Agency
Constructive fraud in Michigan real estate occurs when a licensee:
ADeliberately lies to the buyer
BFails to disclose a known material fact without necessarily intending to deceive✓ Correct
CCharges an above-market commission
DLists a property below its market value
Explanation
Constructive fraud (also called negligent misrepresentation) occurs when an agent fails to disclose a known material fact or makes a careless false statement, even without intent to deceive. This can create liability even without intentional wrongdoing.
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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.
Dual AgencyA situation where a single real estate agent or brokerage represents both the buyer and the seller in the same 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.
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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