## Facts

- Sellers John and Beth Richards sold real property under a standard installment land contract containing a forfeiture clause upon buyer default.
- Russell became the assignee-purchaser, paying \$11,188 to the assignors and assuming \$37,938 due under the contract to the Richardses.
- Russell made 72 payments to the Richardses and reduced principal by \$10,782, leaving \$26,504 in principal at default.
- The property’s value increased from about \$48,989 at purchase to about \$82,735 at default.
- Russell possessed the property for roughly six years and derived rental income from part of it.
- Russell defaulted; the Richardses declared a forfeiture under the contract.
- Russell sued for damages for (1) loss of her contract interest after forfeiture and (2) personal property not recovered from the premises.
- The trial court found a forfeiture occurred but concluded enforcement “shocked the conscience,” and awarded roughly \$56,724 for Russell’s claimed equity plus \$7,500 for personal property.

## Issues

1. Whether the trial court abused its discretion by effectively refusing to enforce the contract’s forfeiture clause on the ground that the forfeiture “shocked the conscience.”
2. Whether the trial court erred in awarding damages for Russell’s claimed equity in the real property and for loss of personal property.

## Decision

- The Supreme Court of New Mexico held the trial court abused its discretion in declining to enforce the forfeiture clause.
- The court reversed the portion of the judgment awarding Russell recovery measured by her equity in the real property.
- The court affirmed in part and reversed in part the damages award, leaving intact those components (including the personal property award) supported by the record and consistent with enforcement of forfeiture.

## Legal Principles

- Forfeiture provisions in installment land contracts are enforceable absent unfairness that “shocks the conscience” of the court.
- Equitable relief from forfeiture is limited and is assessed using established considerations, including:
  - the amount paid by the buyer,
  - the buyer’s period of possession,
  - market value at default compared to original price, and
  - the property’s rental potential and value.

- A trial court’s equitable discretion is constrained by these standards and cannot be used to rewrite a freely made contract based on generalized notions of harshness.

## Conclusion

The court enforced the installment contract’s forfeiture clause because the circumstances did not meet New Mexico’s narrow “shock the conscience” threshold, reversing the equity-based recovery while allowing properly supported damages unrelated to undoing the forfeiture to stand.


Russell v. Richards, 103 N.M. 48, 702 P.2d 993 (N.M. 1985)