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2014BasicSkillsCoursePresentedbytheIowaBarReviewSchoolandTheIowaStateBarAssociation.
MondaySeptember22,2014
IowaRealEstateLaw11:15 a.m. - 12:15 p.m.
Materials byTim KrummMeardon, Sueppel & Downer P.L.C. 122 S. Linn Street Iowa City, Iowa 52240 Phone: (319) 338-9222
IOWA REAL ESTATE LAW
TIMOTHY J. KRUMM MEARDON, SUEPPEL & DOWNER P.L.C.
122 S. Linn Street
Iowa City, Iowa 52240
Telephone: (319) 338-9222
Revised August 2013
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Table of Contents
I. CONTRACTS TO SELL OR OTHERWISE TRANSFER REAL ESTATE ......................... 1
A. Residential Property Seller Disclosure Statements ................................................. 1
B. Statute of frauds . ............................................................................................................ 3
C. Contents of purchase agreements ................................................................................ 4
D. Installment contracts ...................................................................................................... 5
E. Caveat emptor (“Let the buyer beware”) .................................................................... 7
F. Equitable conversion ...................................................................................................... 8
II. EXAMINING ABSTRACTS AND CURING TITLE DEFECTS ......................................... 8
A. Examination of abstracts ................................................................................................ 8
B. Iowa Land Title Standards .......................................................................................... 11
C. Marketable Title Acts. .................................................................................................. 11
D. Title Guaranty ............................................................................................................... 17
E. Curing title defects ...................................................................................................... 21
III. MECHANIC’S LIENS .............................................................................................................. 25
A. Persons entitled to a mechanic’s lien ....................................................................... 25
B. Perfection of the mechanic’s lien ............................................................................... 26
C. Priority of the mechanic’s lien ................................................................................... 29
D. Special limitations on mechanic’s liens ................................................................... 29
E. Discharge of the mechanic’s lien ............................................................................... 30
F. Actions to enforce or challenge the mechanic’s lien .............................................. 31
G. Actions by a subcontractor against a principal contractor .................................... 32
H. Satisfaction of the mechanic’s lien ............................................................................ 32
IV. OTHER MISCELLANEOUS LIENS ON PROPERTY ........................................................ 33
A. Real estate tax liens ....................................................................................................... 33
B. Special assessments ...................................................................................................... 33
C. State income tax liens ................................................................................................... 34
D. Federal income tax liens .............................................................................................. 34
E. Federal estate tax liens ................................................................................................. 35
F. Federal gift tax liens ..................................................................................................... 35
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G. Inheritance tax liens ..................................................................................................... 35
H. Judgment liens ............................................................................................................... 36
I. Mortgage liens ............................................................................................................... 37
J. Homestead exemption ................................................................................................. 38
V. QUIET TITLE ACTIONS ......................................................................................................... 39
A. Persons entitled to bring a quiet title action . .......................................................... 39
B. Function of the quiet title action ............................................................................... 39
C. Nature of the action to quiet title .............................................................................. 39
D. Content of the petition to quiet title ........................................................................ 39
E. Service of notice ........................................................................................................... 40
F. Appointment of a guardian ad litem ........................................................................ 40
G. Servicemembers Civil Relief Act (SCRA) ............................................................... 41
H. Costs ............................................................................................................................... 42
VI. REAL ESTATE CLOSINGS .................................................................................................... 42
A. Closing Documents ..................................................................................................... 42
B. The Closing Statement ................................................................................................ 42
C. The Deed ........................................................................................................................ 43
D. Declaration of Value ................................................................................................... 46
E. Groundwater Hazard Statement ................................................................................ 46
F. HUD-1 Statement ......................................................................................................... 47
G. Post-closing ................................................................................................................... 47
VII. FORFEITURE ............................................................................................................................. 47
VIII. FORECLOSURE ........................................................................................................................ 51
A. Notice and Opportunity to Cure ............................................................................... 51
B. Notice of Mortgage Mediation Assistance for One and Two-Family Dwellings
51
C. Mediation Releases for Agricultural Property ........................................................ 52
D. Special Protection for Members of the Armed Forces . ......................................... 52
E. Judicial Foreclosure ..................................................................................................... 52
F. Non-judicial Foreclosure ............................................................................................ 58
