Report 2015-134 Recommendation 2 Responses

Report 2015-134: Residential Building Records: The Cities of San Rafael, Novato, and Pasadena Need to Strengthen the Implementation of Their Resale Record Programs (Release Date: March 2016)

Recommendation #2 To: Novato, City of

To ensure that it is aware of the degree of property owners' compliance with its resale record ordinance, Novato should implement procedures that can help it monitor the sale or exchange of properties that require resale record inspections. The city should work with applicable stakeholders, such as realtors, to aid in this effort.

1-Year Agency Response

As noted in our May 23, 2016 response, City staff met with the Marin Association of Realtors and contacted several other municipalities to identify any reliable and current data sources which would identify all residential property sales transactions. Each indicated that no such data source exists. Even daily review of the MLS listing would not include all potential properties sales and transfers. The County Assessor's records as as much as 90 days out of date. The State Auditor's Assessment is that even transactional data that is several months old is still valuable in determining compliance. However, since the City's ordinance places responsibility for a resale inspection on property sellers, finding out that a transfer has occurred after the fact will not put the City in a position to create recourse for a non-compliant seller who has already disposed of the subject property.

We continue to consider the audit recommendation impractical and contend that our subsequent investigation bears this out, and that we have therefore satisfied the recommendation of the audit.

California State Auditor's Assessment of 1-Year Status: Will Not Implement

As we commented on page 53 in our report, it is our position that having better information regarding the occurrence of residential real property transactions would enhance the city's confidence that buyers and sellers are more fully complying with the resale record ordinance and that the purposes of the ordinance are being met. Although the city continues to express concerns over the timeliness of data sources, our recommendation is focused on Novato being able to monitor the property transfer transactions in order to inform it of the degree that property owners have complied with obtaining resale record reports, but does not specify that the monitoring occur in advance of property sale transactions being completed. As we discuss on pages 15 and 16 of our report, the city is not monitoring this information. Thus, it cannot know how well the ordinance is being followed and take steps to gain greater compliance from stakeholders in the future. We believe that historical information would still be valuable in determining compliance regardless of the city's ability to seek recourse.

6-Month Agency Response

As noted in our May 23, 2016 response, City staff met with the Marin Association of Realtors and contacted several other municipalities to identify any reliable and current data sources which would identify all residential property sales transactions. Each indicated that no such data source exists. Even daily review of the MLS listing would not include all potential properties sales and transfers. The County Assessor's records as as much as 90 days out of date. Since the City's ordinance places responsibility for a resale inspection on property sellers, finding out that a transfer has occurred after the fact will not put the City in a position to create recourse for a non-compliant seller who has already disposed of the subject property.

We continue to consider the audit recommendation impractical and contend that our subsequent investigation bears this out, and that we have therefore satisfied the recommendation of the audit.

California State Auditor's Assessment of 6-Month Status: Will Not Implement

As we commented on page 53 in our report, it is our position that having better information regarding the occurrence of residential real property transactions would enhance the city's confidence that buyers and sellers are more fully complying with the resale record ordinance and that the purposes of the ordinance are being met. Although the city expressed concerns over the timeliness of data sources, our recommendation is focused on Novato being able to monitor the property transfer transactions in order to inform it of the degree that property owners have complied with obtaining resale record reports, but does not specify that the monitoring occur in advance of property sale transactions being completed. As we discuss on pages 15 and 16 of our report, the city is not monitoring this information. Thus, it cannot know how well the ordinance is being followed and take steps to gain greater compliance from stakeholders in the future. Even if the information Novato uses is several months old, the information is still valuable in determining compliance.

60-Day Agency Response

City staff met with the chief executive of the Marin Association of Realtors and contacted several other municipalities with resale inspection programs to determine if any knew of reliable and current data sources identifying all residential property sale transactions. Each indicated they knew of no such data source available. As we discussed with the State audit team, the County Assessor's records can be as much as 90 days old, meaning that transactions would have been concluded before the City became aware through the County's records. Since the City's ordinance places the responsibility for a resale inspection on property sellers, finding out months after a transfer has occurred will not put the City in a position to create recourse for a non-compliant seller who has already disposed of the subject property. Even daily monitoring of the multiple listing service would not identify all sales.

We consider this investigation as having satisfied the recommendation of the audit.

California State Auditor's Assessment of 60-Day Status: Will Not Implement

As we commented on page 53 in our report, it is our position that having better information regarding the occurrence of residential real property transactions would enhance the city's confidence that buyers and sellers are more fully complying with the resale record ordinance and that the purposes of the ordinance are being met. Although the city expressed concerns over the timeliness of data sources, our recommendation is focused on Novato being able to monitor the property transfer transactions in order to inform it of the degree that property owners have complied with obtaining resale record reports, but does not specify that the monitoring occur in advance of property sale transactions being completed. As we discuss on pages 15 and 16 of our report, the city is not monitoring this information. Thus, it cannot know how well the ordinance is being followed and take steps to gain greater compliance from stakeholders in the future. Even if the information Novato uses is several months old, the information is still valuable in determining compliance.

All Recommendations in 2015-134

Agency responses received are posted verbatim.