Attorney Warns REO Community About Meth Labs
Angela Martin, Esq. | 03.31.08
Methamphetamine addiction has become an epidemic in the
Unfortunately, it may be difficult for a potential buyer to know that a property has been used as a clandestine lab. Even if an interested party is aware that a property has been used as a lab, they may not understand the health and monetary risks associated with it. It is essential that parties involved in real estate transactions be knowledgeable about identifying labs, the health effects associated with meth labs, state remediation and disclosure guidelines, and the costs of rehabilitating a property to avoid a toxic pitfall.
Methamphetamine is a synthetic material made from various chemicals often found in common household items and over the counter medicines. Cold and allergy medications containing ephedrine or pseudoephedrine are broken down and combined or “cooked” with precursor chemicals through various methods to produce the drug. Most cooking is done with common items found around the house, such as hot plates, plastic hoses, glass jars, milk jugs, plastic containers and anything imaginable that can be used to house, transfer and heat liquids. Precursor chemicals are often found in items used in everyday life. Red phosphorous (road flares and matchbook strike pads), acetone (nail polish remover), hydrogen peroxide, iodine and battery acid can all be used to cook meth. (Footnote: 1) But regardless of their “everyday” nature, many precursor chemicals can be inherently dangerous. Of the 32 chemicals that are commonly used in the production of methamphetamine, about one third are extremely toxic. (2)
Five to six pounds of highly toxic waste is generated from every pound of meth that is produced. (3) Vapors and spills from chemicals and hazardous by-products can seep into almost any surface, including wallboards, furniture, carpeting and insulation. (4) Taps, drains and the resident septic systems can also be contaminated with waste chemicals. (5) Hazardous vapors get sucked into the heating and air system, and can reactivate and spread throughout the ventilation system when it is restarted or switched to different settings. (6) Some of these chemicals are easily removed, while others such as lithium, red phosphorous, mercury and iodine can reside indefinitely on surfaces and in ventilation systems.(7)
Meth residue and waste are not isolated to the structure. To avoid detection, many cooks will dispose of chemicals and by-products on the land surrounding the lab. Dumping is also frequently done on neighboring properties or large parcels of land that are not easily patrolled. (8)
Coming in contact with chemicals and by-products at a meth site, whether outdoors or indoors, can cause a wide range of health issues. Eyes, skin, the respiratory system, nervous system and internal organs can all be affected by residues left over from production. Common symptoms from exposure to fumes can include eye and skin irritation. (11) More serious effects can include headache, dizziness, tightening of the chest, nausea and vomiting.(12) In extreme cases, contamination can cause burns, damage to the liver and kidney, jaundice, and convulsions.(13) Healthy individuals can be susceptible to all of these ailments. But, imagine the effect on a person with existing respiratory problems, such as asthma. Small children can be especially susceptible to coming in contact with contaminants because they spend more time playing on the floor where chemicals have been accidentally spilled or outdoors where dumping may have occurred.
Some states have enacted remediation laws to address the public safety issues of contamination. Most of these laws require that a state, county or city authority test for the level of contamination once a suspected lab is identified. If a property exceeds the state guidelines for habitation, the house is generally quarantined or posted until proper remediation can occur. State guidelines on the level of contamination and remediation vary. However, the majority of states that have remediation statutes in place require that clean-up and hazardous waste disposal be done by a government certified or authorized agency.(14)
The cost of decontaminating a property can range from several thousand dollars to tens of thousands of dollars. Large labs that produce speed by the pound, rather than by the gram, can exceed $100,000 in clean-up costs.(15) When Arizona law enforcement busted a super lab in Mohave County it took only several days to clean the site.(16) But the cost to remove the contaminated soil, dispose of left-over chemicals and tear down the structures on the property was more than $100,000. (17) Even a small time operation can run into the tens of thousands of dollars. A local Colorado savings and loan discovered that a home it had loaned money on left enough toxins to cost $30,000 to $40,000 to remediate.(18) The amount remaining on the loan in addition to the clean-up cost put the bank upside down on the property value, leaving the bank with the option to demolish the home and sell the lot for $10,000, or abandon the property.(19)
This is probably not an uncommon scenario for lenders or unsuspecting purchasers. Foreclosing lenders, for instance, average a 30-percent to 40-percent loss on homes that they repurchase at foreclosure. Depending on the condition of the property and the local market, they may recoup that loss in REO (post-foreclosure sale). However, if the lender inherits a home that has been contaminated with meth, the costs to remediate can easily eat up any margin they may have been able to recoup at sale. Or, in the worst case scenario, as in the case of the
In order to keep unsuspecting buyers from being duped into purchasing a toxic property, several states have enacted disclosure requirements, as well as other procedures designed to warn potential purchasers. For instance,
Other states require a seller disclose that a home was once used as a meth lab, even if the property has been properly remediated. For instance,
But what is a buyer or lender to do if they are not covered by any of the state’s disclosure laws, or if their state lacks any requirements? It is essential that interested parties make a thorough inspection of the property, both the structures and surrounding land. There are tell-tale signs that point to meth production that can save a potential buyer from future loss. Indicators include bottles and hosing connected with duct tape, glass containers with dried chemical deposits, funnels, hosing, clamps, respiratory masks and filters, towels, coffee filters or pillow cases stained red (from red phosphorous) or incrusted with powdery substances, and empty bottles of anti-freeze, acetone, ether, drain cleaner, and paint thinners left in the home. (27) Additionally, cooks often use small camp stoves and propane bottles to cook down ingredients. Dead vegetation, burn pits, stained soil, and blacked out windows may all be signs that a property has once been used to cook speed. (28) A strong chemical smell, such as ammonia, or smells routinely associated with households chemicals are also a give-away.
