recommending to their buyer thata building inspection be done.

How do I disclose theinformation?

There is no standard or requirement

for disclosure. The disclosure canbe made orally. However, given thenature of the problem with MGOs andsynthetic drug lab, REALTORSare

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encouraged to act in an extremelycautious manner by having disclosuredocumented. If a listing agent isactually going to indicate on the datainput sheet that the property housedan MGO or synthetic drug lab, he or

she should first satisfy him/her self thatthis disclosure is required by law orregulation and should obtain consentfor that disclosure from the seller.Otherwise, any disclosure requiredby law should be made before anyagreement of purchase and sale issigned.

What are the legalconsequences of selling ahome without disclosing thatit was once used as an MGOor synthetic drug lab?

It may be that there is no obligationto disclose that the property wasan MGO or synthetic drug lab (see

Question 1). That is the first area ofinquiry a REALTORmust undertake.There is, however, always anobligation to disclose material latent

defects that are known or should beknown by the seller. Both the sellerand the listing REALTOR(if theyknew or ought to have known) couldbe liable for damages to the buyer forthe costs of any necessary repairs to

make the property fit for habitation.It must also be remembered thatthe standard of care imposed onreal estate practitioners requiresthem to confirm information whenthe circumstances dictate. In somesituations, REALTORSmay not beable to simply take the sellers wordfor the status of defects, and may be

required to investigate further.

As a REALTORdo I have totake any steps to determine ifmy clients property has beenused as an MGO or syntheticdrug lab?

Yes. As a REALTORyou have a legal

duty to make reasonable efforts todiscover the relevant facts about yourclients property.

REALTORSare also bound bythe REALTORCodea codethat symbolizes a commitment tocompetence, service, and professionalconduct. According to the REALTORCode, a REALTORhas an obligation

to discover facts pertaining to aproperty that a prudent REALTORwould discover in order to avoiderror or misrepresentation (Article4: Discovery of Facts). Provincialregulations and regulator codesof ethics may impose additionalobligations on a REALTOR.

Should the address ofa known former MGOor synthetic drug lab bepublished by either theREALTORor the Board?

No. Property addresses, insofar asthey can be linked to a name, arepersonal information. Due to the ease

of linking addresses to names, anaddress should generally be treatedas an item of personal information.CREAs Privacy Code provides that

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Sources

i. Royal Canadian Mounted Police, 2012ii. Branford, Becky, Canadas growing marihuana problem, BBC News, 2006, accessed from

http://news.bbc.co.uk/2/hi/americas/4620272.stmiii. Riley, Diane, Drugs and Drug Policy in Canada, 1998, accessed from

http://www.parl.gc.ca/Content/SEN/Committee/362/ille/rep/rep-nov98-e.htm

iv. CBC, 2013, Fake farm concealed underground grow-op in Langley, B.C., accessed from http://www.cbc.ca/news/canada/british-columbia/story/2013/06/04/bc-langley-underground-grow-op.htmlv. CBC, 2008, Neighbours surprised by massive Ottawa Valley grow-op bust, accessed from http://www.cbc.ca/news/canada/ottawa/

story/2008/09/23/ot-growop-080923.htmlvi. CBC News, 2013, 12 signs your home was a marihuana grow-op, accessed from

http://www.cbc.ca/news/canada/ottawa/story/2013/03/06/ottawa-signs-your-home-was-a-marihuana- growop.htmlvii. RCMP, 2012viii. Riley, Diane, 1998, Drugs and Drug Policy in Canada, accessed from http://www.parl.gc.ca/Content/SEN/Committee/362/ille/rep/rep-nov98-e.htm

ix. RCMP Gazette, 2013, The evils of ecstasy, accessed from http://www.rcmp-grc.gc.ca/gazette/vol75no1/facts-faits-eng.htmx. CBC, 2012, Quebec police dismantle massive drug network, accessed from http://www.cbc.ca/news/canada/british-columbia/story/2012/11/01/

quebec-drug-arrests-organized-crime-ontario-british-columbia.html

xi. La Barge, Armand, P., 2005, The Police Chief, vol. 72, no. 3, accessed from http://www.policechiefmagazine.org/magazine/index.cfm?fuseaction=display_arch&article_id=534&issue_id=32005

xii. Insurance Bureau of Canada, 2013; Ottawa Police, 2005, Marihuana Grow Operations Ottawa, Ontario 2000 to 2004,accessed from http://www.google.ca/url?sa=t&rct=j&q=the%20average%20claim%20to%20repair%20damage%20caused%20by%20a%20grow%20op%20is%20%2441%2C000&source=web&cd=6&cad=rja&ved=0CEQQF-

jAF&url=http%3A%2F%2Fwww.ottawapolice.ca%2Fen%2Fresources%2Fpublications%2Fpdf%2Fmarihuana_operations.pdf&ei=6gvcUeThEorj4AP9oICwCQ&usg=AFQjCNFqKwToAx11O5pY9s8aenjGhHvDCQ

xiii. Garis, L. and Clare, J., 2013. Cleaning Up Former Drug Operations in our Residential Neighbourhoods, accessed from http://www.surrey.ca/files/CleaningUpFormerDrugOperationsinourResidentIalNeighbourhoods.pdf

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2013 CREA MGO

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