CONCEALMENT I FRAUD I REAL ESTATE FRAUD – Homebuyers Recover Damages from Homeowners and Realtors following Concealment of Structural Defects

CONCEALMENT I FRAUD I REAL ESTATE FRAUD – Homebuyers Recover Damages from Homeowners and Realtors following Concealment of Structural Defects

May 13, 2022

By: Diana Adjadj, Esq.

Concealment and fraud liability resulting from homeowners’ failure to disclose and intentional concealment of structural defects in a newly purchased home.

Concealment and Fraud

Concealment of material facts, that occur within a contract negotiation can often amount to fraud. In pervious articles our offices discussed how fraud can result from various actions including fraud by false promise, intentional fraud and deceit, fraud by concealment, fraud resulting from breach of fiduciary duty, and constructive fraud.

Fraud by Deceit

Concealment, also known as fraudulent concealment, is discussed in California civil code section 1710(3). The civil code defines concealment and deceit interchangeable.  In CCP § 1710(3) concealment fraud or deceit is defined as follows:

“A deceit, within the meaning of the last section, is … [t]he suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact.”

REAL ESTATE FRAUD AND CONCEALMENT A CASE STUDY

Defrauded homebuyers file an action against homeowners and real estate agents in Riverside, California for various causes of action including fraud, concealment, and breach of contract following their failure and intentional concealment of known structural defects in the home.

Concealment of Material Fact

Prior to the close of escrow, the home seller was aware of defects in the structure of his house yet failed to disclose this material information to the buyers. Additionally, the seller’s real estate agents, also aware of the structural damage, concealed the known material fact from the buyers with the intention not to terminate or disrupt the sale of the property. Once the homebuyers closed on the sale of the home they discovered that the seller and his real estate agents were aware of structural defects prior to the close of the purchase.

Verdict for Failure to Disclose Structural Defect

Defrauded homebuyers attempted to resolve this dispute prior to a jury trial to no avail. Following a prolonged jury trial, the jury reached a verdict in which they awarded the homebuyers $69,300 in fraud damages.

Steven Ackerman, et al. v. Ronald Evans, (Split Jury Verdict; January 09, 2001; Causes of Action: breach of contract, fraud, intentional misrepresentation, fraud and concealment, negligent breach of fiduciary duty, negligence, constructive fraud and misrepresentation, concealment; Filing Court: Superior Court of California, Riverside County)

Real Estate Fraud and Mortgage Fraud additional articles are included below:

• What Is Wire Fraud? How To Avoid Wire Fraud When Investing In Real Estate
• Real Estate Wire Fraud Is The Most Common Form Of Real Estate Fraud
• Cautionary Steps When Purchasing Real Estate As A Foreigner And Avoiding Real Estate Fraud

• FRAUD I MORTGAGE FRAUD – 3 ARRESTED IN $7 MILLION CALIFORNIA MORTGAGE FRAUD SCHEME TARGETING THE ELDERLY, 3 VICTIMS LIVE IN SAN DIEGO:

• BREACH OF CONTRACT I FRAUD I VERDICT – Homeowner Recovers $1.63 Million In Damages Against Mortgage Fraud Broker In Fraud, Negligent Misrepresentation, Breach Of Fiduciary Duty Action
• BREACH OF CONTRACT I BUSINESS LAW – FRAUD DAMAGES IN BREACH OF CONTRACT – COMPANY FAILS TO PAY FORMER PRESIDENT’S SHARES, PRESIDENT SECURES VERDICT FOR $553,000
• FRAUD I BREACH OF FIDUCIARY – Drew Brees Alleges Breach Of Fiduciary Duty Against SD Jeweler Vahid Moradi
• FRAUD I BREACH OF FIDUCIARY – Jury awards Brees $6 million in Jewelry Fraud Lawsuit
• BREACH OF CONTRACT I FRAUD I VERDICT – Homeowner Recovers $1.63 Million In Damages Against Mortgage Fraud Broker In Fraud, Negligent Misrepresentation, Breach Of Fiduciary Duty Action
• FRAUD – Legal Liability for Fraud – Civil Tort for Conversion or Breach of Fiduciary Duty

