Meth Poses Significant Risk and Cost for Property Owners

As published in Nashville Business Journal.

Last spring, Gov. Bredesen signed into law the Meth Free Tennessee Act of 2005. A year has passed since its enactment and the ramifications to the real estate industry are now being recognized. At the time of the Act, the impact of the legislation on the real estate industry wasn't highlighted. But for owners of, or lenders on, commercial or residential rental property, it can be significant, including the assessment of clean-up costs if the manufacture of methamphetamine is found to have taken place on the property.

The residual contamination from the byproducts of the manufacture of meth can infect the property for decades, posing an immediate threat to human health and leading to a quarantine of the property.

Although meth is a relatively modern problem to Tennessee, the problem quickly exploded and some authorities have estimated, prior to the enactment of the Meth Free Act, Tennessee accounted for 75 percent of all meth production in the Southeast. Meth is an extremely addictive drug and has a devastating effect on the communities ravaged by its addicts.

Since the effective date of the Meth Free Act, drug and production seizures have decreased, but the manufacturing problem remains. The primary real estate related concern is the ease of manufacture of the drug, which can be done in any motel or hotel room, any industrial warehouse or any rental property, residential or commercial, urban, suburban or rural.

The problem is exacerbated by the fact that manufacturing meth can be easily learned from the Internet and accomplished using common household supplies. Many of the ingredients, when combined, are extremely unstable and create a significant fire, environmental and health hazard. For every pound of meth made, 5 to 6 pounds of residual toxic waste are flushed or dumped. The residual contamination is absorbed into hard surfaces, fixtures, walls, carpets, drapes, bedding, furniture, appliances, etc. The result is complete contamination of the property.

Lawmakers wisely sought to mitigate the health and environmental damages caused by meth production. The first step was to restrict and monitor the sale of pharmaceutical products that contain the primary ingredients used in meth production. The second step was to quarantine properties used in meth production, to establish a registry to monitor the cleanup of the properties, and to provide for the filing of a Notice of Methamphetamine Lab Quarantine in the register of deeds for the county in which the property lies. The final step was to establish a sanctioned method of cleaning contaminated property, and credentialing qualified technicians to perform such work.

In the event of contamination and quarantine of a property, owners will, of course, be anxious to have the quarantine order removed as soon as possible. In order to do so, the cleanup must be conducted following standards required by the Tennessee Department of Environment and Conservation.

Among the requirements are the use of qualified professionals, for which a listing is available on TDEC's Web site. There's additional guidance available from TDEC in the form of regulations and other easily accessible information. The intent is to return the property so that it is "safe for human use," and to provide a documented history of the cleanup. Property owners or lenders should expect that the appropriate cleanup will, most likely, be more expensive and more time consuming than anticipated.

Property owners, and lenders on at-risk properties, should protect themselves by closely monitoring their investments. Lenders will want to protect themselves to ensure that borrowers of properties subject to such a quarantine order will respond to the quarantine appropriately and effect the necessary remedy in a timely and properly documented manner. In the event of contamination and quarantine, the cleanup process is feasible, though expensive. Following the steps to release a property from quarantine also is feasible, but should be carefully monitored.

The scourge of meth addiction, though lessened by the passing of the Meth Free Tennessee Act of 2005, will continue to threaten property owners. Knowing the appropriate remedies and procedures to follow to mitigate the health and environmental hazards generated by the production of meth will minimize potential losses suffered by property owners.