As reported by the Indianapolis Star, the Indiana State Police have discovered 119 methamphetamine labs in Delaware County in the first 6 months of 2015. The next highest was Noble County with 35. While methamphetamine is an illegal substance that has wrecked many lives in Indiana, methamphetamine is also a large problem for realtors, landlords, and buyers and sellers of real estate due to the contamination that occurs in the houses and buildings where the meth is cooked.
Most Sellers of a 1-4 unit residential property are required to fill out a Seller’s Residential Real Estate Sales Disclosure Form per Indiana Code Section 24-4.6-2, et seq. On page 2 under “Hazardous Conditions” the following question appears: “Have there been or are there any hazardous conditions on the property…such as…toxic materials…?” The Seller has the option to indicate “Yes,” “No,” or “Do Not Know.” Methamphetamine contamination would be considered a toxic material. With methamphetamine production, clean-up generally will involve, at a minimum, the removal of all surfaces that came in contact with the contaminants and removal of drywall down to the studs. If a Seller fails to clean-up the condition or sells the property without disclosing the methamphetamine contamination, they could be liable to a Buyer for the failure to disclose.
If a house has been contaminated, there are also insurance issues that will need to be determined. Does a landlord still have insurance coverage when a property is contaminated by a tenant? Is there coverage for lost rent while the house is being cleaned up? What about coverage if the health department or police order the house to be closed up until their investigations are completed? As with all insurance questions, individual policies must be read entirely to determine whether there may be coverage for the landlord in these situations.
If you have concerns surrounding property you own that may have had an undisclosed methamphetamine lab in it or have questions surrounding your insurance coverage, contact the real estate attorneys at Goodin Abernathy, LLP to discuss your case.