Jared M. Kays and Lauren Kays, Appellants-Defendants v. Louis L. Shepherd and Maria J. Shepherd, Appellees-Plaintiffs (2025)

MEMORANDUM DECISION

[1] Jared M. Kays (“Jared”) and Lauren Kays (“Lauren”) (collectively, “the Buyers”) appeal the trial court's order granting partial summary judgment to Louis L. Shepherd and Maria J. Shepherd (collectively, “the Sellers”) and denying the Buyers’ competing motion for partial summary judgment. The Buyers claim the trial court erred as a matter of law by finding the Sellers were entitled to the remedy of forfeiture and ejectment, rather than the equitable remedy of foreclosure. Because we identify genuine issues of material fact as to the proper remedy, we conclude that no party is entitled to summary judgment. We therefore affirm the denial of the Buyers’ motion for summary judgment, reverse the grant of the Sellers’ motion, and remand for further proceedings.

Facts and Procedural History

[2] The Sellers hold legal title to residential real estate located in Lebanon, Indiana (“the Property”). On March 6, 2017, Jared and the Sellers entered into a Land Contract (“the Contract”), whereby Jared agreed to purchase the Property for $90,000 and obtain immediate possession. Lauren became a party to the Contract through an Addendum executed on June 11, 2019. The Contract required a $2,000 down payment with the remaining balance of $88,000 subject to 5% annual interest “computed monthly, in accordance with a monthly amortization schedule during the life of the Contract.” Appellants’ App. Vol. II p. 133. The Buyers agreed to make monthly payments of $500.¹ The Contract provided for a balloon payment, specifying that “the entire remaining balance plus accrued interest shall become due and payable” by April 30, 2018. Id. In a section titled “Default,” the Contract contemplated that the Buyers would obtain a mortgage to pay the balloon payment, with the possibility of a twelvemonth extension to obtain a mortgage. That section of the Contract addressed what would happen if the Buyers failed to timely obtain a mortgage, specifying that the Buyers forfeited the Property and all payments to date:

If circumstances beyond control of the [Buyers], e.g., an Act of God, prohibits [the Buyers] from obtaining a mortgage after Twelve (12) months, [the parties] may mutually agree to extend the terms of th[e] [C]ontract for not less than Three (3) months, and not to exceed [an] additional Twelve (12) months. If the [Buyers] fail[ ] to obtain said mortgage within this mutually agreed upon extension, the [P]roperty and all assets within, involving all payments to that date[,] shall remain with [the] Seller[s] without prejudice.

Id. at 134. The Buyers were obligated to pay utilities and property taxes, and were to “provide insurance for not less than $90,000[.]” Id. The Contract also provided that “[w]aiver by the Seller[s] of a default or a number of defaults ․ shall not be construed as a waiver of any default, no matter how similar.” Id.

[3] On March 1, 2018—around the original twelve-month deadline for the balloon payment—Jared wrote to the Shepherds “to say thanks for [the] patience [and] for the extension,” stating that he “still ha[d] several things to complete regarding [the] mortgage” and was “working on them.” Appellants’ App. Vol. III p. 89. Jared continued making monthly payments and remained in possession of the Property. On June 11, 2019—by which point Jared had paid the Sellers about twenty-four monthly installments—the parties executed an Addendum to the Contract that added Lauren as a purchaser. The Addendum stated that “[a]ll other terms and conditions ․ shall remain the same.” Appellants’ App. Vol. II p. 28. The Addendum did not explicitly address the balloon payment.

