## Facts

- A landowner (Arko Enterprises, Inc.) contracted to sell a tract of land to Jackson under an executory land-sale contract.
- The contract required Arko to subdivide the tract into residential lots and complete specified development improvements; Jackson paid an initial amount and was to pay the balance upon completion of the improvements.
- Jackson entered the contract either as trustee for Wood and Coleman or as a joint venturer with them, making Wood and Coleman the beneficial/economic holders of the purchaser’s interest.
- Before Arko completed the required improvements and before closing, the City of Cocoa condemned the property through eminent domain.
- Arko, as record titleholder, participated in the condemnation case and received the condemnation award; Jackson was named but did not appear, and Wood and Coleman were not parties to the condemnation proceeding.
- Wood and Coleman later filed suit seeking declaratory relief, an accounting, and restitution of the amount paid at contract execution (with interest and costs).
- Arko counterclaimed against Wood and Coleman and cross-claimed against Jackson seeking the unpaid purchase price, less credits for the condemnation award and the initial payment.

## Issues

1. Whether, under equitable conversion, the purchaser under a specifically enforceable executory land-sale contract is treated as the equitable owner such that condemnation proceeds substitute for the land and are allocated according to the parties’ equitable interests.
2. Whether condemnation before completion of the seller’s remaining contractual obligations abrogates the contract and entitles the purchaser/beneficial owners to restitution and discharge from further payment.

## Decision

- The appellate court reversed the summary final decree for Wood and Coleman and remanded.
- The court held that equitable conversion applied upon execution of the contract; the purchaser (Jackson, and derivatively Wood and Coleman) became the equitable owner, and Arko held legal title as security.
- The condemnation did not abrogate the contract or destroy the vendor’s security interest.
- The purchaser remained liable for the full contract price, subject to credits for amounts already paid and for the condemnation award.
- On remand, the trial court was to conduct further proceedings to account for and distribute the condemnation proceeds consistent with these interests.

## Legal Principles

- A specifically enforceable contract for the sale of land effects equitable conversion: the purchaser is treated in equity as owner of the land, and the vendor retains legal title primarily as security for payment.
- When condemned after contract execution, the property is treated as converted from land to money; the condemnation award substitutes for the land and is distributed according to the parties’ pre-taking equitable interests.
- Condemnation, without more, does not terminate an executory land-sale contract; the vendor’s lien follows the substituted proceeds to the extent of the unpaid purchase price.
- The purchaser bears the economic consequences of post-contract changes affecting the property (including condemnation) absent a contrary contractual allocation; the purchaser is entitled to any excess of the condemnation award over the balance due after applying credits.

## Conclusion

The court held that condemnation after execution of a specifically enforceable land-sale contract does not cancel the agreement; instead, equitable conversion governs allocation of the condemnation award, preserving the vendor’s lien for the unpaid price and treating the purchaser as entitled to any surplus after appropriate credits.


Arko Enters., Inc. v. Wood, 185 So. 2d 734 (Fla. Dist. Ct. App. 1st Dist. 1966)