Duties to Customers & Misrepresentation
~10 min read · Owe honesty to non-clients and separate puffing from misrepresentation and fraud.
To the unrepresented party the agent owes honesty, not advocacy — and the exam tests exactly where honesty's line runs: puffing is legal opinion, misrepresentation is actionable falsehood, and silence about a known material defect is fraud by omission.
Duties to customers
Every licensee owes ALL parties — client or not — honesty and fair dealing: accurate answers to direct questions, disclosure of known material facts about the property's condition, no misrepresentation, and reasonable competence in statements of fact. What customers are NOT owed: advice, negotiation help, confidentiality, or loyalty. Agency disclosure rules require telling unrepresented parties, in the statutory form and timing, whom the licensee represents.
- Honesty, accuracy, known material property facts — to everyone
- No advice or advocacy for the other side
- Agency-disclosure forms tell customers who's who
Puffing, misrepresentation, fraud
Puffing: vague opinion and sales talk no reasonable buyer relies on — 'stunning view', 'a decorator's dream' — legal. Misrepresentation: a false statement of FACT — innocent (believed true), negligent (should have known), or fraudulent (knew) — supporting rescission and damages as culpability rises. Fraud by omission/concealment: actively hiding a defect (paneling over the crack) or staying silent about a known material defect the buyer cannot discover. The measuring stick: facts can be false; opinions can only be windy.
- Puffing = opinion, legal
- Misrepresentation = false fact; innocent/negligent/fraudulent tiers
- Concealment and silence about known defects = fraud
Statements that bite
Square footage, lot lines, zoning, permit status, school assignment, flood zone: statements of FACT — verify or attribute to source ('per county records') rather than guessing. 'As-is' clauses sell the property without repair warranties but never excuse concealing or misrepresenting known defects. And the modern rule on stigma questions (deaths, crime history) varies by state statute — the safe generic answer: follow state disclosure law; never volunteer protected-class information about neighborhoods (that drifts into steering).
Worked example
Showing his client's 'as-is' listing to an unrepresented buyer, an agent says: (1) 'This is the best backyard in the county'; (2) 'The roof was fully replaced five years ago' — repeating the seller's statement without checking, when it was actually patched, not replaced; (3) nothing at all about the basement's seasonal flooding, which he has seen photos of. The buyer closes and sues on all three. Grade each statement.
(1) Best backyard: puffing — pure opinion, no liability. (2) The roof: a statement of FACT that was false — at minimum negligent misrepresentation (he had means to verify or should have attributed: 'seller states…'); buyer reliance on a factual claim about a major component supports damages. (3) The flooding: he KNEW a material latent defect and said nothing — fraudulent concealment, and the 'as-is' clause is no shield: as-is disclaims repair obligations, never honesty obligations. Likely outcome: rescission or damages, license discipline, and the listing client dragged into the fraud exposure. One showing, all three tiers of the doctrine.
Common exam pitfalls
Stretching puffing to cover factual claims.
Numbers, dates, conditions, and permits are facts. Opinion protection stops where verifiable assertions begin.
Hiding behind 'as-is.'
As-is allocates repair risk; it never licenses concealment or misstatement of known defects.
Repeating the seller's claims as your own.
Attribute ('per seller', 'per county records') or verify — an agent adopts what he asserts.
Opinions may sparkle; facts must be true; and known defects must be spoken — as-is or not.
Recap
- All parties get honesty, accuracy, and known material property facts
- Customers get no advice, advocacy, or confidentiality
- Puffing (opinion) legal; misrepresentation (false fact) actionable in tiers
- Silence about known latent defects = fraud by omission
- As-is clauses never excuse dishonesty
- Verify or attribute factual claims; agency-disclose to unrepresented parties
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