[4] About four years later, the Sellers sent a letter to the Buyers dated June 22, 2023. Therein, the Sellers asserted the Buyers were in default under the Contract for failing to obtain a mortgage. The Buyers did not respond and stopped paying the monthly installments, making their last monthly payment in May 2023. On August 17, 2023, the Sellers filed a pro se action against the Buyers alleging the Buyers were in default and the Sellers were entitled to an ejectment order.² The Sellers also alleged they were entitled to $10,000 in damages. The Sellers later obtained counsel and, on December 27, 2023, moved for partial summary judgment on the ejectment issue. The Sellers designated evidence indicating that the Buyers had not obtained a mortgage and had stopped making monthly payments as of June 2023, when the Sellers sent the default letter. The designated evidence included pictures of the exterior of the residence. Those pictures depicted exposed roof decking and other deteriorating conditions, which included rotting soffits. On a sidewalk outside the residence, there were torn bags of trash. There was also furniture strewn about the yard. In a memorandum in support of partial summary judgment, the Sellers argued that the residence “ha[d] fallen into extreme disrepair,” id. at 121, and the Buyers had “failed to cure their defaults under the Contract,” id. at 123. As to the Buyers’ contractual obligations, the Sellers referred to the failure to obtain a mortgage. Other allegations included that the Buyers caused a lapse in insurance coverages and that the Buyers were late in paying real estate taxes.

[5] The Buyers filed a cross-motion for partial summary judgment. In a supporting memorandum, the Buyers acknowledged their default but argued that equitable principles applied to override provisions in the Contract authorizing ejectment as a remedy for default. The Buyers referred to Skendzel v. Marshall, where our Supreme Court noted that a land sale contract is “in the nature of a secured transaction, the provisions of which are subject to all proper and just remedies at law and in equity.” 301 N.E.2d 641, 650 (Ind. 1973). The Buyers argued that, under Skendzel, foreclosure proceedings were necessary to protect their equitable interest in the Property. Appellants’ App. Vol. II p.178 (discussing “whether forfeiture or foreclosure [was] the appropriate remedy” and seeking “invocation of [the trial court's] equitable powers”). The Buyers designated evidence in support of their motion, including photographs of the interior of the home and an affidavit from Jared, who claimed the Buyers made substantial improvements to the Property that were “estimated to total more than $37,000 in materials and labor.” Id. at 211. Jared said he “attempted to make the monthly installment payment for June [2023], but inadvertently did not sign the check” and that he “attempted to cure this mistake,” but payment was refused. Id. Jared added: “Since June [2023], I have continued to occupy and possess the Property and live in the home with my children.” Id. at 212. He also said: “I have not vacated the Property as I believe I have an equitable and possessory interest in the Property under Indiana law[.]” Id. Jared estimated that “the current fair market value of the Property [was] at least $150,000.” Id.

[6] In March 2024, the trial court held a hearing on the competing motions for partial summary judgment. At the hearing, the Sellers asked the trial court to enforce the express provisions of the Contract that they claimed authorized an ejectment order, asserting: “[T]he contract is a contract and it means what it says and, if the parties agreed to it in writing, they should indeed honor it.” Tr. Vol. 2 p. 3. The Sellers maintained that “the contract controls,” but also addressed the Buyers’ claim that equitable principles discussed in Skendzel prevented forfeiture. Id. at 8. The Sellers argued that, if Skendzel applied, the instant case fit within the “limited circumstances” identified in Skendzel where “forfeiture can be considered an appropriate remedy.” Id. at 12. Regarding those “limited circumstances” allowing a forfeiture, the Sellers argued that the Buyers paid only a “minimal amount” toward the purchase price. Id. The Sellers also minimized designated evidence that the Buyers made $37,000 in improvements to the Property, asserting: “You don't have any evidence in the record of a receipt, a repair bill from a contractor, something from Lowe's showing that there was a dollar put into improvements to the inside of the home as [the Buyers] claim they made.” Id. at 13. The Sellers further asserted that forfeiture was appropriate under Skendzel because, due to the Buyers’ actions, “the home and grounds around it” were “in jeopardy.” Id. at 12.