If a resident cook has cleaned up the waste from production, there are still signs that might indicate the home’s use as a meth house. They include burn marks on hard surfaces, carpets and floors; tubs and sinks with deep scratches, burn marks or stains; and carpet or flooring that has been hastily removed. Cooks may also attempt to heavily post the property with no-trespassing signs and take odd security measures, such as placing baby monitors outside.
Certain tests can also be used to detect a clandestine meth lab. Spray starch or water can sometimes be used to highlight residues. (29) More technical tests include pH indicators to test acids on surfaces and photo-ionization detectors to test chemicals in the air and ventilation. (30) But, if a visual inspection of the property indicates that meth has likely been produced in the home, then it may be more cost effective to put the money into clean-up than into technological testing methods. (31)
For all of the things that can be done to prevent a person from purchasing a clandestine lab, there exists few options when a person ends up with a meth lab. As previously discussed, the costs to remediate may simply exceed the value of the property, and abandonment may seem to be the only option. Several states allow buyers and owners to seek restitution for criminals convicted of cooking meth on the property. (32) However, it is unlikely that a convicted meth cook will have the means to pay restitution. But, as discussed above, states with disclosure requirements allow buyers to seek compensation from sellers that fail to properly disclose. State and county programs may also be available to assist owners with remediation. The Environmental Protection Agency has also established the Brownfields Program to assist communities in rehabilitating hazardous properties through grants and loans.(33)
There is also positive news from
Angela Martin, Esq. | 03.31.08
Methamphetamine addiction has become an epidemic in the
Unfortunately, it may be difficult for a potential buyer to know that a property has been used as a clandestine lab. Even if an interested party is aware that a property has been used as a lab, they may not understand the health and monetary risks associated with it. It is essential that parties involved in real estate transactions be knowledgeable about identifying labs, the health effects associated with meth labs, state remediation and disclosure guidelines, and the costs of rehabilitating a property to avoid a toxic pitfall.
Methamphetamine is a synthetic material made from various chemicals often found in common household items and over the counter medicines. Cold and allergy medications containing ephedrine or pseudoephedrine are broken down and combined or “cooked” with precursor chemicals through various methods to produce the drug. Most cooking is done with common items found around the house, such as hot plates, plastic hoses, glass jars, milk jugs, plastic containers and anything imaginable that can be used to house, transfer and heat liquids. Precursor chemicals are often found in items used in everyday life. Red phosphorous (road flares and matchbook strike pads), acetone (nail polish remover), hydrogen peroxide, iodine and battery acid can all be used to cook meth. (Footnote: 1) But regardless of their “everyday” nature, many precursor chemicals can be inherently dangerous. Of the 32 chemicals that are commonly used in the production of methamphetamine, about one third are extremely toxic. (2)
Five to six pounds of highly toxic waste is generated from every pound of meth that is produced. (3) Vapors and spills from chemicals and hazardous by-products can seep into almost any surface, including wallboards, furniture, carpeting and insulation. (4) Taps, drains and the resident septic systems can also be contaminated with waste chemicals. (5) Hazardous vapors get sucked into the heating and air system, and can reactivate and spread throughout the ventilation system when it is restarted or switched to different settings. (6) Some of these chemicals are easily removed, while others such as lithium, red phosphorous, mercury and iodine can reside indefinitely on surfaces and in ventilation systems.(7)
Meth residue and waste are not isolated to the structure. To avoid detection, many cooks will dispose of chemicals and by-products on the land surrounding the lab. Dumping is also frequently done on neighboring properties or large parcels of land that are not easily patrolled. (8)
Coming in contact with chemicals and by-products at a meth site, whether outdoors or indoors, can cause a wide range of health issues. Eyes, skin, the respiratory system, nervous system and internal organs can all be affected by residues left over from production. Common symptoms from exposure to fumes can include eye and skin irritation. (11) More serious effects can include headache, dizziness, tightening of the chest, nausea and vomiting.(12) In extreme cases, contamination can cause burns, damage to the liver and kidney, jaundice, and convulsions.(13) Healthy individuals can be susceptible to all of these ailments. But, imagine the effect on a person with existing respiratory problems, such as asthma. Small children can be especially susceptible to coming in contact with contaminants because they spend more time playing on the floor where chemicals have been accidentally spilled or outdoors where dumping may have occurred.
