Fraud in Real Estate Transactions

Eric saw an ad for a house that sounded perfect. He went to see the house and met John, the purported owner of the house. In fact, John's aunt owned the house. Eric offered John the full purchase price for the house. In addition, Eric gave John a cash deposit of $2,500. John gave Eric an "Agreement of Sale" to sign. Eric quickly read the document and signed. What Eric didn't realize was that John had attached an extra page to the agreement which said that Eric agreed to pay all the outstanding utility bills on the property. Eric later discovered that John didn't own the house. John, along with Eric's deposit, was nowhere to be found. John's aunt presented Eric with Eric's agreement to pay all of the utility bills. She was under the impression that her nephew had loaned Eric money in exchange for Eric's agreement to pay the utility bills.

Real estate transactions are fraught with opportunities for fraud. In fact, it seems to happen all the time.

What is fraud?

Fraud, insofar as the area of tort law is concerned, is usually defined by state law. State law varies from state to state; thus, the applicable law must be consulted for further details. Generally speaking, however, fraud involves the following elements:

• a person knowingly executed or attempted to execute a scheme to defraud or to obtain property by means of false or fraudulent pretenses, representations, or promises;
  
• the person did so with the intent to defraud; and
  
• the defrauded party acted in reliance on the false or fraudulent pretenses, representations, or promises.

It is important to note that fraud is also a crime under state and federal law.

Remedies

In the event a plaintiff prevails on an action for fraud against a defendant, numerous remedies may be available, including money damages. The law of the relevant jurisdiction should be consulted for further details.

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