Sacramento Law Group

Duress in Sacramento Real Estate Transactions

In mob movies the gangster may force a business owner to sign over their store for pennies on the dollar. When this happens, California real estate law considers the victimized business owner to be under duress, and where the buyer or seller in a real estate transaction is under duress or undue influence, California law allows the victimized party to rescind the transaction. In the case of the gangster who gave the business owner “an offer he couldn’t refuse,” the business owner could later rescind (cancel) the real estate contract on the grounds of duress if he can show that his consent was obtained through duress or undue influence by the other party (the gangster) or by third parties whose wrongful acts placed the innocent party in a position the other party (still our gangster) had knowledge of. For instance, say the gangster’s henchmen were destroying everything in our business owner’s store while the gangster held the real estate sales contract out to the victimized business owner. Since the gangster had knowledge of the innocent business owner’s situation created by the wrongful acts of his henchmen, the business owner could rescind the real estate contract due to duress created by the wrongful acts of third parties.

What Is Duress Or Undue Influence In A Real Estate Transaction?

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 property (sell me your condo or I’ll burn it down). Whether there is undue influence in the sale of real estate sufficient to warrant rescission of the contract is a question of fact and is determined on a case by case basis. Factors affecting to 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 and occurs on a case-by-case basis, seek the advice of a real estate attorney to learn whether you can rescind your real estate contract due to duress or undue influence.

By Adam Garcia.  Adam is an attorney in Sacramento and real estate agent.  He frequently writes about bankruptcy law and regulations affecting California real estate agents.

By Adam Garcia

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