## Facts

- Brian McLemore and Laurie McLemore (collectively, “Brian”) entered a 1998 conditional land sales contract (contract for deed) to buy industrial-zoned real property from Brian’s uncle, Morris McLemore, and Morris’s wife, Janice (collectively, “Morris”).
- The contract set a $185,000 purchase price, required a $25,000 down payment, and called for monthly installment payments of $1,545.21 at 10% interest; Brian also agreed to maintain insurance and timely pay property taxes.
- The contract contained an “as is” provision and stated Morris made no warranties regarding zoning or compliance with laws or codes, placing compliance responsibility on Brian.
- The contract included a forfeiture remedy for default, with limits consistent with Indiana law governing land contracts when the buyer has accumulated more than minimal equity.
- Over about three years, Brian made regular installment payments and paid down roughly 18% of the purchase price.
- Brian missed a property-tax payment deadline. Morris paid the taxes and then locked Brian out of the property.
- About two weeks later, after Morris had taken control of the premises, Brian directed the property’s tenants to make future rent payments to Morris, and Brian vacated.
- Brian sued Morris for damages, asserting (among other theories) breach of contract and civil conversion. Morris counterclaimed seeking forfeiture of Brian’s interest.
- After a bench trial, the trial court found Brian breached the contract by failing to pay taxes on time, found Brian lacked substantial equity, found Brian had abandoned the property (including by relinquishing rent payments), and entered judgment ordering forfeiture. The trial court denied Brian’s breach-of-contract and conversion claims.
- Brian appealed.

## Issues

1. Did the trial court err by ordering forfeiture of Brian’s interest rather than requiring Morris to proceed by foreclosure-type relief under Indiana law governing conditional land contracts?
2. Did the trial court err in denying Brian’s breach-of-contract claim against Morris?
3. Did the trial court err in denying Brian’s civil conversion claim against Morris?

## Decision

- The Indiana Court of Appeals affirmed in part, reversed in part, and remanded.
- The court held the forfeiture judgment was clearly erroneous because the record did not support treating Brian as an abandoning or absconding vendee and did not show only a minimal payment or a jeopardized security interest that would justify forfeiture.
- The court ruled Morris’s proper remedy was foreclosure-type relief, not forfeiture, and remanded for proceedings consistent with that remedy (including the possibility of a money judgment analogous to a mortgagee’s deficiency/waste recovery if warranted).
- The court affirmed the denial of Brian’s breach-of-contract claim, relying on the contract’s express allocation of risk and responsibility to Brian (including “as is” acceptance and the absence of warranties concerning zoning/code compliance).
- The court affirmed the denial of Brian’s civil conversion claim, concluding the evidence did not establish actionable conversion under the circumstances of the parties’ contractual dispute and Morris’s asserted rights following default.

## Legal Principles

- Indiana treats a conditional land sales contract as mortgage-like for remedial purposes; when equity favors the buyer, judicial foreclosure is generally the appropriate remedy rather than forfeiture.
- A forfeiture clause in a land contract is not automatically void, but it is enforceable only in limited situations, such as when (a) the vendee abandons or absconds, or (b) the vendee has paid only a minimal amount and the vendor’s security has been jeopardized.
- “Abandonment” for forfeiture purposes requires more than a buyer’s departure after the seller has already taken possession-related actions; courts evaluate the surrounding facts to determine whether the buyer truly relinquished the property interest in a manner that justifies forfeiture.
- Whether payments are “minimal” is determined from the payment record, and non-minimal equity weighs strongly against forfeiture.
- Where foreclosure is required, the seller may seek relief comparable to a mortgage remedy, including a damages award for waste/shortfall in appropriate cases, rather than wiping out the buyer’s accumulated equity through forfeiture.
- Contract provisions stating the property is taken “as is” and disclaiming warranties regarding zoning or legal compliance can assign compliance duties and related costs to the purchaser and defeat a claimed seller breach based on those subjects.
- Civil conversion requires unauthorized control over another’s property; actions taken under a claimed contractual right in a bona fide contract dispute may defeat a conversion claim absent proof of the statutory elements.

## Conclusion

The Court of Appeals held that, although Brian breached the contract by missing the tax deadline, the trial court erred in ordering forfeiture because Brian had more than minimal equity and the evidence did not show abandonment or other circumstances that justify forfeiture under Indiana land-contract doctrine; the case was remanded for foreclosure-type proceedings, while the trial court’s denial of Brian’s breach-of-contract and civil conversion claims was affirmed.


McLemore v. McLemore, 827 N.E.2d 1135 (2005)