The Law & You: Megan’s Law

July 1, 2000

You’ve located the perfect house for the buyers. Or is it? They have a young daughter, and a convicted sex offender lives nearby. What’s your duty as a licensee to investigate and reveal the sex offender’s presence?

The U.S. government and all 50 states now have enacted regulations to register convicted sex offenders. Although courts are just beginning to interpret the regulations, one thing has become clear: This area is a potential minefield for licensees.

In 1994, 7-year-old Megan Kanka was brutally raped and murdered by a convicted sex offender living in her New Jersey neighborhood. The community was outraged and argued that this could have been averted had they known that the sex offender lived there. As momentum gathered for registering the location of sex offenders, the question became, Who would be responsible for providing this information to homeowners and prospective homebuyers?

Megan’s Law, the federal law requiring a public registry of known sex offenders, was enacted in 1996. Implementation was delegated to the states, including the issue of whether real estate licensees have a duty to disclose information concerning sex offenders. Unfortunately, few states have clarified the extent to which real estate licensees must investigate or disclose such information. A recent NAR survey revealed that only 16 states exempt real estate licensees from disclosure responsibilities. They are Arizona, Georgia, Idaho, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, and Wyoming.

Four states—Alaska, California, New Jersey, and Virginia—limit a licensee’s duty to telling potential buyers or tenants in writing where information can be found.

Two recent state court decisions provide some insight into the varied risks faced by real estate professionals.

In 1994 a Texas court in Sanchez v. Guerrero held that a broker’s failure to disclose that an alleged child molester had previously lived in the home violated the Texas Deceptive Trade Practices Act. In this case, the broker knew that a tenant had been tried and acquitted of child molestation charges but didn’t tell the buyers, who had asked about previous owners. The buyers were awarded damages to compensate them for their losses, as well as $100,000 for mental anguish even though they had never moved into the house.

In sharp contrast, the New York Court of Appeals in January 2000 dismissed a lawsuit, Glazer v. LoPreste, brought against the sellers and salespeople by the buyers because they weren’t told that a convicted sex offender lived across the street. The court ruled that under the doctrine of caveat emptor, neither the sellers nor the salespeople had a duty to disclose this information, since there was no active concealment and the information was available to the buyers in newspapers.

Whether to disclose information about sex offenders is particularly vexing in states where no legislation specifies Megan’s Law disclosure duties but where regulations require licensees to disclose facts that are material to the transaction.

Licensees still face potential risks:

  • If sellers direct their broker not to reveal Megan’s Law information, but the broker gives information to the buyers without the sellers’ authorization, will the broker be liable to the sellers if the sale fails to close?
  • What duty does the licensee have to keep abreast of sex offenders moving in and out of a neighborhood?
  • How is neighborhood defined? When the location of the residence or place of employment of a convicted sex offender is known, must it be disclosed to people living or working in adjacent properties, within a specified number of feet, within the same city limits, or by another measure?
  • If there’s a disclosure duty, is it any different with regard to short-term or seasonal rentals?
  • If a brokerage promotes its services by advertising that it’ll search for sex offenders in the area, does it increase the broker’s liability?

NAR advocates that in order to ensure that Megan’s Law information is provided to the public properly and accurately, it should be disseminated solely by the law enforcement officials who maintain it, as is the case in New Jersey and several other states.

Since Megan’s Law is still evolving, check your state law to ensure that you’re complying. In states that don’t have clear guidelines, consider providing written disclaimers concerning the dissemination of Megan’s Law information, and notices advising buyers where they can obtain the information.

Moreover, if a seller directs you not to provide Megan’s Law information, it may be in your best interest to decline that listing.

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