Melissa Harrison, a realtor, sells a house to the Smiths. Before the sale is finalized, Mr. Smith asks Melissa for details of repairs the house has undergone over the years. Melissa gives him details of minor repairs but hides all documents regarding a major plumbing defect that was repaired last year. Three months after the Smiths moved in, the defect reappeared flooding the first floor, damaging their expensive carpet and furniture. Melissa is liable for which of the following frauds?

Question

Quizplus · Accepted Answer

Melissa is liable for fraud by concealment because she intentionally hid the information about the major plumbing defect from the Smiths, which they relied upon while making the decision to purchase the property. Fraud in the inception, also known as fraud in the factum, is when a person is misled into signing a document that they have no knowledge of or are unaware of its true nature. Fraud in the inducement is when a person is misled into entering into a contract by fraudulent misrepresentations. However, in this scenario, Melissa did not make any misrepresentations, she simply concealed the information.

Melissa Harrison, a Realtor, Sells a House to the Smiths