## Facts

- A landowner entered installment land sale agreements with grandchildren to sell parcels of unimproved land for a stated price per acre, payable in small monthly installments, with title retained by the seller.
- In November 1967, the seller contracted to sell slightly more than six acres to the buyers for $9,162, payable at $50 per month, with a right to pay the remaining balance at any time.
- The written contract lacked a “time is of the essence” clause and did not specify default remedies.
- The buyers made most scheduled payments through March 1973, then became irregular and ultimately stopped; the seller later accepted a $250 payment and elected to terminate the contract.
- After the seller’s death, the buyers (and successors) tendered the entire unpaid balance and sought specific performance against the estate’s administratrix.
- The trial court found the buyers’ breach “grossly negligent and willful,” denied specific performance, quieted title in the estate, and awarded only restitution of installments paid plus interest.

## Issues

1. Whether a vendee who willfully defaults after paying a substantial portion of the purchase price under an installment land sale contract, where the seller retains title only as security, has an absolute right to redeem by tendering the full balance and amounts due.
2. When and how that redemption right may be exercised when the seller elects to terminate the contract or seeks to quiet title.

## Decision

- The California Supreme Court reversed and remanded.
- A seller’s retention of title in an installment land sale contract may function as security for payment, giving the vendee a right analogous to equitable redemption.
- Even if the vendee’s default is willful, a vendee who has paid a substantial part of the purchase price retains an absolute right to redeem by paying the entire balance and other amounts due.
- If the seller seeks to quiet title due to default, the vendee may exercise redemption before judgment or within a reasonable time after judgment set by the court.
- If the contract does not require conveyance of title within one year of formation (under the applicable statute), the vendee may exercise redemption upon the seller’s notice of election to terminate for default.

## Legal Principles

- In an installment land sale contract where the seller retains title only as security, the vendee’s interest is protected by an absolute right of redemption after substantial payment.
- Equity disfavors forfeiture that would strip a purchaser of the property after substantial performance when the purchaser can cure by full tender.
- A willful or “grossly negligent” payment default does not, by itself, eliminate the right to redeem upon full payment of the remaining balance and amounts due.
- In seller-initiated quiet title litigation based on default, courts must allow exercise of redemption before judgment or within a reasonable postjudgment period.

## Conclusion

A vendee who has substantially paid under an installment land contract in which the seller’s retained title serves as security may defeat forfeiture by redeeming through full tender of the remaining balance and amounts due, even after a willful default and even in the face of the seller’s attempted termination or quiet title action.


Petersen v. Hartell, 40 Cal. 3d 102 (Cal. 1985)