Opinion ID: 1623167
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Heading: The Law Governing Forfeiture of Real Estate Contracts.

Text: Forfeiture is a harsh remedy and is not favored in either law or equity. Lett v. Grummer, 300 N.W.2d 147, 149 (Iowa 1981); Babb's, Inc. v. Babb, 169 N.W.2d 211, 212 (Iowa 1969); Kilpatrick v. Smith, 236 Iowa 584, 593, 19 N.W.2d 699, 703 (1945). One may make a contract that provides for forfeiture following a breach; however, courts of this state will scan [a contractual forfeiture provision] closely before giving it effect. Van Hosen v. Bankers Trust Co., 200 N.W.2d 504, 507-08 (Iowa 1972) (forfeiture clause in employee pension plan); LaFontaine v. Developers & Builders, Inc., 261 Iowa 1177, 1189-90, 156 N.W.2d 651, 659-60 (1968) (same in stock purchase agreement). The party claiming forfeiture of a real estate contract has the burden of proving facts that, based on terms of the contract, would entitle the vendor to forfeit the agreement. Tait v. Reid, 158 Iowa 466, 472, 139 N.W. 1101, 1103 (1913). Forfeitures will be enforced only when those claiming them ... show that the equities are clearly on their side. Kilpatrick, 236 Iowa at 593, 19 N.W.2d at 703. When assessing the propriety of a claimed forfeiture, we are mindful of the legal relationship between vendor and purchaser. After a real estate contract is made, the purchaser becomes the equitable owner of the land. The vendor retains legal title to the land as security for payment of the purchase price. Knapp v. Baldwin, 213 Iowa 24, 27, 238 N.W. 542, 544 (1931). For this reason, we are less likely to approve a forfeiture if the purchaser is current with payments. Cf. Lett, 300 N.W.2d at 149. Regarding breaches other than failure to make payments, we have held that de minimis breaches not affecting the vendor's security will not justify forfeiting a real estate contract. Id. (six missing ten-by-twelve pens in an obsolete hog house insufficient to support a forfeiture). On the other hand, flagrant and stubbornly deliberate breaches, even if minor when viewed from an economic standpoint, have been held to justify a forfeiture. Miller v. American Wonderlands, Inc., 275 N.W.2d 399, 403 (Iowa 1979).