Much has been said about mortgage fraud in recent months, especially with Florida holding the second highest rate in the nation.

But fraudulent actions are not limited to mortgages and are occurring everyday throughout the real estate market.

One of the most common incidents of fraud is when a seller misrepresents a property or fails to disclose important information to the home buyer, which usually causes a financial loss to the latter party.

If you have experienced this, you may have a cause of action against the defrauder – but there are certain elements you must satisfy first.

The elements of a fraud claim, established in Huffstetler v. Our Home Life Ins. Co., 67 Fla. 324, 65 So. 1 (1914), are:

(1)  a false statement must be made concerning a material fact;

(2)  the seller had (or should have had) knowledge that the representation was false;

(3)  an intention that the representation induces another to act on it; and

(4)  an injury to the acting party (homebuyer) relying on the representation.

In Johnson vs. Davis, 480 So. 2d 625, 627 (Fla. 1985), Davis entered into a contract to buy the Johnsons’ home for more than $300,000. Davis paid $5000, the first installment of the deposit, and agreed to pay the second installment of $26,000.

They Davis family later noticed a problem with the home’s roof. And after further investigation, they came to realize the roof was more problematic than the Johnsons mentioned before.

Davis filed a lawsuit against the Johnsons asking to rescind the contract to purchase, and for return of the deposit payments.

The court held that a seller has a duty to disclose when he or she knows of facts that affect the value of the home, and those facts are not readily observable. The court also upheld the Huffstetler decision which sets the standard needed to establish a claim of fraud.

If you (or your business) has been injured due to the fraudulent actions of another person, use this form to contact our Florida business lawyers, or give us a call at (954) 779-7009.