Released August 7th, 2018
5 Things HomeBuyers should know about the New Cannabis Act
1) Does a seller and listing brokerage need to disclose the past existence of cannabis being grown on the property once the Act is enacted?
One of the benefits of using a REBBA member is that they will obtain the answer to this question as it is now part of the latest update to the mandatory HomeBuyer Property Disclosure (HBPD) form you will be required to sign off on prior to you buying the home. The latest update includes a detailed explanation of any risk attached to cannabis, the inspections completed for cannabis and whether any previous owners have confirmed cannabis production on the lands (inside and outside the home) you are acquiring.
(note a Seller Property Information Statement SPIS is not the same as a HBPD)
2) How much cannabis can I legally grow in my home after I own it?
In Ontario, as of the date of this article being published, no commitment has been made to where, what or how much cannabis can be grown by a homeowner in that province. While the current Federal Outline does set out maximums to where, what and how much, Provincial governments have been authorized to set their own minimums to where, what and how much cannabis can be grown at home. Until final Provincial legislation is passed assume no where, none and nothing if this will be a determining factor in your home buying decision.
3) When I go to sell my home and if I have grown cannabis while owning it will that impact my homes value?
Yes. For the foreseeable future there will be HomeBuyers who are properly represented by professionals where they will attach a Valuation Risk to any home that even is suspected of having cannabis grown on the premises. Now this is not to say some lesser number of HomeBuyers will not care as much about the financial risk attached to buying a home where cannabis has been grown but the appraisal value of a home where cannabis has been produced will be lessened.
4) If I choose to rent out my home can I stop my tenants from growing cannabis on the premises?
Yes. As part of your tenant vetting process you set the rules that your lease agreement is signed under and you can require any tenancy where you agree to be the landlord, to include penalties that enforce the terms of the contract. That said when cannabis becomes legal and with current vaping technologies or when access to consumables becomes readily available (meaning no smoking still applies) tenants will be able to use cannabis on the premises without harming your property's future value
or with your permission being required to do so.
5) What will condominiums do to stop cannabis from being smoked or grown?
This is probably the single largest problem for HomeBuyers created by the legalization of Cannabis. The due diligence now required on any Condo purchase will require the oversight of legal council to protect yourself from financial risk attached to the new Cannabis Act. REBBA professionals as a group have agreed to require an independent review of the ownership status of any Condo they are assisting their clients in acquiring. Since each condominium is unique a specific answer to this question will be required for each condominium you are considering owning.
The new Cannabis Act has the potential for serious long term financial consequences for any home purchased after the last federal election concluded. This will be a defining moment for the HomeBuying process and we foresee the entire industry surrounding the purchase of residential real estate to be transformed as a result of this legislation being enacted especially in consideration to this specific time in the current National Home Trading Cycle.
If you entered into a contractual relationship to purchase a home after the previous federal election concluded we recommend contacting your lawyer for advice in how to protect yourself from any losses in Home Equity that could result. Recent HomeBuyers should understand there has been adequate warning about Cannabis Risk to home values for more than 15 years. There is no reason why any recent HomeBuyer was not fully aware of this risk prior to putting their signature on any agreement to own a home.
As always any questions and comments can be sent to [email protected]
1) Does a seller and listing brokerage need to disclose the past existence of cannabis being grown on the property once the Act is enacted?
One of the benefits of using a REBBA member is that they will obtain the answer to this question as it is now part of the latest update to the mandatory HomeBuyer Property Disclosure (HBPD) form you will be required to sign off on prior to you buying the home. The latest update includes a detailed explanation of any risk attached to cannabis, the inspections completed for cannabis and whether any previous owners have confirmed cannabis production on the lands (inside and outside the home) you are acquiring.
(note a Seller Property Information Statement SPIS is not the same as a HBPD)
2) How much cannabis can I legally grow in my home after I own it?
In Ontario, as of the date of this article being published, no commitment has been made to where, what or how much cannabis can be grown by a homeowner in that province. While the current Federal Outline does set out maximums to where, what and how much, Provincial governments have been authorized to set their own minimums to where, what and how much cannabis can be grown at home. Until final Provincial legislation is passed assume no where, none and nothing if this will be a determining factor in your home buying decision.
3) When I go to sell my home and if I have grown cannabis while owning it will that impact my homes value?
Yes. For the foreseeable future there will be HomeBuyers who are properly represented by professionals where they will attach a Valuation Risk to any home that even is suspected of having cannabis grown on the premises. Now this is not to say some lesser number of HomeBuyers will not care as much about the financial risk attached to buying a home where cannabis has been grown but the appraisal value of a home where cannabis has been produced will be lessened.
4) If I choose to rent out my home can I stop my tenants from growing cannabis on the premises?
Yes. As part of your tenant vetting process you set the rules that your lease agreement is signed under and you can require any tenancy where you agree to be the landlord, to include penalties that enforce the terms of the contract. That said when cannabis becomes legal and with current vaping technologies or when access to consumables becomes readily available (meaning no smoking still applies) tenants will be able to use cannabis on the premises without harming your property's future value
or with your permission being required to do so.
5) What will condominiums do to stop cannabis from being smoked or grown?
This is probably the single largest problem for HomeBuyers created by the legalization of Cannabis. The due diligence now required on any Condo purchase will require the oversight of legal council to protect yourself from financial risk attached to the new Cannabis Act. REBBA professionals as a group have agreed to require an independent review of the ownership status of any Condo they are assisting their clients in acquiring. Since each condominium is unique a specific answer to this question will be required for each condominium you are considering owning.
The new Cannabis Act has the potential for serious long term financial consequences for any home purchased after the last federal election concluded. This will be a defining moment for the HomeBuying process and we foresee the entire industry surrounding the purchase of residential real estate to be transformed as a result of this legislation being enacted especially in consideration to this specific time in the current National Home Trading Cycle.
If you entered into a contractual relationship to purchase a home after the previous federal election concluded we recommend contacting your lawyer for advice in how to protect yourself from any losses in Home Equity that could result. Recent HomeBuyers should understand there has been adequate warning about Cannabis Risk to home values for more than 15 years. There is no reason why any recent HomeBuyer was not fully aware of this risk prior to putting their signature on any agreement to own a home.
As always any questions and comments can be sent to [email protected]