[7] On May 22, 2024, the trial court resolved summary judgment in favor of the Sellers. In a written order, the trial court distinguished Skendzel primarily on the basis that, unlike the land sale agreement in Skendzel, the Contract contained a specific provision requiring the Buyers to obtain a mortgage within one year (with a possible extension to two years). See Appellants’ App. Vol. II p. 14 (noting that the parties “never intended this Contract to ‘extend over a number of years’ ” (quoting Skendzel, 301 N.E.2d at 645)). The trial court determined an equitable remedy was inappropriate, noting: “It is axiomatic that one who seeks equity must do equity.” Id. at 16. With regard to equitable principles, the trial court said that the Buyers “neither acted equitable [sic] nor [were] they entitled to equitable relief.” Id. The court said that “[t]he record is completely void of any indication the [Buyers] took any effort to comply with satisfying the Contract by paying the full purchase price in one (1) year.” Id. The court noted that, “[f]rom the early onset of th[e] Contract, the [Buyers] failed to comply with its most basic terms which placed the [Sellers] in an untenable position.” Id. The court added that, after the Sellers sought legal recourse, the Buyers “reside[d] in the residence while paying no monies whatsoever,” with the Buyers “elect[ing] to enjoy this free ride while the [Sellers] were required to continue paying real estate taxes and homeowners insurance premiums.” Id.

[8] The trial court discussed evidence bearing on the equities, at one point stating:

The parties agree and there is no dispute that the purchase price of the [P]roperty was Ninety Thousand Dollars ($90,000.00) and the [Buyers] have paid approximately Fifteen Thousand Dollars ($15,000.00) in princip[al] towards that purchase price. This amounts to approximately 16% of the total contracted price. The [Buyers] contend that they have made improvements to the [P]roperty since its purchase[,] estimating the costs of more than Thirty Seven Thousand Dollars ($37,000.000) ․ It should be noted that no corroborating documentation was presented to support [the Buyers’] estimated costs.

Id. at 12. In the end, the trial court determined that the Buyers “[were] not entitled to equitable relief” and “the unambiguous terms of the Contract control[led]” such that the Sellers were “entitl[ed] to regain possession of the[ ] [P]roperty and retain all proceeds received through a forfeiture.” Id. at 16–17. The trial court ordered the Buyers to vacate the Property within forty-five days.

[9] The Buyers timely filed a Notice of Appeal, specifying they were appealing as of right under Indiana Appellate Rule 14(A)(4), which allows immediate appeal of an interlocutory order “for the sale or delivery of the possession of real property[.]” In briefing, the Buyers assert—and the Sellers do not dispute—that the Buyers complied with the ejectment order and vacated the Property.

Discussion and Decision

[10] The Buyers claim the trial court erred in resolving summary judgment in favor of the Sellers. According to the Buyers, the designated evidence established that, under Skendzel, the Contract was unenforceable and the Sellers’ only remedy was foreclosure. The Buyers argue the trial court should have granted their competing motion for partial summary judgment. See Appellants’ Reply Br. p. 15 (seeking remand “with instructions to enter a decree of foreclosure”).

I. Standard of Review

[11] We review summary judgment de novo, applying the same standard as the trial court. Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014). Summary judgment is appropriate only if “the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to ․ judgment as a matter of law.” Ind. Trial Rule 56(C). “The moving party ‘bears the initial burden of making a prima facie showing that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law.’ ” Manley v. Sherer, 992 N.E.2d 670, 673 (Ind. 2013) (quoting Gill v. Evansville Sheet Metal Works, Inc., 970 N.E.2d 633, 637 (Ind. 2012)). If the moving party meets this burden, “the non-moving party must come forward with evidence establishing the existence of a genuine issue of material fact.” Id. “We construe all factual inferences in favor of the non-moving party and resolve all doubts as to the existence of a material issue against the moving party.” Id. Summary judgment presents a “relatively high bar” for the movant such that “summary judgment [may] be precluded by as little as a non-movant's ‘mere designation of a self-serving affidavit.’ ” Hughley, 15 N.E.3d at 1003–04. This is by design, in that “Indiana consciously errs on the side of letting marginal cases proceed to trial on the merits, rather than risk short-circuiting meritorious claims.” Id. at 1004.

II. Applicability of Skendzel

[12] The Buyers claim the trial court erred in enforcing the Contract, which set forth the remedies of ejection and forfeiture. They direct us to Skendzel and its progeny, claiming that principles of equity required foreclosure under the circumstances, not a forfeiture. As our Supreme Court explained in Skendzel, “[u]nder a typical conditional land contract, the vendor retains legal title until the total contract price is paid by the vendee.” 301 N.E.2d at 646. The vendee typically makes payments in periodic installments. Id. “Legal title does not vest in the vendee until the contract terms are satisfied[.]” Id. However, “equitable title vests in the vendee at the time the contract is consummated,” at which point “[t]he vendee has a sufficient interest in land so that upon sale of that interest, he holds a vendor's lien.” Id. “[C]onsistent with ․ notions of equitable ownership,” Indiana courts “view[ ] a conditional land contract as a sale with a security interest in the form of legal title reserved by the vendor.” Id.

