[Broker’s Agency Relationships and Disclosures – Misrepresentation] Which of the following actions by a listing broker is an example of willful…

Willful misrepresentation occurs when a broker knowingly makes a false statement about a material fact or deliberately conceals a material fact (willful omission) with the intent to deceive a party. Deliberately hiding known structural damage is an intentional act of concealment of a material fact, which directly constitutes willful misrepresentation/omission. The broker is aware of the defect and intentionally withholds this crucial information from the buyer, which is a serious violation of their duty to disclose.

A. Accidentally providing incorrect square footage is an example of negligent misrepresentation, as the act was unintentional, though the broker should have known the correct information.

C. Forgetting to disclose a minor repair is a negligent omission. The failure to disclose was not deliberate, but rather an oversight or carelessness.

D. Misunderstanding a zoning ordinance and providing incorrect information is negligent misrepresentation. The broker did not intend to deceive but failed to exercise reasonable care and skill.

1. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual.

Chapter 8, "Real Estate Brokerage and the Law of Agency," Section: "Misrepresentation and Omission." This chapter explicitly defines and differentiates between willful and negligent misrepresentation and omission. It clarifies that a "willful" act is one done intentionally and knowingly, whereas a "negligent" act is unintentional but results from a failure to exercise reasonable care. Deliberately hiding a known material defect like structural damage is presented as a classic example of a willful act.

2. UNC School of Government. (n.d.). Real Property Law Course Materials.

In discussions on broker duties and liabilities, university courseware on North Carolina property law emphasizes the element of scienter (knowledge of falsity or intent to deceive) as the key distinction between willful misrepresentation (fraud) and negligent misrepresentation. The act of "deliberately hiding" something satisfies the scienter requirement for a willful violation.