Fraud & Misrepresentation Real Estate
What is vicarious liability?
A legal principle that means one party may be liable for the words or actions of another party.
Which of the following would qualify as fraud?select all that apply (a) A sailor says that he is the sole owner of the property and it is later discovered that there are other owners. (B) A buyer falsifies information about his employment history (c) A seller misrepresenting the revenues of a property such as an apartment complex (d) A real estate licensee not disclosing major mechanical problems with a property (e) A seller of commercial property trying to hard structural damage of a building located on the property
A seller says that he is the sole owner of a property and it is later discovered that there are other owners is fraud. A buyer falsified information about his employment history is fraud. A seller misrepresenting the revenues of a property such as an apartment complex is fraud. The real estate licensee not disclosing major mechanical problems with the property is fraud. A seller of commercial property trying to hide structural damage of a building located on the property is fraud.
Which of the following are asking for trouble? (A) negotiating the terms of a contract for your client with the other parties agent over the telephone without immediate written follow up. (B) Negotiating the terms of a contract for your client with the other party's agent because you think you know your clients desires and intention. (C) initiating a sales contract change or counter for your client because your client is out of town and probably cannot be reached. (D) all of these answers apply.
All answers apply.
Angie, a real estate licensee, scheduled a home inspection for a house that was due to close in a week. The buyers of the house, mr. and Mrs. Brown, arrive before the home inspector so Angie unlock the house so they can wait inside. As soon as the home inspector arrived, The inspection began. Anje and the Browns followed the home inspector around the house as the home inspector pointed out various elements of the house. Since the inspector pointed out both positive and negative aspects of each element, this proved to be extremely helpful to the Browns. On a couple of occasions the inspector overlook some issues and Angie brought them to the inspector's attention. The Browns were appreciative of Angie voicing her observations about the property. The Browns felt that those issues would have been overlooked by the inspector if Angie had not been present at the inspection. Which of the following is the best statement? (A) Angie did a great job for the Browns and is to be commended. (B) Angie took on unnecessary risks by attending the home inspection and commenting on the issues that she noticed. (C) if Angie had not been present at the inspection, valuable insights about the property would not have been voiced. (D) agents should always be present at an inspection.
Angie took on unnecessary risks by attending the home inspection and commenting on the issues that she noticed.
Broker Langley canvassed A subdivision to inform her former customers about the plan for the construction of a complex for affordable housing to Russian immigrants adjacent to their subdivision. As a result, many owners expressed concern that this would cause a loss in value off their property. The broker agreed with them and suggested it might be a good time to sell their property. She informed them about a new subdivision she had just listed in another part of town. The broker may be guilty of (a) farming (b) steering (c) blockbusting (d) redlining
Blockbusting
_____________________ is when real estate agents tell people in a neighborhood that another race of people are moving into the neighborhood incentivizing them to sell their homes.
Blockbusting
Select all that apply DO NOT do the following (a) do not perform the inspection yourself. (B) do not make any suggestions or recommendations as to possible inspections (c) do not accompany the inspector (d) Do not interpret the inspection do not interpret the inspection (e) do not allow the seller to pay for the inspection (f) do not suggest that in addition to a general inspector a buyer consult with a specialized inspector also
Do not perform the inspection yourself. Do not accompany the inspector. Do not interpret the inspection. Do not allow the seller to pay for the inspection.
When taking a listing the agent asked the seller during casual conversation what school his kids attended. This seller answered honestly but failed to mention that his kids do not attend the school that they are supposed to attend according to school districts. The house backs up to a really excellent school district but the house is actually in a school district of lesser academic standing. The oldest boy in the family is a star football player in the football coach for the high school in the excellent school district got special permission for all the kids in the family to attend the school even though it's out of their district. The agent entered the incorrect school district into the MSL. A buyer bought the property specifically because they thought it was in the excellent school district and were really upset after closing when they discover the truth. Which of the following statements is true? (A) Even though the licensee truly believed the statement was true & the agent "meant well" the agent committed fraud through the carelessness because the buyer was harmed by this misinformation. (B) The agent is guilty of the vicarious liability. (C) The agent is not liable for the false information since the false information was provided to the licensee by the seller. (D) The agent and the seller are guilty of fraud.
