Mortgage Broker

MORTGAGEBROKER mbabc.ca summer 2015 | 35 civilforfeiture Application to Owners/ Landlords and Lenders Owner - In 2014 the BC Court of Appeal upheld forfeiture of the owner's interest in real estate where large-scale, well-planned, and sophisticated MGOs were found on the property on three occasions. e property was an instrument of unlawful activity because it was used to engage in an MGO contrary to the Controlled Drugs and Substances Act. e unlawful activity resulted in or was likely to result in cash ranging at a minimum between $87,750 and $221,130 per crop. e owner was in control of the property for at least periods of the relevant time and there was no evidence to show someone else was growing the marijuana. He was unemployed for periods of the relevant time and there was no explanation how he afforded to buy real estate or pay mortgages during periods of unemployment. e owner was not an uninvolved interest holder and likely knew, participated or acquiesced in the MGOs during periods of the relevant time. Relief from forfeiture is the exception and is available only where forfeiture would be clearly inequitable and unjust in all of the circumstances. It was not granted in this case. Owner/Landlord - A landlord lost title to two of three rental properties he owned in Vancouver, because his tenants had used them as MGOs (2,000 plants). He had let a friend handle the renting and let her keep any rent over $800 per unit. He had no dealing with the tenants, and the rents were always paid in cash and were not reported on his income tax. e landlord was not criminally charged with regard to either of these houses or others that had been used as grow operations but were later either demolished or sold. e Court said the landlord had been wilfully blind and could have, with some due diligence, had actual knowledge of the grow operations. e Court ordered the full rents ($24,000) forfeited as proceeds of unlawful activity and two of three properties (the owner had $360,000 of equity in the three houses) forfeited as instruments of unlawful activity. Lender - It would seem the best approach for a lender caught in a forfeiture situation would be to satisfy the requirements of being an uninvolved interest holder. In a case decided under the forfeiture provisions under the Controlled Drugs and Substances Act the Court said the lender had to have taken reasonable steps based on the standard of a reasonable mortgage lender. e steps included verifying that the borrower had made a significant down-payment from his own funds, obtaining a statutory declaration from the borrower stating that he would live in the property, and obtaining a full appraisal (including an inspection of the property). e case-by-case analysis suggested in this case is likely to be the approach which would be taken under the Civil Forfeiture Act. The Takeaway for Owners, Landlords and Lenders e argument that you are an uninvolved interest holder should only be made as a last resort. You might want to include in any rental or mortgage terms the right to periodically inspect the property on short notice. You should make and keep a record of inspections as well as report any MGOs found so as to offset any allegations of wilful blindness or recklessness. To be eligible for relief from civil forfeiture, you must prove you did not engage in, know about or benefit from the unlawful activity. MORTGAGEBROKER mbabc.ca summer 2015 | 35 reasonable steps based on the standard of a reasonable mortgage lender. e steps included verifying that the borrower had made a significant down-payment from his own funds, obtaining a statutory declaration from the borrower stating that he would live in the property, and obtaining a full appraisal (including an inspection of the property). e case-by-case analysis suggested in this case is likely to be the approach which would be taken under the e argument that you are an uninvolved interest holder should only You might want to include in any rental or mortgage terms the right to periodically inspect the property on short notice. You should make and keep a record of inspections as well as report any MGOs found so as to offset any allegations of wilful blindness or recklessness.

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