✏️ Editor’s Note: Realtor Associations, agents, and MLS’ have started implementing changes related to the NAR’s $418 million settlement. While home-sellers will likely save thousands in commission, compliance and litigation risks have significantly increased for sellers throughout the nation. Learn how NAR’s settlement affects home sellers.
74% of homesellers admitted to hiding issues in the seller disclosure form. However, such an approach could lead to buyers backing out of the deal at the last moment. In worst-case scenarios, they could even take you to court. Failure to disclose Megan’s Law is one such scenario.
According to Megan’s law, sellers must inform potential buyers about sex offenders residing in the neighborhood. However, the rules related to Megan’s Law vary by state. Instead of worrying about whether you’re complying with the law, opt for Houzeo and get all federal and state disclosure forms at $399+.
What Is Megan’s Law?
Megan’s Law is also known as the Sexual Offender Registration and Notification Act (SORNA). This 1996 federal legislation gives the public access to information about the possible number of sex offenders residing in their area.
It requires homesellers to disclose this information to potential buyers prior to___. The purpose of Megan’s law is to ensure transparency in the real estate process.
How Does Megan’s Law Work?
Typically Megan’s law is added as a disclaimer to the usual seller disclosure form given to the buyer. However, sometimes, it also mandates issuing a notification to the community when a high-risk sex offender moves into a neighborhood.
The rules and regulations surrounding Megan’s Law differ from state to state. For example, in California, sellers have to download a Megan’s Law disclosure form. This form includes the names and signatures of both the buyer and seller. It also includes a disclaimer statement, with a website URL.
The buyer can check the website to know the number of offenders residing in the area and make the based on the tier they belong to.
The Tier System
Sex offenders can be classified into 3 tiers:
- Tier I: Pose the lowest risk of re-offending. Their information is not shared publicly.
- Tier II: Moderate risk of re-offending. Their information is available online.
- Tier III: High risk of re-offending. Their information is widely available online.
Check Megan’s Law Requirement in Your Locality
How Megan’s Law Affects Real Estate Transactions
The presence of a sex offender in your neighborhood affects more than your locality’s crime rate. It also has an impact on real estate transactions in the area. Let’s see how it affects sellers and buyers.
How It Affects Sellers
Homes located near registered sex offenders usually close on a 4% lower selling price than other comps. These properties also take 18% longer to sell than comparable homes. Further, you may be forced to reduce your home’s asking price and give concessions to buyers. In total, you could lose $4000 – $5000 if you are in a locality with a sex offender.
If you choose not to disclose this information to save on the concessions, the buyer may sue you and take you to court. As a result, you end up paying even more.
How It Affects Buyers
Megan’s Law can affect the buyer’s decision to purchase a home. Some mortgage lenders may also be hesitant to issue a loan. This is because they may be concerned about the potential decrease in property values.
History Before Megan’s Law
In 1994, the Jacob Wetterling Act required each state to maintain a sexual offender registry. However, only law enforcement agencies could access this information. Public disclosure was permitted only if a person’s information posed a safety risk.
However, the rape and murder of 7-year-old daughter Megan Kanka forced her parents to question the effectiveness of the law.
They pushed for a rule where sex offenders have to inform the public if they move into a community. In 1994, Paul Kramer, a Republican politician, sponsored a package of 7 bills known as Megan’s Law. The legislation was enacted in New Jersey just 89 days after Megan’s murder.
Bottom Line
Not disclosing sex offenders’ information or any other known defects in the home can land you in court. As a home seller, it is your legal and ethical responsibility to disclose all the information in the seller disclosure.
This will help buyers to make informed decisions about where to live. This also helps create a safer and more transparent real estate market.
Frequently Asked Questions
How to look someone up on Megan's law?
You can access information about registered sex offenders through sex offender registries. You can also visit websites like Family Watchdog, and The National Sex Offender Public Website.
What is a tier?
Tiers are levels based on which sex offenders are categorized. Tier 1 consists of offenders to pose the lowest risk while tier 3 includes offenders who pose highest risk.
What is the purpose of Megan's law disclosure?
Megan's law notifies the public about registered sex offenders. This helps buyers make informed decisions about where to live. This also makes the real estate market safer and more transparent.
