Which of the following is an example of an agent committing fraud?

Which of the following is an example of an agent committing fraud?

• A. An agent knew about foundation problems but did not disclose it when the buyer asked about the foundation
• B. An agent who discloses all known defects
• C. An agent who helps the buyer compare loan options
• D. An agent who reports all issues to the seller

Answer: (A)

In real estate, fraud involves knowingly misrepresenting or concealing a material fact about a property to induce someone else to act to their detriment. Here, the agent knew there were foundation problems and chose not to disclose that information when the buyer asked. The foundation issue is a material defect that affects value and desirability, and the agent’s deliberate silence in response to a direct question amounts to concealment with intent to deceive. That combination—knowledge of a defect and purposeful nondisclosure—fits fraud. Disclosing all known defects is the opposite of fraud and is the expected ethical duty. Helping a buyer compare loan options and reporting issues to the seller do not constitute fraud in this context because they don’t involve concealing a known defect to induce a purchase.

In real estate, fraud involves knowingly misrepresenting or concealing a material fact about a property to induce someone else to act to their detriment. Here, the agent knew there were foundation problems and chose not to disclose that information when the buyer asked. The foundation issue is a material defect that affects value and desirability, and the agent’s deliberate silence in response to a direct question amounts to concealment with intent to deceive. That combination—knowledge of a defect and purposeful nondisclosure—fits fraud.

Disclosing all known defects is the opposite of fraud and is the expected ethical duty. Helping a buyer compare loan options and reporting issues to the seller do not constitute fraud in this context because they don’t involve concealing a known defect to induce a purchase.