Last year the Pennsylvania Supreme Court, in the case of Marion v. Bryn Mawr Trust Co., officially recognized that a third party can be sued – thus potentially held liable – for aiding and abetting fraud if the third party has actual knowledge of the fraud and provided substantial assistance to the person who committed the fraud.
Why should you be concerned? The real estate industry is rife with opportunities for fraud, and your work as a Realtor® can lead you to some uncomfortable situations. Letting yourself get dragged into your clients’ schemes is wrong on a number of levels, but now it can also lead to civil liability.
In the civil law context, fraud is a cause of action that arises when one party either knowingly or recklessly makes false statements or conceals a material fact, which then prompts another to act. The victim of the fraud ultimately acts to their own detriment, losing (most often) money and/or property. According to the Marion case, if you knew of the fraud and yet took steps to help or encourage the fraudster, then you may find yourself on the hook to the victim, as well. The court found that even though actual knowledge is required, a showing of “intentional ignorance” or “willful blindness” could establish actual knowledge on the part of the one assisting.
Let’s look at this in the context of seller disclosure and a transaction in which you represent the seller. You would, of course, provide a seller’s property disclosure statement for the seller to complete with instructions to read the form, answer all questions, and provide explanations to the best of their ability when applicable. But what if you get the form back from the seller and notice that many questions are unanswered? And what if those unanswered questions happen to correspond with water stains on the basement wall you noticed during your listing appointment? If you deliver that incomplete disclosure statement to the buyer, who ends up purchasing the property and later suing the seller, you may also be sued and found liable to the buyer.
As stated above, there are multiple opportunities for fraud in a real estate transaction – bad checks for deposits, fake names of buyers or tenants, mortgage and lending, stolen title, etc. Your radar is going to have to be attuned to potential pitfalls and you’ll have to ask questions – sometimes uncomfortable ones – when things don’t seem to add up.
Topics
Member Discussion
Recent Articles
-
Webinar Recap: Agreement of Sale Refresher
- July 11, 2025
- 8 min. read
PAR’s Legal Team provided an Agreement of Sale Refresher webinar focused on hot topics, ranging from deposits to possession, mortgage contingency to inspection contingency.
-
Buy Now, Pay Later Gaining Popularity
- July 10, 2025
- 2 min. read
As Americans face higher costs of living, the option to buy now and pay later is gaining popularity, seeing an estimated $125 billion in payment values by 2027.
-
Is an Open-Concept Floor Plan Right for You?
- July 9, 2025
- 3 min. read
Open-concept floor plans have been popular since the mid-20th century, but more people today are considering traditional layouts instead. Here are some pros and cons of open concepts.
Daily Emails
You’ll be the first to know about real estate trends and various legal happenings. Stay up-to-date by subscribing to JustListed.