G. Deed in Lieu of Foreclosure ....................................................................................... 59
IX. PARTITION ............................................................................................................................... 59
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A. Basis for the action ....................................................................................................... 59
B. Governing statutes and rules ..................................................................................... 59
C. Partition by sale v. Partition in-kind ........................................................................ 59
D. Parties having a right to partition . ............................................................................ 60
E. Limitation on commencement where probate is pending ................................... 60
F. Content of the petition for partition ......................................................................... 60
G. Necessary and optional parties to the partition action ......................................... 61
H. Joinder of claims and counterclaims ......................................................................... 61
I. The decree ..................................................................................................................... 62
J. Costs ............................................................................................................................... 62
X. ADVERSE POSSESSION ........................................................................................................ 62
A. Elements of adverse possession claim ..................................................................... 62
B. Hostile . ........................................................................................................................... 62
C. Actual ............................................................................................................................. 63
D. Open . .............................................................................................................................. 63
E. Exclusive ........................................................................................................................ 63
F. Continuous .................................................................................................................... 63
G. Under claim of right or color of title ........................................................................ 64
XI. DISPUTED BOUNDARIES .................................................................................................... 64
A. Potential theories for resolving boundary disputes .............................................. 64
B. Boundary by acquiescence ......................................................................................... 65
C. Chapter 650 special actions ........................................................................................ 65
D. Boundary by written agreement ............................................................................... 66
E. Estoppel ......................................................................................................................... 66
XII. EASEMENTS ............................................................................................................................. 67
A. Nature of the interest .................................................................................................. 67
B. Definitions .................................................................................................................... 67
C. Methods for creating easements ............................................................................... 67
D. Easement by express grant or reservation ............................................................... 68
E. Easement by prescription ........................................................................................... 68
F. Easement by necessity ................................................................................................. 69
G. Easement by implication ............................................................................................ 69
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H. Termination, release or loss of easements ............................................................... 70
XIII. COVENANTS ............................................................................................................................ 70
XIV. LAND USE AND DEVELOPMENT ...................................................................................... 71
A. Condominiums ............................................................................................................. 71
B. Cooperatives ................................................................................................................. 73
C. Divisions and Subdivisions of Land ........................................................................ 74
D. Zoning ............................................................................................................................ 75
1
IOWA REAL ESTATE LAW
I. CONTRACTS TO SELL OR OTHERWISE TRANSFER REAL ESTATE
A. Residential Property Seller Disclosure Statements
1. Prior to making or accepting a written offer for the transfer
of real estate containing at least one but not more than four
dwelling units, the potential transferor must deliver a
written disclosure statement to the potential transferee.
Iowa Code §§ 558A.1(4) and 558A.2(1).
a. A broker or salesperson acting on behalf of the
transferor may deliver the disclosure statement
instead. Iowa Code § 558A.2(1).
b. Delivery of the disclosure statement may be made via
certified or registered mail or personal delivery to the
transferee. Iowa Code § 558A.2(2). Unless the parties
agree otherwise, delivery may also be made to the
transferee’s spouse. Id.
c. Numerous types of transfers are excluded from the
disclosure requirement including, but not limited to,
transfers by a fiduciary during the administration of
an estate, trust, guardianship or conservatorship,
transfers made to a spouse, and transfers by quitclaim
deed. See Iowa Code §558A.1(4)(a)-(i).
2. The disclosure statement must include certain information
“relating to the condition and important characteristics of
the property and structures located on the property,
including significant defects in the structural integrity of the
structure…” Iowa Code § 558A.4. A form Residential
Property Seller Disclosure Statement is available through the
Iowa State Bar Association (Form 155) and can also be found
in 1 MARLIN M. VOLZ, JR., IOWA PRACTICE SERIES §§ 6:7 (2009-
2010 ed.) and online at:
http://www.state.ia.us/government/com/prof/sales/PDF
2
s/seller_disclosure.pdf. It is advisable to use a proper form
document, in order to ensure full compliance with the
disclosure requirements.
3. If the information required to be disclosed is not known or is
not available to the seller, and a reasonable effort has been
made to obtain the information, an approximation based on
the best information available can be made. Iowa Code §
558A.3(1). However, the seller must disclose that the
information provided is just an approximation. Id.
4. In most cases, the seller must amend the disclosure
statement if the information disclosed becomes misleading,
inaccurate or in need of supplementation. Iowa Code §
558A.3(2).
