Thousands of clandestine drug labs exist across America right now. What happens if you discover a methamphetamine laboratory while acting as a professional in the field? What are the telltale signs that might indicate you are on a property that has recently been used as a clandestine laboratory?
On January 18, 2023, HUD reissued its 4000.1 FHA Single Family Housing Policy Handbook. The handbook contains several changes and elaborations. They remain consistent in their guidance regarding methamphetamine and FHA appraisals. The FHA loan appraisal rules regarding environmental concerns remain clear.
Methamphetamine Contamination Guidance:
If the Mortgagee or the Appraiser identifies a Property as contaminated by the presence of methamphetamine (meth), either by its manufacture or by consumption, the Property is ineligible due to this environmental hazard until the Property is certified safe for habitation.
How is the value of a property affected once it has been discovered the property has been used formerly as a meth lab?
Meth labs can cause severe damage to a property, including smells, stains, and other environmental damage that may not be visible to the naked eye, but extremely dangerous to inhabitants and those who come in contact with the property. Repairing this damage can be costly.
A study that we utilize in our FHA course indicates the discovery of a methamphetamine laboratory in a neighborhood has a significant effect on the property values of those homes close to the contaminated location that peaks from 6 to 12 months after each lab’s discovery.
If the Mortgagee notifies the Appraiser or the Appraiser has evidence that a Property is contaminated by the presence of methamphetamine (meth), either by its manufacture or by consumption, the Appraiser must render the appraisal subject to the Property being certified safe for habitation.
If the effective date of the appraisal is prior to certification that the Property (site and dwelling) is safe for habitation, the Appraiser will complete the appraisal subject to certification that the Property is safe for habitation.
If the effective date of the appraisal is after certification that the Property (site and dwelling) is safe for habitation, and the Mortgagee has provided a copy of the certification by the certified hygienist, the Appraiser must include a copy of the certification in the appraisal report.
The Appraiser must analyze and report any long-term stigma caused by the Property’s contamination by meth and the impact on value or marketability.
Both our FHA course, i.e., FHA Site Inspection, which has been updated this month, and our course entitled Environmental Hazards Impact on Value contained sections that describe how to calculate the impact on value including diminution.
With spring appraisals underway, we want you to be safe. So, what are the telltale signs you need to be cognizant of to protect yourself from exposure to contaminants or liability?
The following list identifies clues that might mean the property you are dealing with is or was once a meth lab.
It is important to keep in mind that any one of these signs on their own does not necessarily determine that the property was a meth lab; however, a combination of these factors may be cause for concern.
- Windows that are blacked-out, frosted, boarded up, or otherwise covered.
- Dead patches of grass in the yard.
- Security cameras or security equipment.
- If there is garbage in or near the house that contains an unusual amount or combination of the following, there may be cause for concern:
- Rags with red or yellow stains
- Cold/allergy pills containing pseudoephedrine.
- Bottles with tape and rubber hoses
- Alcohol or lighter fluid
- Coffee filters with red stains
- Disposable cold packs
- Funnels, hosing, clamps, etc.
- Rubber or latex gloves
- Respiratory masks, filters, dust masks
- Camping stoves, propane tanks, fuel containers
Inside the house…
- Is it noticeable that walls, drains, sinks, showers, ceilings, etc., are discolored either red or yellow?
- Are there lots of abandoned glassware and/or tubing?
- Are there empty containers of chemicals in sight?
- Are the smoke detectors covered or removed?
- Houses that were used as a meth lab often have unusual smells such as paint or rotten eggs.
- There is also sometimes a metallic taste in the air within the house or within the surrounding property.
Consider printing out, or even laminating this checklist, and placing it in your car for safekeeping (or, if you are more technically inclined, download it as a pdf on your portable iPad, so you can use this helpful tool in the field).
Ultimately, be alert and stay safe. There aren’t many of us appraisers left!
Good luck and do good work.
Rich