Question

Licensee Gary advises Buyer Tim that a property Tim is interested in is zoned for commercial use. In fact, Gary does not know what zoning applies to the property. Tim put in a purchase contract on the property and later finds out that the zoning in place actually would prevent him from using the property as he intends. Which statement is TRUE?

Answer 1

Answer:

Gary committed misrepresentation.

Explanation:

Misrepresentation refers to making a false statement in order to induce a buyer (or even a seller) to enter or exit a contract. If the buyer can prove that the real estate agent lied and that they entered a contact based on that lie, then he/she can sue the real estate agent for any damages incurred. The misrepresentation (the lie) must be both false and fraudulent, which means that it was made in order to induce another party into entering or exiting a contract.

In this case, even though Gary did not know what zoning regulations applied to this property, he made a false statement on purpose in order to convince Tim of buying the property.