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Negligent fraud refers to the false representation of material facts which pay a key role in the decision making process of other parties.
These false representations are often made with no intention to deceive.
And even if there was absolute intention, it can be very difficult to prove it as long as the party who made such statements claim to know the information as such.
Negligent fraud occurs most often on the seller side when trying to push through a sale.
The home seller or agent can often provide information which they believe would help advance a sale, yet cannot be certain whether the statements are true.
For example, an home owner can claim that the water heater is “as good as new”. But in reality it is 10 years old. Just that from the seller’s perspective, it’s working as well as when it was first installed.
Agents can also sometimes claim that furniture, fixtures or appliances are new, when they actually have no idea. Just that they thought those items looked new.
As these actions are not purposefully meant to cheat, they are more associated with negligence rather than fraud.
However, to deter such behavior the word fraud is tagged to it so that sellers would be more careful when doing their sales pitches.