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Marijuana and Real Estate: What You Should Know About Buying and Selling Residential Property

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Posted by Colorado Real Estate Staff on June 12, 2017

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Since the recreational marijuana consumption was legalized in 2014, Colorado has experienced a lot of changes. In the last 20 years, Colorado has opened hundreds of dispensaries, both medical and recreational, and that has had a lasting impact on the real estate environment.

Even more, Colorado residents can grow up to 6 plants in their home, provided that the residence isn't located next to a school. The passing of amendment 64 creates some uncertainty in the real estate market, and as a result, property buyers and sellers must have the most current information to protect them from making serious mistakes.


Things to Consider for Property Buyers and Sellers

Amendment 64 allows the growth of up to 6 individual cannabis plants in a property. Due to the irrigation, moisture, ventilation, and other necessities associated with the cultivation of marijuana, it's common for mold to appear near growing plants. 


Selling Property

For property sellers that were growing marijuana, it's important that you check around the area of cultivation for water damage, mold, and general cleanliness before you attempt to sell your property. While in the selling process, it is best to disclose that you have grown marijuana, and to be open about it, but be sure to understand that lenders and prospective buyers might be turned off.

Property sellers that do not disclose that they were growing in their home could be hit with a lawsuit especially If the buyer finds out, and was not informed before they decided to purchase the property.

Another important thing to know is that homeowner's insurance is likely to not pay for damage claims associated with growing marijuana.


Buying Property

For property buyers, be sure to understand that there is no legal requirement to disclose cannabis cultivation activities. Because of this, some sellers will try to hide the fact that they were growing marijuana plants.  

Property buyers must be thorough in their inspection of the property. Here's a short list of things you can look for:

  • Mold spores on walls, in the attic, or crawlspace stemming from improper ventilation
  • Damaged or modified vents
  • Unsafe wiring and/or electrical tampering
  • Wood rot from irrigation
  • Contamination resulting from excessive fertilizer use
  • Electric and water meter bypasses
  • Unusual holes for ventilation and/or electrical access

Additional Things to Consider


Federally Illegal

Marijuana is still federally illegal. This means marijuana is not permitted that properties that were built or insured by the Department of Housing and Urban Development. That includes the growing, possession, or consumption of marijuana. 


Homeowner's Association (HOA)

Marijuana cultivation and consumption is legal in Colorado, but it might not be permitted in your HOA. In fact, your local county might have casual laws and regulations on marijuana, but your community or neighborhood can legally restrict in-home growing. 


Landlord Tenant Laws and Marijuana

A majority of rental leases prohibit illegal activities, even with marijuana being legal in Colorado. Most rental leases prohibit marijuana usage, consumption, and growing operations. Tenants can be evicted for any illegal activity not allowed under the terms of their lease.

In certain instances, the lease-buyout provision may be enforced.  Even in instances where the tenant holds a medical marijuana card, tenants can remain subject to eviction, because medical users are not considered a protected-class under fair housing laws.

Colorado's new cannabis laws have greatly affected the real estate climate. Property buyers and sellers need access to information that can help them understand this new law, and to steer clear of any issues that can arise. 

As a Colorado real estate attorney, it's my duty to help my clientele understand the complexities that can be associated with marijuana and real estate. If you're unsure of how any of this relates to your current real estate situation, please contact me before doing something you might regret.

 

Topics: Real Estate in Colorado

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