Our proposal: Mandate all sellers of single family residences (SFRs) to disclose to buyers known criminal activity and crime data in the neighborhood for the past two years.
Why: While sellers and seller’s agents are required to respond truthfully and fully to buyer inquiries about their knowledge of criminal activity, current California law does not require the disclosure of known criminal activity or impose a duty on the seller’s agent to seek out this information by checking local sources.
Yet, criminal activity is a material fact that adversely affects the value and desirability of a property, much like natural hazards, environmental hazards and property defects — all of which are legally-mandated to be disclosed to buyers.
Local crime rates are a major consideration for many homebuyers evaluating properties. In fact, a recent first tuesday poll found, according to agents, low crimes rates topped the list as the most important factor for homebuyers searching for a home, even surpassing quality schools and proximity to work.
Failure to disclose known security conditions and criminal activity on or near a property results in asymmetry of information between the seller and buyer. This lack of transparency leaves the buyer knowing less about the property than the seller and the seller’s agent, preventing the buyer from making an informed offer.
Further, local crime data is readily available through local law enforcement and other online sources, such as CrimeReports, NeighborhoodScout and My Local Crime. Giving notice to prospective buyers requires little effort compared to the value of the service to the public and satisfaction of buyers.
What you can do: In the meantime, real estate agents need to be attentive to buyer concerns regarding local crime rates. As a buyer’s agent, you can request sellers to disclose known information about local criminal activity to reduce the risk of deceitful conduct claims by an ill-informed buyer. As a seller’s agent, the best practice for complying with licensing duties is to disclose crime information to a prospective buyer by using a form designed for this very purpose.
RPI Form 321 – Seller’s Neighborhood Security Disclosure — Addendum may be used when preparing a marketing package with information addressing security on or about a property listed for sale or lease. [See RPI Form 321]
For the buyer, the Seller’s Neighborhood Security Disclosure is an addendum to the purchase agreement, attached as part of a contingency provision requesting security information from the seller on their property and surrounding area.
Each section on the form contains a separate principle relating to the security of the occupants of the property, which include:
- a statement from the sellerdisclosing any investigative reports on the adequacy of the property’s security arrangements [See RPI Form 321 §2];
- security precautions already undertaken, including steps taken by the seller or prior owner to prevent security breaches [See RPI Form 321 §3];
- conduct on the property which has endangered another person or the property of another [See RPI Form 321 §4]; and
- any other specific criminal activity occurring during the past two years. [See RPI Form 321 §5]
When a buyer’s agent reviews the Seller’s Neighborhood Security Disclosure with their buyer, the buyer’s agent may discuss disclosures or findings they have made with the buyer, along with any costs of providing additional security for their use of the property.