Contracts
What is 'constructive fraud' in Pennsylvania real estate and how does it differ from actual fraud?
AConstructive fraud requires construction defects; actual fraud does not
BConstructive fraud involves breach of a duty (like a fiduciary relationship) that benefits the wrongdoer, even without actual intent to deceive; actual fraud requires knowing misrepresentation✓ Correct
CConstructive fraud occurs in commercial transactions; actual fraud in residential
DConstructive fraud is a PREC violation; actual fraud is a criminal charge
Explanation
Constructive fraud (also called equitable fraud) occurs when a person in a position of trust breaches their duty in a way that benefits them, regardless of intent to deceive. In Pennsylvania real estate, a licensee who fails to disclose material information while in a fiduciary relationship may be liable for constructive fraud even without proving intent. Actual (common law) fraud requires: a false statement of material fact, knowledge of its falsity, intent to deceive, reliance, and damages.
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