Leasing License Practice Exam

What type of fraud occurs when someone does not say anything at all?

1. Active fraud

2. Passive fraud

3. Negligent fraud

4. Intentional fraud

The correct answer is: Passive fraud

Passive fraud occurs when an individual fails to disclose important information or does not communicate material facts that could influence another party's decision. This type of fraud relies on omission rather than on deliberate actions, unlike other forms of fraud where active misrepresentation is involved. In the context of leasing and real estate, passive fraud can manifest when a landlord or seller conceals property defects, such as a leaky roof or zoning issues, without directly lying. The absence of communication can mislead potential tenants or buyers, who might otherwise have made a different decision had they been fully informed. On the other hand, active fraud involves taking deliberate steps to deceive someone, which clearly differentiates it from passive fraud. Negligent fraud implies a lack of care in providing accurate information, while intentional fraud refers to willfully deceiving others for personal gain. These distinctions highlight the specific nature of passive fraud, which is fundamentally characterized by the failure to communicate rather than the act of misleading actively.