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Actual fraud vs. constructive fraud: What is the difference?

Fraud is a term that’s often thrown around in public discourse. Florida courts of law, however, recognize different types of fraud and provide separate remedies for each. More specifically, Florida tort law differentiates between actual fraud and constructive fraud.

Understanding actual fraud

When the general public refers to fraud, what they are usually referring to is what the courts deem actual fraud. In order for an act of deception to be considered actual fraud, the act must be material, willful and performed with the intent to deceive. Most importantly, the deceptive act must be successful. Acts of deception that fail are considered to be attempted fraud and treated separately than actual fraud, but attempted fraud can still carry stiff penalties.

How does constructive fraud differ from actual fraud?

For an action or series of actions to be considered constructively fraudulent instead of actually fraudulent, the acts must have taken place without the intent to deceive another party. Depending on the details of the situation, accidental omissions and honest accounting errors may be considered constructive fraud.

Accidental fraud vs. constructive fraud in real estate

Often, constructive fraud in the real estate industry arises when a prospective buyer is conducting due diligence. If a seller erroneously answers one of the prospective buyer’s questions without doing adequate research of their own, then the buyer may have a claim of constructive fraud.

Real estate agents are also at particular risk of committing constructive fraud. If an agent answers a specific question on the condition or history of a property without being absolutely sure that the answer is correct, then they may be committing constructive fraud. Buyers often don’t discover these errors of omission until after the purchase is finalized and the property needs unforeseen repairs. These late discoveries are the most common trigger for real estate fraud litigation in Florida.

If you have found yourself on either side of a possible fraud claim, then understanding whether the claim involves actual fraud or constructive fraud may help you navigate the situation. An experienced attorney may provide you with further clarification and help determine your best course of action moving forward.