Marijuana Odor Lowers Property Value?

[Tom4value]

I did an appraisal a month ago, had a grow operation of a dozen plants. I took a photo, included it in the report and only labeled it "grow plants."

Couple weeks later the AMC wanted a 1004D with the "plants" gone. Which I did. I take that is the state of federal lending. They don't want to see a property with any kind of an operation.

Were the plants in pots? If so, they would be personal property and not real estate. Therefore, why would you even mention it?

 

[Terrel L. Shields]

Therefore, why would you even mention it?

Maybe it is because it is still illegal at the Federal level? Why do you think they made them move them? Ditto pipe bombs, etc. I will mention them and their impact upon value if I can measure it.

 

[Elliott]

I also would mention a brick of cocaine, but that is personal property too. I was once in a house with a 'automatic' rifle on the pegboard wall next to the grow operation along with a safe. I mentioned that too, all personal property. I'm just an inclusive appraiser, I'd think the lender would want to know. Banks hate to be accused of money laundering.

 

[Tom4value]

I did an appraisal a month ago, had a grow operation of a dozen plants. I took a photo, included it in the report and only labeled it "grow plants."

Couple weeks later the AMC wanted a 1004D with the "plants" gone. Which I did. I take that is the state of federal lending. They don't want to see a property with any kind of an operation.

Were the plants in pots? If so, they would be personal property and not real estate. Therefore, why would you even mention it?

Maybe it is because it is still illegal at the Federal level? Why do you think they made them move them? Ditto pipe bombs, etc. I will mention them and their impact upon value if I can measure it.

First, are you sure they are pot plants? If you are going to open yourself to legal action (by possibly having the police involved) you better be damn sure they are not any type of legal plant.
For your second point, how would easily transportable personal property affect the value of the real estate? The only situation I could think of is a meth lab, where chemicals could cause an environmental hazard to the property.

 

[Terrel L. Shields]

how would easily transportable personal property affect the value of the real estate?

If you are unaware...a bank is explicitly liable in law. The value of the RE is not an issue. The value of the loan and the potential legal liability of a bank that ignores it is.

It is called SAR and part of the anti-money laundering act- and banks who ignore it can be seized by the federal deposit insurance corp. Look it up. It part of federal law.

 

[Tom4value]

If you are unaware...a bank is explicitly liable in law. The value of the RE is not an issue. The value of the loan and the potential legal liability of a bank that ignores it is.

It is called SAR and part of the anti-money laundering act- and banks who ignore it can be seized by the federal deposit insurance corp. Look it up. It part of federal law.

I am well aware of SAR from being in the lending world. I know for a fact that banks are not liable for a borrower's actions that the bank is not aware of. What you are talking about is if the borrower goes to the bank and wants to deposit over $10,000 in cash and fails to make them fill out a SAR report.

I guess maybe the contention is that I live and work in MA, where growing pot for personal consumption is perfectly legal. I know that banks have to follow federal law, where pot is illegal. If I point it out to them, now they have a dilemma of being responsible for federal law and force their borrower to get rid of something that is perfectly legal to them.

I, as an appraiser, am responsible for any affect on market value. Since growing marijuana in pots is both legal in my (subject's) jurisdiction and is personal property anyway, it has no affect on market value. Pointing it out and having the borrower possibly lose the loan because of it, may open me up to litigation. I understand that being in Arkansas, where pot is still illegal, you may have added concerns.

 

[glenn walker]

12-plants is not a farm- The biggest liability for the appraiser is too enter a persons home and start playing Judge and Jury - In California any good attorney would hang me if I made an-issue about 12-pot plants and NO the lender does not want involved either - A grow house does not get refinances or sales they are making hundreds of thousands in revenue- They normally get caught because of lot's of traffic coming and going all night and because their electric and water bills are 10 times higher than a normal owner occupied house , in many cases they get an-electrician to by pass the meter so they will not be spotted. BUT in Sanctuary States and States that made pot-legal the local boys want the tax revenue and they don't give a S*** about Federal law because they make their own laws.

 

[Joe Flacco]

12 plants is not a grow operation. If you guys saw Cuban cigars in a house do you take a photo and label it cuban cigars?

 

[Joe Flacco]

We are not horticulturists. We should not even have anything to say what kind of plants are in a house. Alot of people probably never even seen a pot plant before.

 

[Phil McDonald]

Nothing about pot is "perfectly legal". It is still a violation of federal law. I have encountered many commercial property owners who will not lease to anybody in the pot industry because if the federal government decided to enforce federal law then property can be siezed.

I am not an attorney so I don't know those details. I have just experienced property owners sharing that as a concern and have appraised many commercial properties which have been siezed for other criminal activity.

I have also appraised many marajuana commercial properties and those owners are not concerned about the potential liability.

Regarding the original post. I would have done the same thing. Report what I saw and then report that they had been removed. Any other considerations are not my concern. I am not sure how the lender/AMC thinks it accomplished anything. The original appraisal still reports that they were there and the 1004D reports that they were removed at that snapshot in time. Most reasonable people would assume that they were returned after the final inspection. I just don't understand what they thought they accomplished. Even a bad attorney could connect those dots.