Meth Lab Concerns

[Tom Goans]

Meth Lab Concerns

My biggest concern these days is discovering a meth lab in an investment property.

The last time I checked, there is no insurance coverage to protect an investor from the costs and loss. It is my understanding of the laws; should a meth lab be discovered, the property must be immediately vacated. Then, a certified crew must come in and remove the walls, carpet, cabinets, etc. before the residence can be re-rented. This could take months.

Have I overlooked a way to survive such a catastrophe?

[Dion DePaoli]

As far as insurance coverage goes, a landlord should really read their insurance policy to understand.

In a general sense, usually "criminal activity" is excluded from property coverage. However, this tends to be specific to the property owner. If the property owner is unaware, they may be able to seek damages from the insurance policy for clean up. Again, this really needs to be analyzed in the policy itself. They could sneak an exclusion in.

Seeking a claim will likely require an attorney as the insurance companies first line of defense will deny the claim under criminal activity. Most agents will likely say it is not cover, so you may have to inquire with someone from the claims department.

The damage from the meth lab is technically a covered "peril" in most policies. However, you may have to have an "All Peril" policy, which would cover all things not listed as exclusions in the policy.

The remediation of a meth property is not that long of a process and depends on the actual verified damaged area. The residue from the methamphetamine seeps into porous material like carpet, drywall and wood, etc. Because the substance is cooked, its vapors can also cause accumulation in the ducts and air handler.

This may sound a little silly, but, meth lab makers or builders, or whatever you want to call them, are also aware effects of the chemicals and usually take steps to create some form of confined space. Now, these are also idiots, so I am not saying they do a good job, but they will attempt to put up plastic lining or put the lab in a detached garage or shed or similar, depending on property. Not saying you can overly rely on this, but, to some extent, their build out might have confined the spread of the damage.

The level of damage can be tested and a proper as well as state approved or local government approved cleanup terms can be met. Having a meth lab does not always mean, everything must be torn out and replaced. That really depends on the damage. Sometimes the damage can be cleaned by a washing technique with some approved equipment. There are companies who do this professionally, just like companies who clean up after floods and fires, etc.

Most states then require notice to tenants and buyers of the about the lab being present in the property. So this can cause folks to just stay away even if it was clean properly and thoroughly.

Clean up costs can range from $5,000 to $40,000, like I said, depends on the damage. Costs of rental loss or marketability for sale are a bit unquantifiable but add on to the top of tangible expense of clean up.

If you find a lab, you should not touch and you should not hang out around the chemicals. Seek fresh air immediately, open ventilation will help diffuse the concentration levels of the meth but even small traces can cause harm. A county or similar hazmat team will come and inspect the property and if they find the chemicals, they will section of the property until cleaned. You will have to have a final inspection in order to have a C/O back.

One other costly item is the disposal of the other chemicals that are found on the property. Any investor who is use to purchasing vacated properties who runs into old paint, fuels or similar petro-chemicals will tell you this can be costly as those materials have to be 'properly' disposed. In other words, you have to pay for it.