Some states have enacted remediation laws to address the public safety issues of contamination. Most of these laws require that a state, county or city authority test for the level of contamination once a suspected lab is identified. If a property exceeds the state guidelines for habitation, the house is generally quarantined or posted until proper remediation can occur. State guidelines on the level of contamination and remediation vary. However, the majority of states that have remediation statutes in place require that clean-up and hazardous waste disposal be done by a government certified or authorized agency.(14)
The cost of decontaminating a property can range from several thousand dollars to tens of thousands of dollars. Large labs that produce speed by the pound, rather than by the gram, can exceed $100,000 in clean-up costs.(15) When Arizona law enforcement busted a super lab in Mohave County it took only several days to clean the site.(16) But the cost to remove the contaminated soil, dispose of left-over chemicals and tear down the structures on the property was more than $100,000. (17) Even a small time operation can run into the tens of thousands of dollars. A local Colorado savings and loan discovered that a home it had loaned money on left enough toxins to cost $30,000 to $40,000 to remediate.(18) The amount remaining on the loan in addition to the clean-up cost put the bank upside down on the property value, leaving the bank with the option to demolish the home and sell the lot for $10,000, or abandon the property.(19)
This is probably not an uncommon scenario for lenders or unsuspecting purchasers. Foreclosing lenders, for instance, average a 30-percent to 40-percent loss on homes that they repurchase at foreclosure. Depending on the condition of the property and the local market, they may recoup that loss in REO (post-foreclosure sale). However, if the lender inherits a home that has been contaminated with meth, the costs to remediate can easily eat up any margin they may have been able to recoup at sale. Or, in the worst case scenario, as in the case of the
In order to keep unsuspecting buyers from being duped into purchasing a toxic property, several states have enacted disclosure requirements, as well as other procedures designed to warn potential purchasers. For instance,
Other states require a seller disclose that a home was once used as a meth lab, even if the property has been properly remediated. For instance,
But what is a buyer or lender to do if they are not covered by any of the state’s disclosure laws, or if their state lacks any requirements? It is essential that interested parties make a thorough inspection of the property, both the structures and surrounding land. There are tell-tale signs that point to meth production that can save a potential buyer from future loss. Indicators include bottles and hosing connected with duct tape, glass containers with dried chemical deposits, funnels, hosing, clamps, respiratory masks and filters, towels, coffee filters or pillow cases stained red (from red phosphorous) or incrusted with powdery substances, and empty bottles of anti-freeze, acetone, ether, drain cleaner, and paint thinners left in the home. (27) Additionally, cooks often use small camp stoves and propane bottles to cook down ingredients. Dead vegetation, burn pits, stained soil, and blacked out windows may all be signs that a property has once been used to cook speed. (28) A strong chemical smell, such as ammonia, or smells routinely associated with households chemicals are also a give-away.
If a resident cook has cleaned up the waste from production, there are still signs that might indicate the home’s use as a meth house. They include burn marks on hard surfaces, carpets and floors; tubs and sinks with deep scratches, burn marks or stains; and carpet or flooring that has been hastily removed. Cooks may also attempt to heavily post the property with no-trespassing signs and take odd security measures, such as placing baby monitors outside.
Certain tests can also be used to detect a clandestine meth lab. Spray starch or water can sometimes be used to highlight residues. (29) More technical tests include pH indicators to test acids on surfaces and photo-ionization detectors to test chemicals in the air and ventilation. (30) But, if a visual inspection of the property indicates that meth has likely been produced in the home, then it may be more cost effective to put the money into clean-up than into technological testing methods. (31)
For all of the things that can be done to prevent a person from purchasing a clandestine lab, there exists few options when a person ends up with a meth lab. As previously discussed, the costs to remediate may simply exceed the value of the property, and abandonment may seem to be the only option. Several states allow buyers and owners to seek restitution for criminals convicted of cooking meth on the property. (32) However, it is unlikely that a convicted meth cook will have the means to pay restitution. But, as discussed above, states with disclosure requirements allow buyers to seek compensation from sellers that fail to properly disclose. State and county programs may also be available to assist owners with remediation. The Environmental Protection Agency has also established the Brownfields Program to assist communities in rehabilitating hazardous properties through grants and loans.(33)
There is also positive news from the Department of Justice (DOJ). In its National Methamphetamine Threat Assessment 2008 the DOJ noted that the number of methamphetamine labs across the
It is unlikely that the
the Department of Justice (DOJ). In its National Methamphetamine Threat Assessment 2008 the DOJ noted that the number of methamphetamine labs across the
It is unlikely that the
