What Can Property Managers Do About Marijuana Cultivation?

indoor marijuana growing with fan

Changes in state laws about marijuana use and cultivation means that growing marijuana may become an issue for real estate agents in several states. Recently, CRES Risk Management fielded a call from a client wanting to know how to deal with a marijuana cultivation issue.

Our client is a property manager who learned that a tenant is legally (based on the state law) growing marijuana on the property. The plants are in the garage, where the Homeowner’s Association (HOA) pays the power. The issue came to light because the HOA is upset about increased power usage. Our client wanted to know what they could do in this situation.

The CRES Risk Management legal advice team recommended two options:

  1. In this case, the client is on a month-to-month lease agreement, which means the lease can be terminated with 60 days notice to the tenant.
  2. Another option is to contact the landlord with concerns. If the landlord is OK with marijuana growing on property, consider adding an addendum to the lease to solve the HOA’s concern. This would involve a baseline reading on power usage in the garage and requiring the tenant to pay the “overage” fees for the increase in power consumption related to growing.

Counsel advised our client that they should save all emails sent and received to the landlord, tenant, HOA or other parties related to this matter in case further issues arise.

In addition, the CRES legal advice team suggested that the client, as the acting property manager, consider using a disclosure form* for marijuana cultivation. The disclosure should address issues such as conflicting federal and state law, potential legal consequences, and potential contamination of the property with mold, chemicals or other substances (possible side effects of growing).

Because of differences between state and federal law, issues related to growing marijuana on property you represent should be treated with care. As a CRES Real Estate E&O + ClaimPrevent® client, when you are concerned about marijuana cultivation on a property you represent, contact our real estate legal advice team. At CRES, we want to help you with potential claim issues and risks before they become lawsuits.

Do you use a disclosure about marijuana-related use of property?  

*Example CA Marijuana Disclosures related to this article provided by Edward McCutchan, Esq. of Sunderland | McCutchan, LLP

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

Originally Published December 20, 2017

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