A Liability Glossary


Conduct that is intentionally deceptive. “Active fraud” occurs when individuals make affirmative statements they know are false. “Passive fraud” occurs when someone deliberately fails to reveal known material information.

Innocent misrepresentation

Making an affirmative statement without knowing whether the statement is true or without any knowledge of a factual basis for the statement.

Negligent misrepresentation

Making a statement that, while not intentionally wrong, is nonetheless mistaken due to lack of care in ascertaining or confirming the accuracy of the statement.


Failure to use reasonable care to discover and disclose property defects. This duty, which goes beyond disclosure of known information, isn’t imposed in all states and has been explicitly rejected in several states. In any case, liability for negligence doesn’t extend beyond discovery of defects that a real estate professional in the local area ordinarily would be expected to recognize and understand.

Note: This information provides general legal information and should not be relied upon as legal guidance. Before acting, both the relevant laws and legal counsel should be consulted. This information should not be construed as specific legal advice nor as an opinion on particular facts, cases, or situations.

Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.