5. Failure to make the necessary disclosures pursuant to Iowa
Code Chapter 558A will not invalidate the transfer, but the
transferor will be liable for any actual damages suffered by
the transferee. Iowa Code §§ 558A.6 and 558A.8. See also
Hammes v. JCLB Properties, LLC, 764 N.W.2d 552 (Iowa Ct.
App. 2008).
6. If the disclosure contains errors, inaccuracies or omissions,
the transferor, broker or salesperson may be held liable if
they did not exercise ordinary care in obtaining the
information or had actual knowledge of the inaccuracy.
Iowa Code § 558A.6(1). Proof of fraud on the part of the
seller is not required. Jensen v. Sattler, 696 N.W.2d 582, 587-
88 (Iowa 2005).
7. Pursuant to EPA and HUD rules, the seller also needs to
attach a lead-based paint disclosure statement to the
residential disclosure statement, in addition to providing the
buyer with a pamphlet entitled “Protect Your Family From
Lead in Your Home,” if the dwelling in question, or
structures attached thereto, were built prior to 1978. 1
MARLIN M. VOLZ, JR., IOWA PRACTICE SERIES §6:6 (2009-2010
ed.).
8. A form lead-based paint disclosure statement is available
through the Iowa State Bar Association (Form 156) and can
also be found in 1 MARLIN M. VOLZ, JR., IOWA PRACTICE
3
SERIES § 6:8 (2009-2010 ed.) or online at:
http://www.hud.gov/offices/lead/enforcement/disclosure
.cfm. The “Protect Your Family From Lead in Your Home”
pamphlet is available through HUD and can be found on the
aforementioned website as well.
B. Statute of frauds. Evidence of a contract which seeks to create or
transfer an interest in land is not admissible, unless the contract is in
writing and is signed by the party charged. Iowa Code § 622.32(3).
1. However, the statute of frauds does not bar oral evidence of
the land contract when any of the following circumstances
exist:
a. The contract in question is a lease, the term of which
is less than one year. Iowa Code § 622.32(3).
b. Any portion of the purchase money has been received
by the seller. Iowa Code § 622.33.
c. The buyer has taken possession of the land, pursuant
to the contract, with the actual or implied consent of
the seller. Iowa Code § 622.33.
d. The maker of the contract, against whom enforcement
is sought, does not deny the existence of the contract
in the pleadings. Iowa Code § 622.34.
e. Oral evidence of the contract is offered by the maker
of the contract and the maker is the party charged.
Iowa Code § 622.35.
f. The party seeking to enforce the contract can prove
the elements of promissory estoppel. Kolkman v.
Roth, 656 N.W.2d 148, 156 (Iowa 2003)(requiring the
party asserting promissory estoppel as a defense to
the statute of frauds to prove “(1) a clear and definite
promise; (2) the promise was made with the
promissor’s clear understanding that the promisee
was seeking assurance upon which the promisee
could rely and without which he would not act; (3)
the promisee acted to his or her substantial detriment
in reasonable reliance on the promise; and (4) injustice
can be avoided only by enforcement of the promise.”).
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g. The party seeking to enforce the contract partially
performed under the contract. Gardner v. Gardner,
454 N.W.2d 361, 363 (Iowa 1990)(holding that statute
of frauds would not bar evidence of oral contract
where Plaintiffs had partially performed part of the
contract by conveying their remainder interest in the
land).
h. “There is any other circumstance which, by the law
heretofore in force, would have taken the case out of
the statute of frauds.” Iowa Code § 622.33.
C. Contents of purchase agreements
1. If the terms of the purchase agreement are not sufficiently
definite and certain, the agreement will not be
unenforceable. Tri-States Inv. Co. v. Henryson, 179 N.W.2d
362, 363 (Iowa 1970).
2. At a minimum, the purchases agreement should include the
following:
a. The name of the buyer(s);
b. The name of the seller(s), as the name(s) appears on
the deed;
c. An accurate description of the property involved;
d. The purchase price;
e. The terms of payment of the purchase price; and
f. A statement evincing that it is the intent of the seller
to sell the property and the buyer to buy the property.
See 1 MARLIN M. VOLZ, JR., IOWA PRACTICE SERIES § 6:3
(2009-2010 ed.).
3. Where the seller is married, the seller’s spouse should be
made a party to the agreement and sign the agreement as
well, unless the spouse executes a power of attorney for such
purpose. See Iowa Code § 561.13 (relating to homesteads).
