Real Property

Installment Land Contract Not 'Sale' Under Separation Agreement

, The Legal Intelligencer

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In what it called "a hybrid action raised under a divorce caption, couched in declaratory judgment terms and requesting monetary damages," the Pennsylvania Superior Court found that a divorced couple's separation agreement did not require them to evenly split the down payment they received pursuant to an installment land contract for the sale of their home because the contract itself did not constitute a sale.

Therefore, the court found, an alleged oral agreement under which plaintiff Sarah Bernhardt was to trade her claim to half of the down payment for all of the property's oil and gas rights was necessarily invalid.

In an unpublished opinion in Bernhardt v. Dieffenbach, a three-judge panel unanimously affirmed a Bradford County trial court's ruling that Bernhardt was not entitled to half of the $35,000 down payment she and her former husband, defendant Daniel Dieffenbach, received pursuant to an installment land contract with a would-be buyer named April Conklin, but did so on different grounds.

While the trial court found that the separation agreement had been modified by the subsequent oral agreement requiring Bernhardt to swap her claim to half of the Conklin down payment for all of the property's subsurface rights, the Superior Court said the portion of the separation agreement entitling Bernhardt to half of the down payment had never actually been triggered to begin with.

Judge Jacqueline O. Shogan, writing for the court, said paragraph 15 of the separation agreement required the former couple to evenly split the equity in their marital home in the event of either a sale or a termination of tenancy.

But Shogan said an installment land contract did fall under the common meaning of "sale," which both Black's Law Dictionary and the Merriam–Webster Online Dictionary define as the transfer of ownership in property or title for a price.

Therefore, Shogan said, Bernhardt was not entitled to half of the Conklin down payment.

"The record indicates that the parties entered into a contract, whereby April Conklin paid $35,000 as a down payment and was required to make additional installment payments on a monthly basis after the execution of the contract and before the time appointed for the conveyance of title to the dwelling," Shogan said. "No transfer of title took place upon receipt of the down payment, as in a traditional real estate sale. Accordingly, because the contract was not a sale, it did not trigger that portion of paragraph 15 of the agreement entitling Bernhardt to one-half of the equity in the marital residence."

Because paragraph 15 was never triggered, Shogan added, Bernhardt never had a claim to a portion of the Conklin down payment to trade for the property's subsurface rights.

Therefore, the Superior Court reversed the portion of the trial court's ruling requiring performance of the alleged oral agreement.

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