California law has some fairly strict requirements pertaining to what a seller needs to disclose about residential real estate to a prospective buyer. The state California has created what is known as a Transfer Disclosure Statement, or TDS, that enumerates the disclosures that must be made by a homeowner to a prospective buyer. The vast majority of these disclosures pertain to physical issues associated with the real estate, like the presence of lead paint.
The California Association of Realtors has developed a standard TDS form that is utilized in all residential sales transactions in the state. If you are considering selling your home, or if you are on the market seeking to purchase a residence, you may wonder whether California law necessitates the disclosure of a crime at a residential property. The answer to the question of whether or not a crime that occurred at a residential property in California turns out to be not a simple “yes” or “no.”
Crime Resulting in Death at a Residence
One area in which crime and disclosure are clear in California is a situation in which a person is killed as the result of a crime that occurred in residential property. If a crime occurred in a home that resulted in the death of anyone – a resident or not – must be disclosed.
There is one important caveat associated with the disclosure, however. The disclosure of a crime resulting in death at a residence need only be disclosed if the crime and death occurred within a three-year period of time. A crime resulting in death that occurs beyond that time frame need not be disclosed as a matter of routine in California. (There is an exception to this caveat which is discussed in a moment.)
What motivates this reporting requirement is not the crime, but rather the death. California law requires the disclosure of any death in a residence that occurred within a three-year time period.
If a crime resulting in death occurred more than three years prior and requires no automatic disclosure, a buyer may still ask a question about a crime resulting in death. If such a question arises regarding a person dying in the residence, even outside the three-year time period, a homeowner must answer the question honestly. Again, the issue is a death in the residence and not the occurrence of a crime.
Other Crimes at a Residence
Generally speaking, there is no requirement that a homeowner discloses any crime not involving death that occurred at a residence to a prospective buyer. There is one caveat to this that is discussed in a moment.
With that said, California real estate disclosure laws do require that a TDS include a statement to the effect that a buyer can obtain information about the location of registered sex offenders through local law enforcement agencies and that can be accessed via a website operated by the state of California.
Where the Law Gets Murky: Notorious Events at a Residential Property
There are residential properties throughout California at which some type of highly negative, notorious event has occurred. These can include everything from a particularly gruesome homicide beyond the 3-year time frame to a residence alleged to be haunted.
Technically speaking, nothing contained in California statutes requires any disclosure of these types of notorious situations. With that said, there is now a line of court cases in California that appear to require homeowners to disclose particularly notorious happenings at a residence to a potential buyer.
The bottom line in these situations is that if an event occurred at a residence, including any type of notorious crime, that potentially could negatively impact the value of the property, a homeowner is wise to disclose the occurrence to a prospective buyer. Such a disclosure permits a prospective buyer the ability to make a fully informed decision.
A homeowner needs to keep in mind that there are now cases in California in which homebuyers have won financial judgments against home sellers who did not disclose a notorious event at a residence, including crimes. Courts found that although statutory law in California didn’t expressly require a disclosure, certain events are so notorious and negative that they necessarily impact the true value of a property. This potential impact of such a notorious event can result in a decrease in the value of the property.
Consult a Professional
Because there are gray areas in California law regarding certain types of disclosures, and because state courts are only now starting to address such issues, a homeowner is advised to consult a real estate professional or attorney when faced with concerns or questions about disclosure requirements. In the final analysis, a homeowner is advised by the old cliché of “better safe than sorry.” In other words, if a homeowner is uncertain about disclosing a non-physical issue with a residence, the best course is to err on the side of caution and disclose.