Cf. Iowa Code §§ 633.211 (relating to the intestate share of
the surviving spouse) and 633.238 (relating to the surviving
spouse’s elective share).
4. The purchase agreement may, and often should, also
provide information relating to, among other things, how
5
real estate taxes and special assessments are to be paid for
the year of purchase, who bears the risk of loss and what
sort insurance must be maintained on the property while the
sale is pending, the date possession will be delivered to the
buyer, ownership of fixtures or personalty on the property,
updating of the abstract, remedies of the parties for breach,
warranties of the seller, and the manner in which title will be
conveyed to the buyer.
5. If the purchase agreement is for a residential property that
was built prior to 1978, the lead-based paint disclosure
statement, discussed above, must be attached to the
purchase agreement and signed and dated by both the buyer
and the seller.
6. Given the vast array of provisions that could be incorporated
into the purchase agreement, it may be advisable to review
form purchase agreements, such as those available through
the Iowa State Bar Association (Forms 152, 141, 142, 143, 180
and 153) or the one found in 1 MARLIN M. VOLZ, JR., IOWA
PRACTICE SERIES § 6:32 (2009-2010 ed.), prior to drafting any
purchase agreement or offer to purchase for a client.
D. Installment contracts
1. Typically, a real estate installment contract involves a
promise by the buyer to make payments of the purchase
price to the seller in two or more installments and, in
exchange, the buyer is allowed to take possession of the
property before the full purchase price has been paid.
However, the seller retains legal title until the last
installment payment is made by the buyer. 17 DAVID M.
ERICKSON & CHRISTOPHER TALCOTT, IOWA PRACTICE SERIES §
5:1 (2009-2010 ed.).
2. Special requirements for residential installment contracts
a. Installment contracts for the purchase of residential
real estate must be recorded, by the seller, in the
county where the property is located within 90 days
of signing by the buyer and the seller. Iowa Code §
558.46(1).
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i. Failure to record the installment contract
within the necessary time frame is a public
offense punishable through criminal
prosecution and may result in a fine of up to
$100.00 per day. State of Iowa v. Wolford
Corp., 689 N.W.2d 471, 472 (Iowa 2004); Iowa
Code § 558.46(2).
b. Failure to timely record does not invalidate the
installment contract, but the remedy of forfeiture is
not available to the seller if the contract is not
recorded. Iowa Code § 558.46(3). Forfeiture is a
unique remedy for breach, which is available to
installment contract sellers under Iowa law, provided
that forfeiture is specifically authorized in the
installment contract. See Section VII, below.
c. If the seller has entered into four or more residential
real estate contracts within one year of the residential
installment contract in question, the seller is required
to make certain written disclosures (e.g. the amount
of any real estate taxes or special assessments due on
the real estate, a complete description of any
mortgages or other liens encumbering the real estate,
the mailing address of each party to the contract) to
the buyer prior to execution of the contract, which
must be dated and signed by each party to the
contract. A form disclosure statement is available
through the Iowa State Bar Association (Form 338).
The seller also must provide a complete copy of the
contract with the written disclosures and then mail a
complete copy of the contract to the buyer within 5
days of execution of the contract. Iowa Code § 558.70.
i. The written disclosures required of sellers
falling into this category are separate and
distinct from the Residential Property Seller
Disclosure Statement required by Iowa Code
Chapter 558A.
7
ii. For sellers falling into this category, the
installment contract must be recorded within
30 days, rather than 90 days. Iowa Code §
558.46(7).
iii. Certain entities, such as banks and licensed
real estate brokers while engaged in practice,
are exempted from these disclosure
requirements. Iowa Code § 558.70(4).
