Miles v. Smith

Filed 6/30/06 Miles v. Smith CA

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of San Bernardino County. Shahla Sabet, Judge. Reversed.

Hunt Ortmann Blasco, Palffy & Rossell and Richard E. Blasco for Plaintiffs and Appellants.

Turner Green Afrasiabi & Arledge, Todd A. Green and Christopher W. Arledge for Defendants and Respondents.

1. Introduction

Plaintiffs Ronald Miles and Janet Miles and defendants Randy Smith and Vanessa Smith executed an installment land contract for the sale of a home in Chino Hills, California. The contract required that plaintiffs pay a $10,000 down payment, the monthly mortgage payments, and the balance due on the mortgage within three years. The contract provided that, if plaintiffs failed to perform, they would forfeit their rights under the contract. About eight years later, plaintiffs sought to pay off the balance on the mortgage. Because the three years had expired, defendants refused to transfer title and plaintiffs filed an action for declaratory relief. The trial court found that the contract expired on its own terms and that plaintiffs were essentially holdover tenants under an implied lease agreement.

As argued by plaintiffs, we conclude that the trial court erred in finding that the installment land contract expired on its own terms. Such terms are invalid under California law and plaintiffs had an unconditional right of redemption. We also conclude that the agreement was not the result of a mutual mistake.

We reverse the judgment.

2. Factual and Procedural History

On or about May 16, 1997, plaintiffs and defendants entered into an installment land contract for the sale of a home located at 14713 Hiddenspring Circle, Chino Hills, California. Defendants had a mortgage loan with Downey Savings Bank with a total unpaid balance of about $215,000. Plaintiffs agreed to pay a $10,000 down payment and $2,040 per month to cover the costs of the mortgage payments. The contract provided that plaintiffs had three years to pay off the balance due on the Downey Savings loan.

Plaintiffs moved into the home in May of 1997. Plaintiffs claim, that since then, they made substantial improvements to the property totaling approximately $28,000. Plaintiffs consistently made the monthly payments under the contract.

In July of 2003, plaintiffs attempted to complete the land sale and pay off the Downey Savings loan. On or about October 11, 2003, defendants sent a letter to plaintiffs stating that the contract had expired and gave them the option of either buying the property for the increased price of $324,000 or vacating the property within 60 days. Defendants noted that the current market value of the property was between $425,000 and $450,000. Defendants sent a second letter stating that their offer was firm. In this second letter, dated on November 13, 2003, defendants stated that, if plaintiffs did not opt to purchase the property, the property would be sold and the proceeds would be divided.

On November 21, 2003, plaintiffs, through their counsel, sent a letter again offering to complete the land sale by paying off the balance due on the Downey Savings loan. A few months later, plaintiffs sent another letter notifying defendants that they had been preapproved for a mortgage loan.

The installment land contract included a forfeiture clause. The first paragraph of section 9 of the contract provides:

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