Agency
What is 'constructive fraud' in Hawaii real estate agency?
AA. Physical construction work done without proper permits
BB. A false representation made without knowing it was false, but which the agent had a duty to know was false✓ Correct
CC. Fraud committed through the use of construction contracts
DD. A legal term for misrepresentation of property boundaries
Explanation
Constructive fraud (also called negligent misrepresentation) occurs when an agent makes a false statement without actual knowledge of its falsity but had a duty to know the truth. Unlike intentional fraud, it doesn't require intent to deceive, but it still results in liability for the agent.
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Dual AgencyA situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
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