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If you ever needed absolute proof that you must always screen prospective new tenants, read on.  Although the following incident took place in Canada, it sets an unsettling precedent and could be a harbinger for things to come here in the US. 

A BC court recently forced a landlord to hand over 2 of his 3 rental properties because his tenants had been growing marijuana inside the units of all three properties.  He was ordered to give up the 2 properties (valued at over $900K, by the way) even though the court realized that he had no knowledge of the situation nor did he directly profit from it in any way.  Why?  Because it was ruled that he did not screen the tenants properly since he failed to do rental credit checks or get completed rental apps, nor did he conduct any kind of property inspection

It was ruled that if adequate screening was done, the pot growers would not have been allowed to move in.  Further, the judge opined that if inspections were done while the tenants were there, the landlord would have found evidence of these improprieties.  Thus, he was deemed to have had “willful blindness,” which equates to having full knowledge of the situation.

At least the judge gave him a break.  Because he had no knowledge of the situation, did not benefit in any way, and was found to be a “hard working family man,” the judge only made him forfeit 2 of his 3 investment properties! (gee, thanks!)

So the moral of the story is obviously to take as many precautions as possible when managing tenants.  Although I think the judge’s decision was unnecessarily harsh, it doesn’t matter what I think.  The warning has been put out there, so make sure you manage your income property accordingly.

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