Meth Lab

[Chi Soul]

I currently have a property under contract that I am flipping to another investor. The day we were to sign the contract I was informed by a neighbor of the property that 3 individuals were arrested for cooking Meth in the home & it is currently under quarantine until it is cleaned & inspected. Police say a lien will be put on the home preventing it from being sold until the quarantine is removed, but as of yet I have seen no lien. It will cost $5,00 to sanitize the home and have quarantine removed.

I told the investor that I will just reduce his purchase price by $5,000 & he can pay to have the home cleaned. He will come to closing with the same amount of money, it just gets distributed differently. I also told him about the possible lien, which may force us to structure the deal creatively so he pays the $5000 and not the current owner, and still gets the deed. The investor does not want to pay $5,000 to have a property cleaned that he does not own which makes sense. He also does not want to buy a home under quarantine indefinitely. Because of this I have told him that before closing he can sign an contract with the contractors to do repairs for $5,000 to guarantee that price.

What's the simplest way to structure the deal so the investor is guaranteed ownership in the property after he pays for the cleaning if in fact the deed cannot be transferred until after the quarantine lien is removed?

[Andy J.]

I'm curious as to how you know the cleanup will be $5,000. Most meth lab cleanup quotes I've seen have been in the $20,000+ range. Depending on the level of contamination it can be extremely extensive. I've seen meth houses after a cleanup where all that was left was windows, studs and joists, exterior siding, some plumbing and electrical, and a roof. No dry wall, no carpet, no cabinets, no toilets, no bathtubs, no light fixtures, no sub-flooring, no insulation, almost everything you can take out without the house falling down was gone.

On top of that, even after this cleanup it didn't pass inspection tests for minimum acceptable levels. And because the meth cookers dumped chemicals in the yard they had to dig up truckloads of dirt and dispose of it as a biohazardous substance. Expensive!

Don't forget that you have to disclose to your/their buyers that this was a meth lab. That'll scare a lot of people if your buyer is trying to fix and flip.