Does a seller need to disclose the existence of Audio/Video recording equipment when selling and showing their property?
In Short, Yes. While the buyer believe's their conversations are private, there should be no expectation of privacy of anyone entering a home and privacy is a right that is given to us and we hold onto dearly. And although there is no official disclosure form (I am sure this will come), a seller would be very wise to post a very visable notice at the front door, or upon entry noting that the home contains audio and/or video security devices.
Although the cameras are likely legal, the laws can vary by state.
For sellers, getting an honest (yet somewhat unethical) feedback can inspire them to make changes—such as replacing that outdated flooring or putting in new carpeting.
It can also be valuable during negotiations to know just how much buyers want the home—and how much they said they'd be willing to pay for those properties when they thought no one else was listening. They may also be using it to spy on those who they may or may not want living in their home, but honestly, I believe most people are just worried about their valuable items.
However, as a caution to buyers, no expectation of privacy should ever be expected and all conversations regarding negotiations, the like or dislike of the home and so forth, should be handled outside or other place of privacy.
It is of upmost importance that people are made aware of these devices. Once posted and notice is given it would be difficult for a person to make a claim that they were unknowingly recorded.
What are the fines for unlawful recording in California?
a $2500 fine
Note - that paragraph 10 of the C.A.R. Residential Listing agreement makes this recommendation to your seller's.
Here is a quick guide from C.A.R. legal