Foreclosing On Meth Houses: Buyer Beware

Posted with permission from the August issue of the Tennessee Bar Journal, a publication of the Tennessee Bar Association.

State and national efforts to curb the opioid epidemic have put ongoing angst about the health and financial devastation associated with methamphetamine production and use on the news cycle's back burner.

For home buyers and sellers and their lenders, the sometimes invisible meth problem continues to plague those who have unknowingly moved into a house or mobile home contaminated by meth, and for lenders who may wonder how or whether to foreclose on properties where there is a chance of contamination.

There are two specific areas of drug lab clean-up, generally referred to as "removal" and "remediation." Removal occurs after law enforcement discovers and seizes a laboratory. Law enforcement secures and assesses meth lab sites and then identifies and disposes of drug manufacturing equipment and chemicals. Removal is performed by certified professionals who are trained to handle and dispose of hazardous waste. Remediation comes after the site has been identified and addresses the residual contamination that exists after the manufacturing equipment and chemicals have been removed.

In almost all jurisdictions, the burden for clean-up of "meth labs" and dwellings contaminated by the mere smoking of meth lies squarely on the owner of the property in every jurisdiction. Some states have adopted clean-up protocols and maintain a database of companies qualified to perform those protocols. Remediation is not inexpensive, and some homeowners and foreclosing lenders have found that it is less expensive to trash the trailer or raze the house rather than try to cure the problem. When the dwelling is a brick and mortar residence or other substantial building with value, however, clean-up may be less expensive than abandoning the property.

The Environmental Protection Agency has adopted Voluntary Guidelines for Methamphetamine Laboratory Cleanup, a downloadable booklet that details remediation sequences and techniques, item- and material-specific best practices, and sampling procedures. The EPA estimates that clean-up of a meth lab can cost between $5,000 and $50,000, depending on variables.

Some states, including Tennessee, have adopted clean-up response and documentation guidance for properties quarantined because of clandestine meth lab activities.

Many people are unaware that the dangers lurking in a dwelling where meth has "just been smoked" can be as hazardous to the health of residents as if meth had actually been cooked on the premises. It is easier to determine the location of a drug lab than to discover whether the residents of a dwelling have been smoking. The drug's vapors seep into walls, carpets and ducts, and leave the home uninhabitable. The effects can be fatal to anyone exposed, but are particularly hazardous to those with existing health issues, the elderly and children. A home in a high-end area is just as dangerous as a mobile crack house if someone has smoked meth on the premises.

Much has been written about how a buyer can screen a home before the purchase to help assure it is safe. While professional testing is ideal and can cost around $500, there are also first step screening kits available at low cost that will provide some information. A positive reading shows that a place has a problem and more testing is required, but a negative reading doesn't assure that the house is clean.

Banks do all they can do to minimize the costs associated with foreclosure, but if a lender wants to be as sure as it can be that the institution is not taking ownership of a contaminated piece of real estate, some level of testing prior to foreclosure may be prudent. The potential financial and reputational risk to the lender that forecloses on contaminated property and then sells it will never be worth the relatively small cost of being sure that no one has smoked or cooked meth on the premises.

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