Seller’s Neighborhood Security Disclosure – Form 321

Today, tenants and owners of units in multiple family properties are protected by landlord-tenant law against foreseeable criminal acts within the property. However, sadly, prospective homebuyers looking to purchase a detached single family residence (SFR) have no legislation to rely on for protection against foreseen criminal activity. [Ann M. v. Pacific Plaza Shopping Center (1993) 6 CA4th 666]

Disclosures as a form of protection are different from continuing protection. If the seller’s agent fails in their duty to provide relevant property information to prospective buyers disclosing criminal activity within the neighborhood, then it becomes the responsibility of a buyer’s agent to request and review the criminal history of the area and hand it to the buyer.

As a matter of law, conditions which negatively affect the value of the property, known or suspected by the seller or the seller’s agent to exist, must be disclosed on the mandatory transfer disclosure statement (TDS). However, most sellers and their agents “forget” to provide information about past criminal activity within the neighborhood – whether known or suspected. Their justification: criminal activity is not listed as an item in the defective TDS form and is not a provision in the outdated purchase agreements seller’s agents frequently use. [See first tuesday Form 304]

Disclosure of a negative effect on the value of property is required regardless of whether the negative effect is explicitly stated on a pre-printed TDS form. Anything less is deceit, and thus a fraud on the buyer [Calif. Civil Code §§1102(a), 1102.3, 1102.8]

When property disclosures are prepared by the seller or seller’s agent, there are two operative phrases from case law they must keep in mind:

  • readily available information; and
  • relevance to a buyer’s decisions.

first tuesday’s Seller’s Neighborhood Security Disclosure is an addendum to the purchase agreement requesting security  information from the seller on their property. Although it is not a statutorily mandatory disclosure, it provides material information to the buyer which is “readily available” and “relevant to a buyer’s decision.” Thus, the seller’s disclosure is a legally critical supplement to the mandated TDS. [See first tuesday Form 321]

Related article:

Brokerage Reminder: Neighborhood Security – Is it safe out there?

Each section in Form 321 has a separate principle relating to the security of property occupants.  The sections include:

  • statement from the seller disclosing any investigative reports on the adequacy of the property’s security arrangements;
  • security precautions including steps taken by the seller or prior owner to prevent security breaches; and
  • conduct on the property by a tenant, their pets or visitors which have endangered them or the property of another.

When a buyer’s agent reviews the Seller’s Neighborhood Security Disclosure with their buyer, the buyer’s agent will discuss any disclosures or findings they have made with the buyer. Any costs of providing additional security for their use of the property (e.g., extra lighting, a security system, security gates, etc.) are then pointed out.

After consideration, the buyer is able to make an informed decision whether to proceed with the purchase, negotiate an adjustment in the price to cover the value of the disclosed security risks, or cancel and find a property with fewer associated security risks and costs. [See first tuesday Form 321]321_Page_1321_Page_2