What Is Negligent Misrepresentation?

Real estate transactions present situations in which negligent misrepresentation can occur. Negligent misrepresentation, insofar as the area of tort law is concerned, is usually defined by state law. The law varies from one state to another; so the law of the relevant jurisdiction should be consulted for further details. Generally speaking, however, a plaintiff must establish the following elements in order to prevail in an action to recover on a theory of negligent misrepresentation:

• a false representation was made as a statement of fact;
  
• the statement was untrue and known to be so by its maker;
  
• the statement was made with the intent of inducing reliance thereon; and
  
• the other party relied on the statement to his detriment.

A party may be liable for negligent misrepresentation based on nondisclosure, as well.

Remedies

In the event a plaintiff prevails in an action for negligent misrepresentation against a defendant, numerous remedies may be available, including money damages. Here again, state law should be consulted for further details.

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