Real Property

Installment Land Contract Not 'Sale' Under Separation Agreement

, The Legal Intelligencer

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Shogan was joined by Judge Cheryl Lynn Allen and Senior Judge John L. Musmanno.

Bernhardt had sought a declaratory judgment that she was entitled to half of the Conklin down payment, but Shogan said the separation agreement did not fall within the purview of the Declaratory Judgment Act.

In order for the agreement to be interpreted under the act, Shogan said, the trial court would have first had to reform the contract to include installment land contracts under paragraph 15.

Under the state Supreme Court's 1945 ruling in Baskind v. National Surety, according to Shogan, the act cannot apply in a case where the contract must be reformed before it can be interpreted.

"The trial court may not open the agreement, permit reformation thereof, and thereafter interpret the agreement as reformed," Shogan said. "Thus, we conclude this matter could not be decided in a declaratory judgment proceeding, and we decline to review the trial court's order as a decree in equity."

Instead, Shogan said, the dispute in Bernhardt was governed by contract and real property law.

According to Shogan, the state Installment Land Contract Law defines an installment land contract as including "'every executory contract for the purchase and sale of a dwelling ... whereby the purchaser is obligated to make six or more installment payments to the seller after the execution of the contract and before the time appointed for the conveyance of title to the dwelling.'"

Shogan also noted that an installment land contract is alternatively known as a "contract for deed," which Black's Law Dictionary defines as a "'conditional sales contract for the sale of real property.'"

"Based on the foregoing authority, we do not agree with [Bernhardt's] argument that the Conklin transaction was a sale," Shogan said.

Therefore, while Bernhardt had argued that she never agreed to exchange her half of the Conklin down payment for 100 percent of the property's oil and gas rights, Shogan said it was unnecessary for the court to determine whether an oral agreement existed.

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