Sacramento Law Group

Duress in California Real Estate Transactions

In mob movies, gangsters often force their victims to sell real estate for pennies on the dollar through threats or intimidation. When this happens, California real estate law considers the victimized party to be under duress, and in California when the buyer or seller in a real estate transaction is under duress or subject to undue influence the victimized party may rescind the transaction. In the case of the gangster who gave the victim “an offer they couldn’t refuse,” the victim could later rescind (cancel) the real purchase agreement on the grounds of duress if they can show that their consent was obtained through duress or undue influence by (1) the other party (in this case, the gangster) or (2) third parties whose wrongful acts placed the innocent party in a position the other party had knowledge of. For instance, assume in our example that the gangster’s henchmen were destroying the victim’s property while the gangster held the real estate sales contract out to the victim. Since the gangster had knowledge of the victim’s situation created by the wrongful acts of his henchmen, the victim could rescind the real estate purchase agreement due to duress created by the wrongful acts of the third-party henchmen.

What Is Duress Or Undue Influence?

There is no one all-encompassing definition of duress or undue influence. Duress may be found where one threatens physical harm (sell me your house for $100 or I’ll beat you up) or harm to property (sell me your condo or I’ll burn it down). Whether there is undue influence in a California real estate transaction sufficient to warrant rescission of the contract is a question of fact determined on a case-by-case basis. Factors affecting the determination of undue influence include the adequacy of consideration (was the purchase price really low), the existence of a confidential relationship between the parties (parties with a confidential relationship are more susceptible to undue influence), and whether the transaction was at arm’s length (if it wasn’t at arm’s length one party may have been unduly influenced).

As the determination of duress or undue influence requires accounting for several factors on a case-by-case basis, seek the advice of a knowledgeable real estate lawyer to learn whether you can rescind your real estate contract due to duress or undue influence.

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