Even though the licensee truly believed the statement was true and the agent "meant well," the agent committed fraud through carelessness because the buyer was harmed by this misinformation.
Steering occurs when a salesperson (a) shows homes to a minority prospect in all available neighborhoods (b) fails to show houses based upon a customers needs and financial ability to purchase (c) Directs a non-minority member to a minority neighborhood (d) Offers a gift as an incentive to purchase
Fails to show houses based upon a customer's needs and financial ability to purchase.
The harm caused by misrepresentation is not a severe as the harm caused by fraud?
False
Vicarious liability exonerates one part from another party misrepresentation.
False
Dan, A Licensed real estate agent, used his business relations with local mortgage brokers to assist a buyer in qualifying for mortgages. Diane knew that the buyer was being paid to be a straw buyer and was purchasing multiple properties that they were not going to live in.? What is Diane guilty of? (A) not guilty of a crime but guilty of unethical behavior. (B) No problem this behavior is OK (c) Fraud (d) misdemeanor
Fraud
The owner of a real estate brokerage company put money that he was holding in his escrow account into the company's business operation checking account and use the money for day-to-day business operations. To conceal the source of those deposits into the operations account, he instructed the company's in-house bookkeeper to record deposits of stolen escrow money into the business operations accounts as loans, from fictitious companies. After six months of this activity, The escrow account experienced shortages so the broker began to move money between various checking accounts. What was this broker guilty of?
Fraud
What is the difference between fraud and misrepresentation?
Fraud is done on purpose and misrepresentation the information is believed to have been correct.
An agent received an offer from an agent working for another brokerage firm to purchase one of his listings. The listing agent has a buyer that he has been working with that is also interested in the same property. He would much rather have his own buyer's offer be accepted because he would make more commission but his buyer is out of town for the next 36 hours. He has decided that he will not present the offer to his seller until his buyer gets back into town. He has also decided to keep the fact about the first offer to himself and not tell his seller. What is this agent guilty of?
Guilty of violating License law because all offers must be presented.
Under which of the following circumstances may a broker exclude a home from being shown to minority prospects? (A) A covenant in the deed restrictions limits the sale of the home to Caucasians (b) Approval of sale is required by homeowners association (c) The broker knows that local institutions will not give a mortgage to minority buyers in the area of question (d) If the home is not in the buyer's price range
If the Home is not in the buyer's price range.
You are the listing agent. You have shown your listing to one of your buyer clients. Therefore, you are a limited consensual dual agent. Your buyer client has written an offer that has been countered by your seller client. The counter is back in your buyers hands and they are "thinking about it." An agent with another company who has shown your listing several times to the same bar calls and tells you that their buyer is writing an offer. You should (A) Inform both your buyer client and the other buyer's agent that a competing offer situation may exist. (B) call your buyer client immediately and tell them to respond quickly or they might lose the house. (C) call your seller and tell them that they should take your buyer's clients initial offer (d) Tell the other agent that the property is already under contract and that they are too late
Inform both your buyer client and the other buyer's agent that are competing offer situation may exist.
Knowing pertinent information and failing to disclose it is?
Intentional concealment
____________ _______________ Is a purposeful act of keeping someone from learning a fact.
Intentional concealment
The difference between fraud and misrepresentation was whether it was Done _______________.
Intentionally
Agent, Joseph, has a listing and has been told by the seller that the property is currently zoned residential. The seller also told Joseph that he thinks he can get the zoning changed to commercial, since the property is located very close to a commercial area. Joseph feels that the property is going to be difficult to sell as residential property but would be easier to market as commercial property. So Joseph advertise the property in the MLS as a commercial listing. Which of the following statements is true? (A) Joseph is guilty of fraud and the seller is guilty of suppression. (B) both Joseph and the seller are guilty of misrepresentation. (C) Joseph is guilty of fraud and the seller is not guilty of anything. (D) both Joseph and the seller are guilty of fraud.
Joseph is guilty of fraud and the seller is not guilty of anything.
Which of the following must be present for fraud and misrepresentation to apply?
