Marijuana and Appraising

Dave Towne

Dave Towne

Certified Residential RE Appraiser at Towne Appraisals
AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003.
Dave Towne on e-AppraisersDirectory.com
Dave Towne

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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.

Legalized Marijuana CreatesHazy Confusion for Real Estate Finance

Excerpt:

“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.”

Marijuana Legalization Laws

Dave Towne

Dave Towne

AGA, MNAA, Accredited Green Appraiser - Licensed in WA State since 2003. Dave Towne on e-AppraisersDirectory.com

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2 Responses

  1. Ridiculous. As is the topic.

    IF I enter a home and see racist literature all over the place, it is none of my business. Though it is POSSIBLY an indicator that Federal Fair Housing laws may not be honored it is also NOT something I can prove.

    Same with pot. OK, so lets ASSUME all us ‘over 50’ appraisers remember what growing pot looks like. Lets assume the house is not a large scale growing project replete with grow lights and special irrigation and indoor hothouses.

    You CALL the lender and tell them you see 5, 10 or 50 pot plants around the backyard. You even take pictures. The lender kills the loan.

    The borrower (refi) asks why his loan was denied. The lender NOW must decide whether to LIE or not on the loan denial notification. Maybe growing pot is legal in that state. Maybe its not. I don’t think there is a loan declined due to pot canned statement anywhere. In any case, the borrower knows he was turned down due to the plants.

    He pulls them all up (or maybe its just harvest time)-now there is no proof of your allegation at all. Your interior photos are confidential to the client; and in some states wouldn’t be admissible evidence anyway.

    He goes to another lender. FNMA declines to buy that loan because YOUR old appraisal said there was pot being grown there. Current appraisal has pictures that show petunias back where you claimed pot was growing.

    Owners attorney tells him he should sue you and turn you in to the state. State says report is misleading. You show pot pictures. Owner says they were rubber gag plants and that he told you that at time of appraisal.

    MAYBE it was a sale. Buyer bought BECAUSE he wanted the advanced growth pot plants just lime some people like apple trees. In escrow lender says remove and document removal of the plants. Seller reluctantly does so to close the deal. Buyer says now he doesn’t want the property. Not the same as when he inspected it.

    We are NOT talking about poisonous meth or potentially explosive meth. We are talking about pot. It is a PURELY legal issue between the owner and authorities.

    I was NOT hired to be a policeman. IF its a commercial growing operation then I report a commercial use growing operation at the property and indicate that value about the real estate may be attributed to the agri-business there.

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