Background
Sandra Thomas and her late husband entered into a March 2020 “Rent To Own Contract” under which Destin and Jennifer Clark agreed to purchase 111 acres in Magazine, Arkansas. The contract required monthly payments, allowed advance payment of some or all of the debt, and permitted rescission if the Clarks were forty-five days late on a payment or failed to perform their obligations. Title was to remain with the sellers until the contract was satisfied.
When the Clarks sought to sell the property and use the proceeds to pay the remaining balance, Thomas provided a payoff figure by text but did not supply the signed, written payoff statement required by the title company. Thomas later refused a payment that arrived forty-six days after its due date and served a notice to quit, also alleging that the Clarks had failed to maintain the property because they discharged waste onto the land. The circuit court treated the agreement as a contract for deed and an equitable mortgage, found that Thomas had breached first by withholding the signed payoff statement, ordered her to provide a payoff amount and complete the conveyance, and awarded the Clarks $17,500 in attorney’s fees and costs.
The Court’s Holding
The Arkansas Court of Appeals affirmed. Reviewing the equitable relief de novo and the circuit court’s factual findings for clear error, the court held that the circuit court did not clearly err in ordering specific performance. It sustained the conclusion that the arrangement created an equitable mortgage, emphasizing equity’s disfavor of forfeitures and the significant amount the Clarks had paid toward purchasing the property since 2015.
Because the equitable-mortgage determination and specific-performance remedy were affirmed, the court concluded that the parties’ competing arguments about who breached first, late payment, waiver, and property maintenance were moot. It also affirmed the $17,500 attorney’s-fee-and-cost award because Thomas’s only argument against that award depended on reversal of the underlying judgment.
Key Takeaways
- A forfeiture clause and a time-is-of-the-essence provision did not require forfeiture where the parties’ conduct, the buyers’ substantial payments, and equitable principles supported treating the transaction as an equitable mortgage.
- The circuit court could compel the seller to provide a payoff amount, accept final payment, and execute a deed according to the contract’s advance-payment provision.
- An appellate challenge to attorney’s fees that depends entirely on reversal of the merits fails when the underlying judgment is affirmed.
Why It Matters
The decision illustrates that Arkansas courts look beyond a land-sale agreement’s label and forfeiture language when determining the parties’ equitable rights. Sellers who repeatedly accept performance under a rent-to-own arrangement may not necessarily obtain forfeiture when buyers have accumulated substantial equity and are prepared to satisfy the remaining debt.
It also underscores the importance of presenting an independent challenge to an attorney’s-fee award. A fee argument premised solely on reversal of the merits provides no basis for relief when the merits judgment stands.