A buyer and a seller enter into an installment land contract for the sale of a piece of undeveloped land. Under the agreement, the buyer will make monthly payments for 15 years, at the end of which the seller will transfer a deed to the buyer if the buyer has fulfilled all payment obligations. Four years into the agreement, the buyer defaults on payments for five consecutive months. Which course of action is most consistent with the seller’s remedies under traditional law governing installment land contracts?
The seller must refund the buyer’s prior payments as a condition of retaking possession of the property.
The seller must initiate foreclosure proceedings to recover title to the property, similar to a mortgage foreclosure.
The seller may declare the contract forfeited, retain all payments made by the buyer, and take back possession of the property.
The seller may treat the buyer as a tenant and initiate eviction proceedings to regain possession of the property.
The correct answer reflects the traditional legal approach to installment land contracts, which often allows sellers to treat the contract as forfeited upon buyer default, retaining both the property and prior payments. Under traditional law, installment land contracts were treated differently than mortgages, granting sellers significant discretion to enforce forfeiture clauses and avoid judicial foreclosure. The incorrect answer describing foreclosure proceedings reflects an approach more consistent with modern reforms in some jurisdictions but not the traditional legal doctrine. Similarly, the option describing a lease-related remedy mischaracterizes the nature of installment land contracts, which create an equitable interest for the buyer rather than a landlord-tenant relationship.
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