A homeowner is selling a house to a buyer. The homeowner knows that the foundation of the house is unstable but says nothing about it. The buyer, unaware of the defect, closes the sale and later discovers the issue. Under which circumstance would the buyer's contract enforceability defense most likely prevail on the basis of fraud?
The homeowner failed to take corrective action once the defect was discovered by the buyer.
The buyer assumed the risk of defects by agreeing to purchase 'as-is.'
The homeowner actively concealed the unstable foundation to mislead the buyer.
The buyer did not ask specific questions regarding the foundation's condition before closing the deal.
Fraudulent inducement occurs when one party knowingly makes a false statement of fact with the intent to deceive the other party, influencing their decision to enter into a contract. In this instance, active concealment of a material defect—like failing to disclose the unstable foundation—can satisfy the fraud requirement if the non-disclosure was intended to mislead. Silence (non-disclosure) generally does not amount to fraud unless there is a duty to disclose material information. A mere lack of due diligence by the other party (the buyer, in this case) does not absolve the seller of fraudulent behavior. Material misrepresentations made knowingly and intentionally are central to proving fraud.
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What constitutes 'active concealment' in terms of property defects?
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