Practices and Disclosures

Question 1

Conversion is

Answer 1

the act of using the earnest money checks, for example, taking the money to gamble in Vegas. Is illegal

Question 2

latent, or hidden, defects

Answer 2

A latent defect is defect not readily seen by anyone looking, for example, a crack in the foundation.

Question 3

Stigmatized property

Answer 3

In MA you do not have to disclose unless asked about a Stigmatized property, which means one which buyers or tenants may shun for reasons which are unrelated to its physical condition or features. These can include murder, suicide or even AIDS, in addition to a belief that a house may be haunted.

Question 4

Puffing

Answer 4

Puffing is an exaggeration of a fact. Many agents puff when dealing with third parties. Puffing is legal as long as the statements are not fraudulent. We have all heard agents say, “Wow, this is the greatest house I have ever seen in my life” it’s not lying, but is close.

Question 5

Fraud

Answer 5

An agent must not misrepresent facts, commit fraud, or be negligent.

Question 6

Misrepresentation

Answer 6

is a false or misleading statement or assertion of a material fact with the intent of deceiving someone into taking a course of action he would not otherwise normally pursue. A licensee may be disciplined for misrepresentation even though the misrepresentation did not result in a loss to the principal.

Question 7

There are different types of fraud:

Answer 7

Actual fraud
Constructive fraud
Negative fraud

Question 8

Actual fraud

Answer 8

Actual fraud is a deliberate misrepresentation or a representation made in reckless disregard of its truth or its falsity or the suppression of truth or a promise made without any intention to perform it or any other act intended to deceive.

Question 9

Negative fraud

Answer 9

Negative fraud is the act of not disclosing a material fact to somebody thereby induces him or her into enter into a contractual situation that causes him or her damage or loss.

Question 10

Constructive fraud

Answer 10

Constructive fraud is a breach of duty without any fraudulent intent such as when a person in a fiduciary capacity takes advantage of another person by misleading them to into a prejudiced position. This is also known as passive fraud

Question 11

Negligence

Answer 11

Negligence is the omission to perform a duty or failure to exercise a standard of care that a reasonably prudent person would have exercised in a similar situation. Negligence is typically due to a lack of time, forgetfulness, or just plain laziness.