Marijuana and Appraising
Should appraisers notify client about marijuana growing on property?
This topic is sure to elicit many opinions. Both “fer & agin”. Should you notify your lender client about marijuana plant growing prior to completing an appraisal of a property if you observe such activity? Especially if you see more than the MAXIMUM allowed in your state. See the chart in the PDF article below.
I’ve had this discussion with Washington State appraisers after our initiative was successfully passed.
Some appraisers frankly don’t give a rip about potentially illegal or property damaging activities. They only believe they are there to ‘appraise the real estate.’
Others understand that we are the ‘eyes and ears’ of the lender when we enter a property on their behalf. That we need to inform the client, when Marijuana activity noted above and in the chart is observed, before completing the appraisal. Many lenders WILL NOT lend on any property where MJ is growing due to Federal Laws. So it’s best to give them a ‘heads up call’ right after the inspection. Let them decide if a completed appraisal of the real estate is needed. If not, you need to be properly compensated for your time spent doing preliminary research and the inspection, including travel.
Below are two articles you may wish to consult. The PDF file has a nice chart of MJ laws for the states which have such in place now.
Click here for the article titled “Legalized Marijuana Creates Hazy Confusion for Real Estate Finance”.
“For homeowners or buyers concerned about the possibility of a marijuana business springing up next door, the impact may not be as prevalent as some expect,” the group’s blog stated. “Although state law allows pot shops to exist, amendment 64 gives local governments the authority to regulate commercial activities associated with the recreational use of marijuana. The majority of counties in Colorado have either already passed bans on recreational marijuana retailers or have delayed making a decision and placed a moratoria on pot business; closely monitoring how enactment is working in other parts of the state. It looks as though recreational marijuana businesses will be absent from large portions of the state for the foreseeable future.”