[13] In general, Indiana law “recognize[s] the freedom of parties to enter into contracts.” Parker v. Camp, 656 N.E.2d 882, 885 (Ind. Ct. App. 1995). Thus, courts generally enforce contracts as written, “presum[ing] that contracts represent the freely bargained agreement of the parties.” Id. At the same time, “[f]orfeitures are generally disfavored by the law.” Skendzel, 301 N.E.2d at 644. In Skendzel, our Supreme Court discussed the inherent equities involved in a land sale agreement—where the buyer has equitable title—and discussed the enforceability of contract provisions authorizing the remedy of forfeiture, as opposed to foreclosure. See id. at 642–51. The Court observed that a land sale contract is “subject to all proper and just remedies at law and in equity,” with the Court noting: “[A] court of equity must always approach forfeitures with great caution, being forever aware of the possibility of inequitable dispossession of property and exorbitant monetary loss.” Id. at 650. The Court concluded that forfeiture clauses in a land sale contract are generally unenforceable. See id. However, the Court identified two exceptions when forfeiture satisfies equity. Id. The first exception applies if there is “an abandoning or absconding vendee[.]” McLemore v. McLemore, 827 N.E.2d 1135, 1140 (Ind. Ct. App. 2005). The second exception applies if the vendee “has paid a minimal amount and the vendor's security interest in the property has been jeopardized by the acts or omissions of the vendee.” Id. (emphasis added) (synthesizing caselaw).

[14] In the case at hand, the question presented on summary judgment was not whether “[t]he record support[ed] a judgment based upon breach of contract.” McLendon v. Safe Realty Corp., 401 N.E.2d 80, 82 (Ind. Ct. App. 1980). Indeed, the Buyers have not disputed they defaulted under the Contract. Instead, the “inquiry ․ [was] centered upon the question of a remedy.” Id. On summary judgment, so long as the material facts are undisputed, the trial court may apply the Skendzel exceptions and decide as a matter of law whether the vendor is entitled to an order of forfeiture. Cf. Johnson v. Rutoskey, 472 N.E.2d 620, 626 (Ind. Ct. App. 1984). However, summary judgment is inappropriate when there are genuine issues of material fact regarding whether equity is satisfied by an order of forfeiture, rather than of foreclosure. See, e.g., id. Therefore, on summary judgment, a party is not entitled to an order of ejectment—or an order of foreclosure—if the designated evidence discloses genuine issues of material fact as to whether the purchaser abandoned or absconded, or whether there was minimal payment toward the purchase price and a jeopardization of the seller's security interest. See id. (reversing summary judgment, noting that, under the circumstances, “it would be improper ․ to conclude, as a matter of law, that [the] payment was so minimal as to make forfeiture the preferable remedy”).

[15] Here, the Sellers argue the instant case falls outside of Skendzel, and therefore, there is no need to consider the Skendzel exceptions. The Sellers claim this is so because, even though the Buyers maintained possession of the Property and made monthly payments for approximately six years, the Contract contained a clause requiring the Buyers to obtain a mortgage within, at most, twenty-four months of execution. The Sellers rely on real estate cases where the closing of the transaction was conditioned on the buyer obtaining a mortgage to finance the purchase of the real estate. See, e.g., Dvorak v. Christ, 692 N.E.2d 920, 924 (Ind. Ct. App. 1998), trans. denied. In those types of cases, we have enforced the mortgage clause, determining that, when a purchase is contingent on the buyer's ability to timely obtain financing and the buyer fails to satisfy that condition, the contract generally terminates by its own terms. See id. But those types of cases involved fundamentally different transactions, where the buyer did not obtain possession or start making periodic payments to the seller. In short, Seller relies on caselaw that generally does not implicate the buyer's equitable title in the land. In contrast, here, the Buyers took possession and began making payments to the Sellers, thus developing an equitable interest in the Property that necessitated applying the equitable framework in Skendzel.³

[16] Concluding that the mortgage contingency clause did not exempt this case from the equitable framework discussed in Skendzel, we now examine whether either of the Skendzel exceptions applied based on the designated evidence, or genuine issues of material fact precluded summary judgment as to a remedy for breach.

