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Education, Misc

May 3, 2018

FRAUD


Word of the day

FRAUD

Any form of deceit, trickery, breach of confidence, or misrepresentation by which one party attempts to gain some unfair or dishonest advantage over another. Unlike negligence, fraud is a deceitful practice or material misstatement of a material fact, known to be false, and done with intent to deceive, or with reckless indifference as to its truth, and relied on by the injured parties to their damage. For example, in response to a buyer’s question regarding termites, the seller produces a falsified termite report. Not disclosing known defects or remaining “silent” can be considered fraud; in some cases, silence may not be golden.

It is important to distinguish between fraud in the inducement and fraud in the execution of a contract. If the party knows what he is signing, but the consent to sign is induced by fraud, the contract is voidable. If the party does not actually know what she is signing because of deception as to the nature of such an act, and if the deceived party did not intend to enter into a contract at all, then the contract is void. The voidable contract is binding until rescinded, whereas the void contract has no force or effect whatsoever.

The state statute of limitations for a court action based on fraud is generally computed from the date of the fraud or from the time the defrauded person could discover, or should have discovered, the fraud.

In accordance with the REALTORS® Code of Ethics, it is the duty of a REALTOR® to protect the public against fraud, misrepresentation, or unethical practices in real estate. All state licensing laws provide that a broker’s license can be suspended or revoked for fraudulent acts.

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