Are you aware of local crime rates, recent criminal activity, or if a sex offender lives near one of your client listings or rentals? Disclosing what you know about criminal activity around a listing to interested buyers will help you avoid misinterpreting the property’s value — and keep you out of legal trouble whether representing the seller or the landlord.
Are Real Estate Agents and Property Managers Required to Discuss Local Crime Rates With Clients?
Every state may have different requirements regarding disclosure of crime rates near a listed property or rental unit. As a general rule, listing and selling agents must each conduct a reasonably competent and diligent visual inspection of real property before closing. However, you also remain obligated to disclose material facts about which you have notice or knowledge.
As a real estate licensee or property manager, you do not have an obligation to personally or proactively research information about crime rates surrounding your listings or rental units you represent for a landlord.
If you become aware of information about local crime near your listing, you are required to disclose such information to a potential buyer in writing before closing as a matter of custom and practice. What kind of crime and for what time period? In many states, if you become aware of criminal activity occurring within a five-mile radius of the listed property within the last five years, you must disclose this information to buyers in writing before the closing.
Real estate licensees should contact their local real estate association or an attorney to obtain forms to disclose criminal activity information to buyers.
See more about Real Estate Seller Disclosures.
Make Clear the Buyer’s Responsibility
It is the responsibility of the buyer to utilize due diligence in his or her purchase of a particular piece of property well before escrow closes. This includes researching sex offenders in a property’s vicinity via the sex offender registry website. Diligent selling agents should highlight this statement to your buyers, so they understand it is not your (the agent’s) responsibility to research this for them.
Real estate licensees should provide the following written disclosure to the buyer of a particular parcel well before escrow closes: “It is recommended that the buyer contact local law enforcement before close of escrow/sale as to assorted issues, including but not limited to crime, safety issues and/or registered sex offenders in the locality of the desired property in order for the buyer to safeguard his or her interests in acquiring the desired property.”
Tenant Disclosures
In many states (such as California), special mandates exist on all residential leases and purchase agreements regarding registered sex offenders. In California, these agreements are required to include a statement providing the sex offender registry’s website (www.meganslaw.ca.gov). We suggest you periodically review your state’s Department of Public Safety website for similar registries to reference on at least a quarterly basis.
At CRES, our expert local attorneys can give you guidance to ensure you handle disclosures properly and help you avoid real estate errors and omissions claim risks.
Be Sure You’re Protected with Real Estate Errors and Omissions Insurance
You wouldn’t drive without having car insurance, and you wouldn’t risk not having homeowners insurance to protect your home. Real Estate errors and omissions insurance protects you and your business, should a claim or real estate lawsuit happen. Even if you’re not at fault, you can still be named in legal proceedings and would need legal counsel. The average real estate lawsuit can exceed $40,000 in legal fees.
Don’t risk your income by doing business without real estate E&O insurance. CRES Real Estate E&O + ClaimPrevent® gives you the most extensive protection at an exceptional value — with pre-claim legal advice included at no extra charge!