Our Civil Fraud Series, discussing causes of action for fraud is included below:

• FRAUD – What Constitutes Fraud In California? What Does A Cause Of Action For Fraud By Intentional Misrepresentation In California Mean?
• FRAUD – WHAT CONSTITUTES FRAUD IN CALIFORNIA? WHAT DOES A CAUSE OF ACTION FOR FRAUD BY FALSE PROMISE IN CALIFORNIA MEAN?
• FRAUD VIA FALSE PROMISE OR PROMISSORY FRAUD
• INTENTIONAL FRAUD AND DECEIT
• CONVERSION OR BREACH OF FIDUCIARY DUTY 
• FRAUDULENT CONCEALMENT OR CONCEALMENT FRAUD
• FRAUD – What Constitutes Fraud In California? What Does A Cause Of Action For Fraud By Concealment In California Mean?
• FRAUD – Legal Liability For Fraud – Civil Tort For Conversion Or Breach Of Fiduciary Duty
• CONSTRUCTIVE FRAUD OR NEGLIGENT MISREPRESENTATION is embedded herein
• CORPORATE LAW – Corporations Claiming Personhood and Fiduciary Duties
• FRAUD I BREACH OF FIDUCIARY DUTY – What is Constructive Fraud?
• FRAUD I BREACH OF FIDUCIARY DUTY – What Fiduciary Duties Are Owed? A Fiduciary Owes The Duty Of Confidentiality. What Happens If A Fiduciary Breaches Their Duty Of Confidentiality?
• FRAUD I BREACH OF FIDUCIARY DUTY – What Fiduciary Duties Are Owed? A Fiduciary Owes The Duty Of Undivided Loyalty. What Happens If A Fiduciary Breaches Their Duty Of Undivided Loyalty?
• FRAUD I BREACH OF FIDUCIARY DUTY – What Fiduciary Duties Are Owed? A Fiduciary Owes The Duty To Use Reasonable Care. What Happens If A Fiduciary Breaches Their Duty To Use Reasonable Care?
• FRAUD I BREACH OF FIDUCIARY DUTY – What Is A Fiduciary Duty? What Does A Breach Of Fiduciary Duty Mean? What Is A Fiduciary?

Contract Remedies and Damages are outlined in the Contract Chart below:

Contract Damages /Remedies:		Available if:
Compensatory Damages	Damages that compensate the plaintiff for the unique loss they suffered as a result of the breach of contract, which includes costs and expenses incurred as a result of the breach of contract. (AKA: Consequential Damages)	If there is an actual loss suffered by the non-breaching party.
Punitive Damages	Punitive damages are only awarded to an injured plaintiff when the defendant’s conduct was despicable or reprehensible.  Punitive damages are designed to punish a wrongdoer for the wrongful conduct and discourage similar conduct in the future.	There is a showing of fraud, bad faith, breach of fiduciary, oppression, deceit or malice
Liquidated Damages	A liquidated damages clause in a contract that specifies an amount of damages, payable to a non-breaching party in the event of a specific type of breach or failure to preform.  In order for a liquidated damages clause to be found enforceable amount it must be a reasonable “estimate” of actual damages which will be sustained by a non-breaching party in the event of a breach.	(1)   A liquidated damages clause is included in the agreement; and (2)   The specific amount of payable damages is a reasonable estimate of actual damages.
Specific Performance	In situations in which monetary damages will not make a plaintiff whole, a court may order specific performance. This requires the breaching party to perform their obligations under the contract. Specific performance is a common remedy in real estate disputes, since each piece of real property is considered unique.	What is bargained for in the terms of the agreement must be unique so that no award for monetary damages would suffice.
Rescission   The common law equitable remedy of rescission	The word “rescission” is derived from the word “rescind” which means to cancel or set aside. It seeks to restore the parties to a contract to the positions they held before they first entered into the contract. Rescission nullifies or “undoes” the contract which relieves all parties of their duties and obligations under the contract.	There are numerous grounds for rescission however the most common: Mistake of Fact or Law Fraud Intentional Misrepresentation Negligent Misrepresentation Failure to Disclose a Material Fact Intentional Concealment of a Material Fact Undue Influence Duress

Concealment or Real estate Fraud Questions?