Legal Question in Business Law in Washington

Re: insanity and real estate contracts

The short answer to your question is yes, your friend can "undo" the contract.

In order to do so, your friend will have to prove that at the time of the purchase, she lacked the mental capacity to understand what she was doing, and thus was legally incompetent to enter into a contract to purchase a home.

That will require a doctor's affidavit or declaration, and if it gets to a trial, the doctor's deposition before trial and later testimony at trial. If she was being seen at the time and there are medical records to document her mental health at the time of the purchase, then her odds of getting the contract voided (which means making it as if it never happened) are improved.

The notion that she overpaid for the home is relative. If she overpaid by up to 10% over current market prices, that will not help much, since the estimate of a marketable price is often subjective. (How many times have you been in someone's home and thought to yourself, "how do they live like this?") If your friend paid double the going rate for similarly situated homes in the same neighborhood, that may be reasonable if he really wanted it but no one would sell until she "made an offer they could not refuse." On the other hand, I think it bodes more in your friend's favor if the purchase price was outrageously out of proportion to similarly situated homes in the same neighborhood.

One other note. I do not know enough about bi-polar disorder to know if medically, being bi-polar is enough to make a person mental incapable of forming the legal intent necessary to enter a contract. I know that there is a spectrum of severity of bi-polar disorder, so the doctor would have to testify that your friend's condition was so severe that she was mentally incapable of forming the requisite legal intent to enter a contract to purchase the home.

Also, if your friend had a legal guardian appointed on her behalf prior to or after the purchase of the home is important. If one was appointed at the time of the purchase, that would make it much easier to void the contract, unless the guardian signed the contract as well- in which case your friend might then have claims against the guardian for getting her into such a bad real estate deal.

If one was appointed after the purchase, that may help demonstrate that she was not mentally capable to enter the contract as well, but it is not as direct as having one at the time of the purchase.

I hope this helps. If you would like a free telephone consultation, please feel free to e-mail or call my office to arrange for that.