Indiana Contract for Deed Law


Contract for Deed – General – Indiana

Indiana State Statutes

TITLE 32. PROPERTY
ARTICLE 21. CONVEYANCE PROCEDURES FOR REAL PROPERTY
Chapter 5. Residential Real Estate Sales Disclosure

IC 32-21-5-1

(a) This chapter applies only to a sale of, an exchange of, an installment sales contract for, or a lease with option to buy residential real estate that contains not more than four (4) residential dwelling units.

(b) This chapter does not apply to the following:

(1) Transfers ordered by a court, including transfers:

(A) in the administration of an estate;

(B) by foreclosure sale;

(C) by a trustee in bankruptcy;

(D) by eminent domain;

(E) from a decree of specific performance;

(F) from a decree of divorce; or

(G) from a property settlement agreement.

(2) Transfers by a mortgagee who has acquired the real estate at a sale conducted under a foreclosure decree or who has acquired the real estate by a deed in lieu of foreclosure.

(3) Transfers by a fiduciary in the course of the administration of the decedent’s estate, guardianship, conservatorship, or trust.

(4) Transfers made from at least one (1) co-owner solely to at least one (1) other co-owner.

(5) Transfers made solely to any combination of a spouse or an individual in the lineal line of consanguinity of at least one (1) of the transferors.

(6) Transfers made because of the record owner’s failure to pay any federal, state, or local taxes.

(7) Transfers to or from any governmental entity.

(8) Transfers involving the first sale of a dwelling that has not been inhabited.

(9) Transfers to a living trust.

Indiana State Statutes

Indiana Case Law

The court, in effect, views a conditional land contract as a sale with a security interest in the form of legal title reserved by the vendor. Conceptually, therefore, the retention of the title by the vendor is the same as reserving a lien or mortgage. Realistically, vendor-vendee should be viewed as mortgagee-mortgagor. To conceive of the relationship in different terms is to pay homage to form over substance. Skendzel v. Marshall, 261 Ind. 226 (Ind. Sup. Ct. 1973)

Wherever a penalty or a forfeiture is used merely to secure the payment of a debt… equity, considering the payment, or performance, or enjoyment to be the real thing intended by the agreement, and the penalty or forfeiture to be only an accessory, will relieve against such penalty or forfeiture by awarding compensation instead… Id. at 226

In Indiana today, a vendor must terminate an installment land contract through judicial foreclosure when the defaulting purchaser has substantial equity in the property and has not abandoned it. When the purchaser’s equity is less that substantial, forfeiture remains an option. Arnold v. Melvin R. Hall, Inc., 481 N.E.2d 409 (Ind. App. 1985)