E. Caveat emptor (“Let the buyer beware”)
1. Historically, the doctrine of caveat emptor has “precluded
buyers of real estate from recovering damages in many cases
[where there were problems with the property subsequent to
the purchase] as it was up to the purchaser to ‘examine,
judge, and test if for himself, being bound to discover any
obvious defects.’” Arthur v. Brick, 565 N.W.2d 623, 625
(Iowa Ct. App. 1997)(quoting, in part, Swanson v. Baldwin,
85 N.W.2d 576, 578, 249 Iowa 19, 22 (1957)).
2. While the doctrine of caveat emptor has not been abolished
in Iowa, and property inspections by the buyer remain an
important step in the decision to purchase, the doctrine has
been somewhat weakened over the years, particularly as it
applies to builders of residential housing. See Iowa Code
Chapter 558A (imposing liability on sellers who fail to
disclose certain defects); Arthur v. Brick, 565 N.W.2d 623,
625 (Iowa Ct. App. 1997)(discussing the showing that must
be made in order for a purchaser to recover based on a claim
of fraudulent misrepresentation); Speight v. Walters Dev,
Co., Ltd., 744 N.W.2d 108, 114 (Iowa 2008)(extending the
availability of a claim for breach of implied warranty of
workmanlike construction against the builder of a home to
subsequent purchasers); Randa v. U.S. Homes, Inc., 325
N.W.2d 905 (Iowa Ct. App. 1982)(holding the trial court did
not err in submitting Plaintiff’s intentional infliction of
emotional distress claim against manufacturer of prebuilt
home to the jury).
8
3. In addition to property inspections by the buyer, it may also
be advisable to request express warranties from the seller if
there are concerns relating to the property.
F. Equitable conversion
1. “[A] contract for the purchase of real estate works an
equitable conversion. The contract vendee becomes the
equitable owner; the contract vendor holds title as trustee for
his purchaser.” Fellmer v. Gruber, 261 N.W.2d 173, 174
(Iowa 1978).
2. Therefore, unless the parties agree otherwise, the risk of loss
is on the purchaser once the contract is executed, even if the
seller remains in possession. Rector v. Alcorn, 241 N.W.2d
196, 200 (Iowa 1976). However, if the property is destroyed
due to the fault of one of the parties, the party at fault is
liable for the loss, regardless of which party bore the risk of
loss. See Id.
II. EXAMINING ABSTRACTS AND CURING TITLE DEFECTS
A. Examination of abstracts
1. Typically, the contract to purchase or sell land will require
the seller to provide the buyer with an abstract of title that
has been properly continued (brought up to date). If the
contract does not so provide, the seller is not obligated to
continue the abstract or to provide it to the buyer.
2. The abstract contains a summary of filed or recorded
documents affecting title to the property, allowing the buyer,
or the buyer’s attorney, to determine the condition of the
seller’s title in a timely and efficient manner.
3. The abstract should also contain a certification from the
abstractor. The abstractor’s certificate typically shows the
date through which the abstract has been continued.
4. The process used to examine the abstract varies depending
on the particular attorney. However, regardless of the
process used, the examining attorney should bear in mind
that “[t]he purpose of the examination of title should be to
secure a title for the examiner’s client which is in fact
9
marketable and which is shown by the record to be
marketable, subject to no encumbrances other than those
expressly provided for by the client’s contract. Objections
and requirements should be made only when the
irregularities or defects can reasonably be expected to expose
the purchaser or lender to the hazard of adverse claims or
litigation. The mere base possibility or remote probability
that there may be litigation with respect to the title is not
sufficient to render it unmarketable.” Iowa Land Title
Standard 1.1. For a description of the process used by one
attorney, see 1 MARLIN M. VOLZ, JR., IOWA PRACTICE SERIES §
1:4 et seq. (2009-2010 ed.).
5. Once the buyer’s attorney has examined the abstract, he or
she will typically write a preliminary title opinion, reporting
the attorney’s findings from the abstract examination and
rendering an opinion as to the state of the title and what
steps should be taken to correct any defects in title.
a. If the buyer is taking out a mortgage on the property
to finance the purchase, the lender will typically
require a preliminary title opinion addressed to the
lender.
b. A final title opinion is usually prepared by the
buyer’s attorney after any defects in title have been
corrected and the abstract has been re-continued
subsequent to the closing. The re-continued abstract
typically shows the recording of the deed conveying
the property to the buyer, the buyer’s mortgage (if
any), and other title corrective documentation.
6. Attorneys may differ as to the specific information that they
include in the title opinion but, in general, the following
information is, and should be, included:
a. An accurate legal description of the property covered
by the title opinion;
b. A statement regarding the date through which the
abstract is certified by the abstractor and the number
of entries contained in the abstract;
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c. The opinion of the attorney as to the party or parties
currently holding title to the property, based on the
attorney’s examination of the abstract;
d. A statement of all defects or objections including, but
not limited to, unreleased mortgages, unpaid taxes,
and other unreleased liens reflected on the abstract;
and
e. Information regarding special restrictions on the use
and enjoyment of the property, such as restrictive
covenants, easements, or local zoning.