Misrepresentation, damage, reliance
A buyer's agent was showing property to a perspective buyer. While standing on the deck that looks out over a large beautiful backyard, The buyer comments on how perfect this particular property would be for her family because they intend to install a swimming pool. The buyer signs a contract to purchase the property. After closing the buyer discovers that subdivision covenants do not allow swimming pools on any parcel in the subdivision. The licensee is guilty of (a) Misrepresentation (b) Negligence (c) Fraud
Negligence
In order to buy a property listed by a licensee's Company, he/she must do all of the following except: (a) Gain permission of his/ her broker to pursue the purchase (b) draft a letter to the owner of the property naming the potential purchaser as a licensee of the listing company. (C) notify the real estate commission 15 days prior to writing an offer to purchase. (D) gain permission of the owner to purchase the property.
Notify the real estate commission 15 days prior to writing an offer to purchase.
__________________ is when an agent fails to show a house based upon a customer's needs and financial ability to purchase.
Steering
A __________ _____________ Is when a real buyer cannot complete the transaction for some reason. usually after closing ownership is transferred to the real buyer. it prevents the lender from knowing who the real buyer is. this is fraud
Straw buyer
An agent has been telling perspective buyers that a listing is in a certain School district. However, the property is actually in another school district. The agent is making an honest mistake. He thinks he is telling the truth. In fact, he even put that as the school district in the MLS. The agent had the seller look over the MLS data input sheet to verify its accuracy. The seller noticed the mixup with the school districts. however, since the agent had mistakenly listed the property in a better school district the seller decided not to say anything about it. Which of the following statements is true? (A) The agent and the seller are guilty of fraud. (B) The agent is guilty of vicarious liability. (C) The agent is not liable for the false information since the false information was confirmed to the licensee by the seller. (D) The agent and the seller are guilty of misrepresentation
The agent is not liable for the false information since the false information was confirmed to the licensee by the seller.
A client is not liable for misrepresentation made by a broker in connection with the broker providing brokerage services unless the client knows or should have known of the misrepresentation or the broker is repeating a misrepresentation made by the client to the broker.
True
A licensee is not liable for providing false information to a party in a real estate transaction if the false information was provided to the licensee by a client of the licensee or by customer or by another licensee......Unless the licensee knows or should have known that the information was false
True
Although a misrepresentation is a false statement, it was not made fraudulently.
True
If a buyer's agent knowingly fails to Disclose an important fact to the buyer client, this is intentional concealment.
True
If a licensee truly believe that a statement was true, made the statement, and someone was harmed. Even though the agent "meant well," he/she still committed fraud through carelessness.
True
Innocent misrepresentation is a false statement not known to be false.
True
It is a good idea to document in writing every source that provides information that may be material to any party to the transaction.
True
It is a good idea to give the buyers a list of qualified inspectors. The list could be 3 names, 5 names, or as long as a list of all inspectors in the immediate area who are license with the state of Alabama.
True
The principle of vicarious liability does say that a seller could be vicariously liable for the misstatements of the listing agent particularly if the seller needs of the missed statement and did not correct it.
True
Three factors must exist for liability (1) Misrepresentation (2) reliance & (3) damage. The consumer has to receive material information that is incorrect or misleading, has to rely or depend on that Misinformation, and therefore has to be damaged by the reliance.
True
Vicarious liability is a legal principle that means that one party may be liable for the words or actions of another party. The client can be held responsible for the actions of the broker/agent if he or she has knowledge of an improper or negligent act.
True
Which legal principle means one party may be liable for the words or actions of another party?
Vicarious liability
_____________ __________________ Refers to a situation where someone is HEld responsible for the actions or omissions of another person.
Vicarious liability
Could a seller be vicariously liable for the misstatements of a listing agent? Select the best answer (a) Yes, because the listed property belongs to the sellers thus is liable for everything about the property. (B) Yes, because of vicarious liability. (C) no because of the legal concept of suppression. (D) no because the seller can't be responsible for everything that his/her agent says.
Yes, because of vicarious liability.
Would giving false statements of income and assets on loan applications be considered fraud?
Yes, because this is false information of important facts being presented to the lender.
What elements must be present for fraud or misrepresentation to exist? (A) A home buyer or seller later was damaged by the reliance. (B) A home buyer or seller relied upon this information to make a decision. (C) A false representation of an insignificant issue (d) A false representation of an important fact or issue was made.
a home buyer or seller later was damaged by the reliance, A home buyer or seller relied upon this information to make a decision, A false representation of an important fact or issue was made