Can You Just Say No?

Marijuana is becoming legal in more states, which may make it tougher for landlords seeking to enforce their own bans.

As the movement to legalize marijuana blazes through the nation, landlords and building managers may be wondering whether the right to ban the drug from their properties is going up in smoke. The truth around the issue is a bit hazy.

State laws legalizing some form of pot use don’t prevent landlords from writing lease agreements prohibiting marijuana on their properties. “If a landlord does not want marijuana cultivated, grown, or used on the property, the lease should directly address this and state such prohibition,” says Lesley Walker, associate counsel for the National Association of REALTORS®. “For existing lease agreements, a landlord could consider having tenants sign an addendum that specifically addresses the presence and use of marijuana on the property.”

But the laws don’t necessarily support such agreements either. When a state law says no person shall be penalized for using marijuana, does evicting a tenant who violates a property owner’s no-pot policy constitute a penalty? The question is still being tested in the legal system, but housing experts say state courts are likely to err on the side of “yes.” So for landlords and property managers, there’s real concern not only about creating a zero-tolerance policy but also about enforcing one.

Twenty-three states and the District of Columbia have legalized medical marijuana, and four of those states—Alaska, Colorado, Oregon, and Washington—have also legalized recreational pot. (Voters in D.C. also approved recreational marijuana in November, but the measure was struck down by Congress.) And while no state explicitly requires landlords to accommodate tenants who wish to use the drug at home, many of these states prohibit landlords from discriminating against medical marijuana patients by refusing to rent to them.

Still, marijuana laws are in flux. The federal government, which has long held that any form of pot use is illegal, effectively ended its ban on medical marijuana in late December after President Barack Obama signed a bill prohibiting federal funds from being spent to prosecute medical marijuana users. This may change the situation in California, for example, where residents with medical conditions have the right to “full and equal accommodations” in housing. Before the recent federal change, such protection didn’t necessarily include medical marijuana, says June Barlow, general counsel for the California Association of REALTORS®. But the new law could lead to medical marijuana accommodations in California.

The State’s Prerogative

It’s incumbent on practitioners who work as property managers to monitor changing laws, as more than half of the country’s 1.1 million REALTORS® live in jurisdictions where marijuana is legal in some form, according to NAR.

Here’s a possible scenario: A medical marijuana patient asks her landlord to let her smoke pot in her apartment. The landlord denies her request, but the tenant does it anyway, believing that her state’s law gives her the right. The landlord takes her to court to evict her. Although the state doesn’t explicitly require housing accommodations for pot, the law is in its infancy and a legal precedent has not been set. A judge may decide the legality of medical marijuana in the state means the tenant’s use should not be restricted and she should not be evicted.

“As far as evictions go, enforcement [in states that have legalized marijuana] has gone from criminal to civil, and that’s very difficult,” says Fred Prassas, CPM, GRI, a founding member of property management firm PMC Management Group in LaCrosse, Wisc., and  a real estate professor at the University of Wisconsin-Stout. Prassas, a former president of the Institute of Real Estate Management, spoke about the topic at NAR’s property management forum last May. “State laws give landlords the right to prohibit marijuana,” he says, but in states where use is legal, judges may not uphold such prohibitions.

So far, Prassas says, cases of this nature are only beginning to show up in  lower courts, and no recorded decisions have been made yet. But he has spoken to real estate professionals involved in these cases who believe the tide is turning in tenants’ favor.

The federal law change may further weaken landlords’ rules. While marijuana technically remains an illegal drug at the federal level, the government’s pledge not to prosecute medical marijuana users could make it more difficult for landlords to rely on federal law to argue their case.

States are less compelled to enforce a law the federal government has been lenient on, says Megan Booth, a senior policy representative for NAR.

Strengthening Your Position

Until legal standards are in place, there’s only one thing landlords can do to potentially strengthen their position in court: Follow the advice of NAR’s Walker and write more precise lease agreements.

If a lease agreement says only that illegal substances, or “criminal activity,” are not allowed on the premises, that won’t include a prohibition on the use of marijuana where it is legal under state law. Also, a “no smoking” policy doesn’t explicitly ban other forms of marijuana use, such as “vaping”—the practice of mixing THC with a propylene glycol–based liquid and vaporizing it—or baking pot into food items (such as brownies).

If tenants sign a lease agreement explicitly denying their right to use marijuana in any form on the premises, they have less legal recourse, says Booth. “The more explicitly it is spelled out in your lease, the more protected you are.”

What If You’re OK With Pot?

Certainly, there are landlords who take a more liberal approach to marijuana use.  For them, legal concerns may be less significant, but that doesn’t mean they shouldn’t consider another potential ramification: loss of property value.

In Denver, where both medical and recreational marijuana is legal, marijuana use in properties is becoming a stigma, suggests Jack O’Connor, broker-owner of The Denver 100. “I’ve had people ask if living near marijuana will hurt their kids’ health. I don’t have all the research, but you can’t say 100 percent that it won’t,” O’Connor reasons.

Public sentiment is in favor of marijuana legalization—52 percent of Americans support it, according to a Pew Research Center report last year—but that could change. “People are in favor of it being allowed,” Prassas says, “but that doesn’t mean they want their neighbors smoking it.”

Colorado’s real estate contracts and forms are due to be updated by Jan. 1, 2016, and O’Connor expects the new forms will include disclosure requirements around pot-friendly properties. That could require real estate professionals to inform buyers when homes—particularly condos—are in or near buildings where pot is used or allowed. No state currently requires such disclosures. O’Connor’s company, though, already makes it standard practice.

“We look at it as a potential disclosure of a defect,” O’Connor says. “If a house had a cigarette smoker, that would be a defect because of the odor. It’s the same with marijuana, and there’s no question that marijuana smoke is more potent than cigarette [smoke].”

And it’s not just the smoke that landlords need to think about; growing may raise issues, too. In some states, it’s legal to grow up to six pot plants for personal use. But cultivating the plants requires a high volume of humidity, which can cause mold in units and buildings.

As state marijuana laws evolve, so must best practices for landlords, property managers, and brokers. For now, you may have to read between the lines to discern the right path forward. The best advice is to pay careful attention to the wording of both your state’s laws and your own lease agreements.

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