A. Abandonment Exception

[17] The first Skendzel exception applies to “an abandoning or absconding vendee.” McLemore, 827 N.E.2d at 1140. Here, the Sellers argue the Buyers abandoned the Property as a matter of law because the Buyers stopped making payments after receiving the June 2023 notice of default. We note, however, that to abandon real estate, “one must actually and intentionally relinquish possession of the land and act in a manner which is unequivocally inconsistent with the existence of a contract.” McLendon, 401 N.E.2d at 83. Thus, a party does not establish abandonment by demonstrating only that, while the buyer maintained possession of the property, the buyer breached his contractual obligations. See id.; cf. Morris v. Weigle, 383 N.E.2d 341, 343 (Ind. 1978) (reversing forfeiture of a farm where, despite the buyer's breach, the buyer planted crops and remained in possession until the seller invoked a contract provision to repossess the farm).

[18] We conclude that the designated evidence does not establish abandonment as a matter of law. In this case, the Buyers maintained possession of the Property after receiving the Sellers’ notice of default. Although at that point the Buyers stopped making monthly payments to the Sellers, the Buyers continued to live in the residence and vacated the Property only upon the trial court's order to do so. The Buyers’ continued possession of the Property and ongoing defense in the action indicated that they did not intentionally relinquish their interest in the Property. See id. We therefore conclude that the trial court erred to the extent it determined, as a matter of law, the Buyers abandoned the Property.

B. Minimal Payments and Jeopardized Security Interest Exception

[19] We turn to the second Skendzel exception, which applies if (1) the purchaser “paid only a minimal amount toward the contract price” and (2) the seller's “security interest has been jeopardized.” McLemore, 827 N.E.2d at 1141. In this case, we need not address whether the designated evidence established that the Sellers’ security interest had been jeopardized. That is because genuine issues of material fact exist as to whether the Buyers paid a minimal amount.

[20] Whether a purchaser paid only a minimal amount “depends upon the totality of the circumstances surrounding the contract and its performance.” Johnson, 472 N.E.2d at 626. Pertinent facts and circumstances include the duration of performance, improvements made to the property, and the property's current value compared to the remaining contract balance. See generally id.; Dempsey v. Carter, 797 N.E.2d 268, 277 (Ind. Ct. App. 2003); McClendon, 401 N.E.2d at 83. Cf. Looney v. Farmers Home Admin., 794 F.2d 310, 313 (7th Cir. 1986) (collecting cases evaluating whether the purchaser made only minimal payments). For example, in Dempsey, we concluded the sellers were not entitled to forfeiture on summary judgment where the designated evidence indicated that the buyer paid a limited amount under the contract but had made repairs and improvements that increased the value of the real estate. 797 N.E.2d at 277. We reasoned:

Based upon the totality of the circumstances, it is evident that [the purchaser] did not commit waste upon the [r]eal [e]state, but rather improved the condition and value of the [r]eal [e]state. Accordingly, we find it improper to conclude, as a matter of law, that [the buyer's] payment was so minimal as to make forfeiture the preferable remedy.

Id.

