Real Estate Nondisclosures – Misleading or Deceptive Disclosures May Constitute Fraud

At least one case in California suggests that a deceptive answer to a disclosure related inquiry made by a buyer may constitute fraud. See Brady v. Carman, (1960) 179 Cal. App. 2d 63, 68 (“A representation need not be a direct falsehood to constitute fraud. It may be a deceptive answer or other indirect but misleading language.”) In Brady, Plaintiff buyers sued Defendant listing agent representing the developer seller, for concealment of material facts regarding the terms of an easement. See Brady supra 179 Cal. App. 2d at 65-66. During escrow, Plaintiffs were aware that an easement existed but unaware of the nature of the easement. Id. at 68. When Plaintiff inquired with Defendant, the Brady Court held that “[t]he defendant’s answers were evasive, and misleading, and were such as to discourage further investigation by the purchasers.” Id. In holding that the Defendant agent breached his duty to disclose, the Brady Court stated:

It was not sufficient for the defendant to simply tell the plaintiffs that they ‘had nothing to worry about’ and ‘[i]t is these water pipes that you find on the curb of the street.’ ‘That is all it is.’ The inquiry having been made, and the defendant having undertaken to answer, he was obliged as a professional man to obtain information about the easement and make a full disclosure of the burdens it imposed on the land.

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