You have a “Contract for Sale and Purchase with Lease Provision”, sometimes common known for “lease to own”. Pursuant to the contract, you take possession or have the right to do so, pay a down payment and the balance is payable in a monthly payments. You also have the obligation to pay real estate taxes after the year of “sale”. You are entitled to a deed upon payment of all installments plus interest.
Unfortunately, after paying installments for a sinificant period of time, you defaulted. At certain point, you tendered to the seller the entire unpaid balance of the purchase price plus interest, and demanded a deed. The seller refused to accept payment or give a deed, and insisted that the buyer, because of his default, had forfeited further rights in the land.
The trial court in H & L LAND COMPANY, Inc. a case with the same fact pattern, agreed with the buyer’s position, and held that “the parties were in essentially the same position as if the seller held a purchase money mortgage to secure the buyer’s performance of the buyer’s contract obligations.”
The appellate court held that the vendor under a specifically enforceable installment land sale contract, who has received part of the purchase price and has given the vendee possession of the land and the benefits and burdens of ownership, is in essentially the same position as a vendor who has conveyed the legal title and taken back a purchase money mortgage, and he cannot unilaterally and summarily extinguish the vendee’s equitable title upon the vendee’s default.
What does this mean? It means if a land sale contract is specifically enforceable, and is free of equitable imperfections, the vendee becomes the equitable owner of the land and the vendor holds legal title as security for the vendee’s performance. The defaulting buyer is not a tenant who is subject to be evicted, is ordinarily entitled to an opportunity to redeem (sometimes inaccurately called an ‘equity of redemption’), subject to the protection of a court of equity.