[21] Here, the Contract established a purchase price of $90,000, with the value of the Property increasing to $120,000.00 or as much as $150,000.00 during the six or so years that the Buyers occupied the residence. The designated evidence reflected that the Buyers paid about $36,000 over six years, which reduced the principal balance of $90,000 by about $15,000, representing approximately 16% of the total contract price. Standing alone, this percentage might be considered minimal. See Huber, 867 N.E.2d at 708–09 (affirming an order of forfeiture on summary judgment where the purchaser had paid 19.5% of the contract price). In this case, however, the Buyers designated Jared's affidavit, which indicated that they made more than $37,000 in improvements. The Sellers argue that, under Skendzel, the proper inquiry is “not whether the vendee had allegedly put sweat equity into the property,” Appellees’ Br. at 27, but instead whether the vendee “paid a minimal amount on the contract,” id. (quoting Skendzel, 301 N.E.2d at 650 (emphasis added)). However, our caselaw applying Skendzel looks to the “totality of the circumstances surrounding the contract and its performance.” Dempsey, 797 N.E.2d at 277 (quoting Johnson, 472 N.E.2d at 626). The totality of the circumstances encompasses the buyer's improvements that develop his equitable interest in the land, even if the buyer made limited payments under the contract itself. See id. (determining it was “improper to conclude, as a matter of law, that [the buyer's limited] payment was so minimal as to make forfeiture the preferable remedy” where the buyer “did not commit waste ․ but rather improved the condition and value” of the real estate).

[22] Furthermore, at times, the Sellers direct us to designated evidence indicating there was damage to the exterior of the Property that may offset the value of any improvements. That may be so. But, at the summary judgment stage, we cannot say the designated evidence conclusively established that the Buyers made only minimal payments. Rather, based on the designated evidence, the totality of the circumstances in this case—including the Buyers’ monthly installment payments over six years, their alleged substantial improvements to the Property, and the Property's increased value—disclose genuine issues of material fact as to whether the Buyers made only minimal payments toward the purchase price.

[23] We have identified genuine issues of material fact as to whether the Buyers paid only a minimal amount, thus we need not consider any designated evidence bearing on the jeopardization of the Sellers’ security interest. It follows that, because the Sellers did not establish abandonment under the first exception and there are genuine issues of material fact bearing on the second, neither the Sellers nor the Buyers established that they were entitled to their preferred remedy as a matter of law. We therefore affirm the denial of the Buyers’ motion for partial summary judgment and reverse the grant of the Sellers’ competing motion.

Conclusion

[24] Because this case fell within Skendzel—which limits the availability of forfeiture as a remedy for a buyer's breach of a residential land sale agreement—and the designated evidence precluded summary judgment under the first Skendzel exception while disclosing genuine issues of material fact bearing on the second, the trial court (1) did not err in denying the Buyers’ motion for partial summary judgment but (2) erred in granting partial summary judgment to the Sellers and ordering the remedy of forfeiture as a matter of law. We therefore affirm the denial of the Buyers’ motion for partial summary judgment, reverse the grant of the Sellers’ competing motion, and remand for further proceedings.

[25] Affirmed in part, reversed in part, and remanded.

FOOTNOTES

1.   The Contract called for monthly installments of $500. However, the associated amortization schedule contemplated monthly installments of $499.91. Compare Appellants’ App. Vol. 2 p. 154 with id. at 161–68. The amortization schedule was based on 318 scheduled payments, i.e., 26.5 years of payments to the Sellers.

2.   The action was filed in small claims court and eventually transferred to the Superior Court's plenary docket.

3.   In issuing the ejectment order, the trial court stated that the Buyers were not entitled to equitable relief because they “neither acted equitable [sic] nor” did they fulfill certain contractual obligations. Appellants’ App. Vol. II p. 16. We note, however, that Skendzel does not condition equity on a party's overall adherence to the terms of a conditional land sale agreement. See generally Skendzel v. Marshall, 301 N.E.2d 641, 650 (Ind. 1973). Rather, Skendzel recognizes inherent equitable interests involved in these types of purchase arrangements and provides that forfeiture clauses are generally unenforceable in this context. Skendzel identifies limited exceptions to this general rule, directing courts to focus on (1) whether the purchaser abandoned the property or (2) whether the purchaser made minimal payments and jeopardized the seller's security interest. Id. Evidence of contractual breaches may bear on whether an exception applies, but that type of evidence does not independently override the general rule against forfeiture in this context. But see Huber v. Sering, 867 N.E.2d 698, 709 (Ind. Ct. App. 2007) (referring to “the rapidity and frequency with which the [buyers] breached the contract” in examining the conscionability of forfeiture), trans. denied.

Foley, Judge.

Judges Bailey and Bradford concur. Bailey, J. and Bradford, J., concur.