Broker calls for grow-op reform

Certain homebuyers are being unjustly punished by lenders for purchasing houses that should not be classified as grow ops, according to one industry player.

John Greenlee, a broker with The Mortgage Centre, has had trouble finding financing for houses that had been used as grow ops for marijuana, but he also tells of an instance when a house was improperly categorized one.

“(A Realtor I deal with) was trying to sell a “former Grow-op” where the previous tenant (from 12 years ago) was found to have had two or three plants growing in the bathroom. No modifications were made to the building like a traditional grow-op,” Greenlee wrote on “For all intents and purposes, other than the plant being illegal, it wasn’t anything different than someone growing a lemon tree in their living room.”

Greenlee told the house was mentioned in a police report, which was enough for it to be considered a grow-op by lenders.

The clients had trouble selling the house as a result. And he thinks there should be more clarification around what is considered a grow-op.

For his part, he has had trouble finding financing for houses classified as grow ops.

“I don’t recall higher rates but lenders have certainly gotten tougher on the underwriting,” he told “We always disclose it to a lender; some lenders, including Scotia, won’t even do them anymore.”

Currently, grow-op houses are red flagged in CMHC’s database, and they require a number of requirements before it will insure the property for lenders.

Eugene Pilato, of Century 21, wrote about the requirements for insuring former grow-ops in a blog post, including a copy of an environmental audit, a certificate ensuring the property is habitable, a minimum down payment of 20 per cent, and an insurance premium of one per cent of the amount of the mortgage.

Source: by Justin da Rosa | 22 Jun 2015

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