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Rentals and Marijuana?

Rentals and Marijuana?

With the legalization of marijuana in Colorado, there are many questions that surround rentals and marijuana. Whether you’re ok with tenants having it in your home or not, there are always a few key things to keep in mind as a real estate investor and landlord, particularly how it can affect one of your biggest assets. Check out the article below written by Zach Thaxton on KOAA News 5 where Greg Bacheller, one of Real Property Management Colorado Co-Owner’s weighed in on the issue and how it pertains to the property management sphere:

Rental homes targeted by illegal marijuana grow operations

Written by Zach Thaxton

 

Cartels and other organizations, groups, and individuals who grow illegal amounts of marijuana for intent to sell and distribute often capitalize on absentee landlords and negligent property managers to gut homes, businesses, and other buildings to grow their product.  Tuesday, the Drug Enforcement Administration, El Paso County Sheriff’s Office, Colorado Springs Police, and Metro Vice, Narcotics, and Investigative Division busted 8 illegal grow locations near Ellicott, mostly in rental properties.

“What do the landlords actually know and is there a property manager that’s been dealing with that with putting these people in here,” asked El Paso County Sheriff Bill Elder.

Often times, the renters select homes or properties owned by someone who lives out of state, explained Greg Bacheller, co-owner of Real Property Management Colorado.  “A lot of these folks that want to turn it into a grow house, they know if an owner is a two-hour flight away, they’re not going to be paying close attention to it,” Bacheller said.

Bacheller says reputable property managers will include language in lease agreements specifically stating the marijuana policy for the unit they’re renting.  “Make sure that there’s a clause in there that still says you can’t do marijuana — no growing, no possession, no nothing,” Bacheller said.

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“Use some reasonable due diligence to have language in the lease to make sure that the tenant is affirmatively stating they’re not going to do anything illegal,” said attorney David McDivitt with the McDivitt Law Firm.  “Unless the landlord is really turning a blind eye to some really obvious illegal activity, it would be really hard to say that the landlord was responsible or liable for illegal activity by the tenants.”

But Bacheller says some owners are willing to rent to people with intent to grow if they’re willing to pay steeper rent to do so.  “We will periodically have some of our investor clients that will say, ‘Hey, I’ve heard I can get $500 or $1,000 more in rent to allow someone to grow marijuana in my property,’” Bacheller explained.  “And we immediately talk them out of that or just don’t do business with them.”

“We’re trying to educate our renters to say, build into your contract, lease agreement, monthly walkthroughs and things like that so you can come in and take a look and see exactly what the condition of the place you’re renting is,” said Colorado Springs Police Chief Pete Carey.

Requiring such frequent inspections can be unnecessarily intrusive on tenants, however, according to McDivitt.  “The tenant has a right to quiet enjoyment, which is the right to actually live there without being burdened by the landlord coming in to monitor what they’re doing and constantly check on them,” McDivitt said.

Illegal marijuana grow operations can cause tens, if not hundreds of thousands of dollars in damage, often left to the owner to pay.  “It’s difficult to go after dollars from a tenant that’s incarcerated or a tenant that knew authorities were getting close, so they punched out and fled to a nearby state,” Bacheller said.

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