Colorado Methlab Real Estate Discovery and Disclosure

Senator Shaffer, sensitive to these ordeals, attempted to introduce legislation that would protect Colorado homebuyers. That Act was Senate Bill SB06-002. The resulting legislation, although laudable and noble in nature, actually did not offer much for the consumer, since most of the protections identified by the bill were already available to the home buyer anyway, and the bill actually requires the identification of old methlabs to be removed from listings. Overall, the Bill is poorly written in the context of existing regulations and statutes and actually created problems in that it muddied the legal waters by introducing ambiguities and conflicting language into the existing methlab statutes.

Furthermore, ironically, the Bill also contains language that permits the seller to legally withhold information that the property was once an illegal methamphetamine laboratory, by requiring remediated properties to be removed from ALL government-sponsored informational services that list properties that have been used for the production of methamphetamine. Therefore, whereas prior to the legislation, a prospective buyer could easily determine if a property had been used as a methlab, this bill makes that determination more difficult.

On May 1, 2006, the bill was signed by Governor Owens and became codified in Title 38 (Property – Real and Personal) of the Colorado Revised Statutes, Article 35.7 (Disclosures Required in Connection with Conveyances of Residential Real Property).

The Bill begins by introducing its first ambiguity:

38-35.7-103. Disclosure - methamphetamine laboratory. (1) A BUYER OF RESIDENTIAL REAL PROPERTY HAS THE RIGHT TO TEST THE PROPERTY FOR THE PURPOSE OF DETERMINING WHETHER THE PROPERTY HAS EVER BEEN USED AS A METHAMPHETAMINE LABORATORY.

For a start, prior to this legislation, such a “test” may not have been necessary since the property may have already been listed on a government-sponsored list of properties – a listing that is now prohibited by the bill. Prior to this bill, a prospective buyer would not have to test a previously known property, they could have merely gone to the internet and looked the property up on existing databases.

In any event, although the term "Drug laboratory" is defined by State statute (CRS 25-18.5-101) nowhere in the bill or otherwise in state statues is the term “methamphetamine laboratory” defined. "Drug laboratory" is defined by statute and means any area where controlled substances have been manufactured, processed (used), cooked, discarded, or stored and all proximate areas that are likely to be contaminated as a result of such activities.

The new rule essentially states that a prospective home buyer may have an Industrial Hygienist perform a “test” in a home. The nature of the “test” is not identified, neither are the parameters of the “test,” nor are the analytes of the “test.”

Following the undefined “test,” the buyer is required to “promptly” notify the seller who has thirty days to dispute the "test" by hiring a second Industrial Hygienist who may similarly conduct any kind of undetermined “test” to refute the first undefined “test.” However, the second test (or any other subsequent "tests") cannot actually be used to refute the first test. The seller must accept the first “test” and presume an illegal drug laboratory used to manufacture methamphetamine is extant, and therefore remediate the property pursuant to State regulations.

Testing notwithstanding, the Bill explicitly requires any seller to automatically disclose knowledge of whether the property was used as a “methamphetamine laboratory,” but does not define what constitutes a “methamphetamine laboratory.”

Therefore, a property owner, with a property contaminated by methamphetamine (and an host of other toxic materials associated with meth production) who has used the property to extract pseudoephedrine but shipped the material to a second location for processing, and has received methamphetamine base, and has processed the methamphetamine base with solvents and extracted the meth, and processed the meth for street consumption, can legitimately not disclose the information since the property owner did not actually manufacture the meth at the property.

The problem lies in that the legislators failed to use existing definitions, and failed to mesh the new statute language with existing language.

The bill however, does require a seller who fails to make such a disclosure liable for any remediation costs associated with the property; but does not require the seller to cover the Industrial Hygienist’s costs of the “Preliminary Assessment” or the final verification testing and issuance of the Industrial Hygienist’s “Decision Statement.” The lack of definition of these costs will certainly prove fertile ground for attorneys litigating the associated responsibilities of the seller; a situation that did not exist prior to the promulgation of the bill.

The Bill also makes the seller responsible for any costs associated with chemical injuries as a result of methamphetamine production; but does not include any of the chemical injuries that may be sustained from an illegal drug lab unless the property owner was actually manufacturing methamphetamine. That is, the seller of a contaminated property could merely argue that they were engaged in methamphetamine related activities, but not actually engaged in “production.”

The ambiguity of the new Bill is such that it does not provide any protection to tenants moving into rental properties – but does protect investors who are purchasing rental properties.

Ultimately, the new Bill will actually help to hide former methlabs and hinder the ability of the Colorado homebuyer to determine if a meth lab was present in their new dream home.

A copy of new real estate disclousre act is available by clicking here but a copy of the codified language is not yet available.

To download information on upcoming certified meth-lab training courses, open to the general public, click here.

To return to our main methamphetamine discussion, click here. For a discussion on how to recognize the signs of a methlab click here.

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