This group is awesome! I see we have a deep discussion going on about this and I thank you all for your input and help. This is something that the real estate industry will be dealing with more and more as Cannabis gets through it’s final hurdles of legal normalcy. So good for all of us to be on the forefront and in the know.
@420FriendlyInsurance Thank you! I am going to agree and add to your reply. I too just got off the phone with an Escrow Rep who is the info and legal guru for Chicago Title here in Stockton. Considering the situation being a double edged sword, he asked how I was going to advise my client on this. First and foremost as Realtor/Broker I have to remember that Escrow companies complete escrows based on the instruction provided to them by Seller, Buyer, and Realtors involved. However, I do have to keep in mind that disclosure is very important within the real estate industry. So with that said, I have decided to:
Attach a separate disclosure between Buyer and Seller stating that the property is within a green zone. Nothing more nothing less. This disclosure does not state whether the property is going to be used for cannabis or not. Vague enough for the assumption to go either way and does not affect title or anything the escrow company has to do. Yet, stays within the rules of real estate disclosure and is important because it protects all parties involved from ever saying they “weren’t made aware”. Disclosure of a potential, maybe, “possibly intended” use is preemptive. I mean, who is not to say the new owner may change their mind and grow tomatoes or store cars? I feel this is the best way to properly disclose.
Advise the client on purchasing the necessary property and casualty insurance for the property’s intended use. That way whether as an owner operator or lessor to an owner operator, my client’s property and everything tied to it and cannabis is protected. I think the rule of intended use is important more so for property and casualty insurance purposes opposed to title.
Since it is best to keep the property transaction as clean and easy as possible for title and escrow to complete their instructions, I have suggested that a separate contract noting property contingencies and use be drafted and attached, whereas the real estate contract is acknowledged as an exhibit to the contract or addendum per se. That way escrow closes as any normal real estate transaction. Yet, there is a written agreement stating the purpose of the sale and the known contingencies (intended use, etc.) between both Buyer and Seller.
(Whew! I hope I didn’t lose you all.)
Still discussing this with my legal counsel as well and with the VP of title and escrow at Chicago Title, to make sure we are all within legal limits in regards to real estate. But for the most part I am comfortable with moving forward on this transaction as such.
Anyhow, thanks again all!
And @bryan.eden definitely not ignorant at all. Disclosure is a tricky thing within real estate. If one knows of something that has happened to or on the property then disclosure is very legal. For example, if I know that someone raised pigs on a property being sold but do not disclose to my client, then I have just then put myself in a huge pickle. Whereas, if I don’t disclose that someone “could possibly” raise pigs on the property is a different story… Sorry, a bit out there… but all I could think of at the moment. lol And yes, with regards to industrial or commercial you are right. At this point, everyone involved including escrow is aware of that part (industrial and commercial) and this is what I believe we are all agreeing to leave it at or should leave it at. Keeps it simple right?