In particular, in the context of a rental of an apartment or business lease, the issue of fraud in the inducement comes into play. The duties, however, of the lessor may be distinguishable based upon whether or not the lessee is entering into a lease of a dwelling unit, or a business location. Under the doctrine of caveat emptor, a landowner may not necessarily have a duty to disclose, to the business lessee, the status of crime on the property, absent a specific question directed toward this issue.
However, as in the case of any type of fraudulent misrepresentation, a lessor must answer truthfully when a specific question is asked relating to the status of crime on property or in the surrounding area. Along these lines, the lessor may also be liable for negligent misrepresentation if he or she answers in a manner that he or she believes to be correct, but reasonably should have known was not.
Residential Lease Crime Disclosure
When the issue turns toward a residential lease, however, the obligations are quite different. Under these circumstances, although there is no case directly on point, the obligations of a landlord are not only to answer truthfully, but also to disclose any material issue that the lessee should want to know before he or she rents the premises. Although this issue does not yet seem to have been tested, a lessor of residential property should be liable for fraud where he or she knows of significant crime on the property, but fails to disclose the same to a residential renter. In fact, under cases of fraud, punitive damages may be recoverable, if it can be established that the misrepresentation was intentional or deliberate. A claimant should always consider whether or not he or she may have a case of fraud in the inducement, when he or she rents an apartment or house, and where the renter fails to disclose the existence of a substantial amount of crime on the property, or in the immediate area.
Business Lease Crime Disclosure
Even in the case of a business lessee, however, although there may not be a duty to disclose the existence of substantial crime on the property to prevent a claim based on fraud, absent a specific inquiry, the lessor still may be liable for general negligent security based upon a theory of a failure to warn of the existence of danger of which the landlord had knowledge. Accordingly, even though the business lessor may not have a claim for fraud, he or she should still examine the facts of which the landlord either was or should have been aware to determine if the landlord failed in its responsibility to warn.
To learn more about fraud in the inducement for both residential and business leases, please contact Corless Barfield Trial Group at 813-498-1623.