How Does Legalized Marijuana Impact Realtors?

As the public perception of marijuana changes, so are the laws – and at a quick pace in recent years.  Many states are allowing medicinal and/or recreational use of marijuana within their boundaries.  Some of those states are also allowing a limited number of marijuana plants to be grown for personal use.  With many of these state being among the largest and most populated in the nation, roughly half of all Realtors live in a state with some marijuana usage allowed.  These developments impact real estate agents in many diverse ways.

Management Concerns

As many real estate agents also manage properties or act as leasing agents, the landlord-tenant issues and property management liability are important aspects to consider.

When acting as the landlord of a premise, it is part of your duty of care to rent the properties to tenants who will, among other things, keep the property in good condition.  Smoking or cultivation of plants on premises can damage the property and impact other tenants in the building.  It is important to draft leases that are clear on what activities are allowed and what activities are banned.  If you are acting as a property manager and rent a home or condo to someone who converts the space to an indoor greenhouse, you could be held liable for damages that result.  It is vital for real estate professionals to maintain control over the usage of the properties they manage and investigate suspicious activity.

It is also important to consider your state’s laws regarding special accommodation for medical use of marijuana.  Some states say medical marijuana smoking must be allowed as a special accommodation and California even says that to ban it would be a violation of fair housing laws.

Property Damage Potential

Cultivation of any plant within the confines of a home is a recipe for disaster.  Homes were not designed to handle the ventilation, hydration and electrical needs of plants.  Improper cultivation techniques can lead to damage to the building or unit itself.  Real Estate agents should be able to spot signs of this – whether the plants cultivated are marijuana or simply a tomato.  The Canadian Real Estate Association has published an educational pamphlet outlining common signs of indoor cultivation:

  • Modified ductwork, plumbing or electrical work to a specific area of the house
  • Circular holes or patched holes that could have been used for exhaust fans or vents
  • Stains in soffits from venting
  • Stains on the floor from containers sitting too long
  • Rotten wood or warped wood due to excessive moisture
  • Wiring or piping that circumvents water or electrical meters
  • Strange or unique odor from plant material, chemicals or fertilizers

These items should be looked at by a prudent agent in today’s environment.

To ask or not to ask?

As a real estate agent, what should you do when you do notice some of the items noted above?  When taking a new listing, should you ask what went on and if any remediation was done?  Do your line of questions differ if it is marijuana plants as opposed to flowers?  What needs to be disclosed on the MLS and to potential buyers about this?  If you are a buyer’s agent and you notice potential signs – but no damage – what is the proper route to go?  These are things that real estate firms need to consider as they draft language for their policy manuals and develops procedures for agents on this developing topic.

Contact us to learn about ways to further protect your real estate firm from professional liability or to discuss additional risk management steps your firm can take.