## Facts

- A vendor entered a conditional land sale contract to sell real estate for $36,000, payable in installments without interest.
- The contract included a forfeiture clause allowing the vendor, after a continuing default, to terminate the contract and retain prior payments as liquidated damages.
- The vendees made payments irregularly and often late; the vendor repeatedly accepted late payments.
- The last payment was made in February 1965; total payments were $21,000, leaving roughly $15,000 unpaid.
- After the original vendor’s death, the vendor’s contract interest was assigned to new parties.
- The assignees sued to enforce the forfeiture clause, terminate the contract, and obtain possession of the property.

## Issues

1. Whether the vendor/assignees were entitled to strict enforcement of a land-contract forfeiture clause permitting termination and retention of substantial payments after default.
2. Whether a conditional land sale contract should be treated, for remedies upon default, as creating a security interest akin to a mortgage lien requiring foreclosure and a redemption period.

## Decision

- The Indiana Supreme Court granted transfer, vacated the Court of Appeals’ decision, and reversed.
- The court held forfeiture and immediate possession were not appropriate on these facts.
- The court required the vendor’s interest to be treated as a lien on real estate, enforceable through foreclosure and judicial sale, with a statutory redemption right for the vendees.
- The case was remanded for proceedings consistent with foreclosure-type remedies rather than contractual forfeiture.

## Legal Principles

- Equity disfavors forfeiture and may refuse to enforce forfeiture provisions where monetary compensation is feasible and the forfeiture functions as a penalty.
- A vendor can waive strict performance by accepting late or irregular payments; after a pattern of indulgence, equity may require specific notice that strict compliance will be demanded before imposing harsh remedies.
- When a purported “liquidated damages” forfeiture is disproportionate to the actual loss, it is treated as an unenforceable penalty.
- In a typical installment land contract, equitable title vests in the vendee at contract formation while the vendor’s retained legal title operates as security; the vendor’s retained title is functionally equivalent to reserving a lien or mortgage.
- Because the vendor’s interest constitutes a real-estate lien, the proper remedy for default—especially after substantial payments—ordinarily is foreclosure and judicial sale with a redemption period, not termination and retention of the vendee’s accumulated equity.

## Conclusion

The court refused to enforce a forfeiture clause that would have allowed the vendors to repossess the property while retaining substantial payments, and it directed that installment land contracts be treated as secured real-estate transactions requiring foreclosure procedures and a redemption right when equity and proportionality concerns make forfeiture unjust.


Skendzel v. Marshall, 261 Ind. 226, 301 N.E.2d 641 (Ind. 1973)