7. The abstract does not show the following items and,
therefore, the attorney may want to advise in the
preliminary title opinion that the buyer make independent
inspection of these items:
a. Rights of parties in possession;
b. Easements existing by virtue of use;
c. Location of boundary lines;
d. Location of fence lines;
e. Unpaid sewage disposal bills;
f. Any labor or materials furnished the premises within
the last 90 days and still unpaid, as this would be the
subject of a lien without being shown on record;
g. Special assessments adopted by a municipality or
county which have not been certified to the County
Auditor;
h. Pendency of any action under the Iowa Dissolution of
Marriage laws, which files are sealed by law;
i. Financing statements under the Uniform Commercial
Code of Iowa and covering fixtures located upon the
real estate; and
j. Environmental audits or reports.
8. Since abstracts can be rather expensive to replace, a record
should be kept regarding who has possession of the abstract
at all times.
11
B. Iowa Land Title Standards
1. The Iowa Land Title Standards are a set of standards meant
to assist attorneys in examining abstracts and promote
consistency among attorneys in Iowa. IOWA LAND TITLE
STANDARDS, PREFACE.
2. The Title Standards were prepared and continue to be
updated by a committee appointed by the Iowa State Bar
Association and are available on the Iowa State Bar
Association’s website at http://iabar.net/. The Title
Standards cover a wide variety of topics, are presented in a
question and answer format and include citations to
authorities supporting the answer provided in the Title
Standard.
3. By way of example, Title Standard 9.1 asks: “When a will
vests the executor with unrestricted power to sell real estate,
is an order of court necessary either in connection with the
sale or the execution of the executor’s deed?” The answer
provided is “No” and the authority cited for said answer is
Iowa Code section 633.383. Title Standard 9.1 also includes a
comment which reads “[t]his is true whether the power is
mandatory or merely discretionary.”
C. Marketable Title Acts.
1. The ability to preserve an interest that is a cloud on title to
land in Iowa is limited by the Marketable Title Acts. 17
DAVID M. ERICKSON & CHRISTOPHER TALCOTT, IOWA PRACTICE
SERIES §1:1 (2009-2010 ed.).
2. An understanding of the Marketable Title Acts is important
when examining abstracts. The Title Standards contain two
chapters covering various Marketable Title Act issues and
questions. See IOWA LAND TITLE STANDARDS, CHAPTERS 10 &
11.
3. 10-year Marketable Title Acts
a. Pre-1980 claims. An action claiming an interest in
real estate that is adverse to the holder of record title
to the property, which is based on a claim that arose
or existed prior to January 1, 1980, is barred if:
12
i. The holder of record title is in possession of the
property;
ii. The holder of record title or his or her
immediate or remote grantors have held the
chain of title since January 1, 1980; and
iii. The claimant or an appropriate agent of the
claimant did not file a proper written
statement of his or her claim within 1 year of
July 1, 1991. Iowa Code § 614.17.
b. Post-1992 actions. After July 1, 1992, an action to
establish or recover a claim to or interest in real estate
is barred if:
i. The claim upon which the action is based arose
more than 10 years earlier or has existed for
more than ten years;
ii. The action is against the record titleholder who
is in possession of the property;
iii. The record titleholder or his or her immediate
or remote grantors have held chain of title to
the property for more than 10 years; and
iv. The claimant or an appropriate agent of the
claimant failed to file proper written statement
of his or her claim within 10 years of the date
on which the claim arose. Iowa Code §
614.17A.
If the written statement of claim is filed, the deadline for
filing an action is extended for 10 years, with an option to
file additional extensions. Iowa Code § 614.17A.
c. Possession by the record titleholder.
i. For both pre-1980 claims and post-1992 actions,
the requisite possession of the real estate by the
record titleholder may be shown by the filing
of an affidavit of possession by the record
titleholder. Iowa Code § 614.17(3). A form
affidavit of possession is available from the
Iowa State Bar Association (Form 154).
13
ii. “There need not be any continuity of
possession for the holder of record title so long
as he or she is actually in possession at the time
the affidavit is filed.” Schroeder v. Buegel, 371
N.W.2d 178, 179 (Iowa Ct. App. 1985).
d. Minors and persons with mental illness. Minors
and person with mental illness do not receive the
usual extension of the statute of limitations where the
10-year Marketable Title Acts are involved. Iowa
Code § 614.19.
e. Foreclosure of ancient mortgages.
i. “No action shall be maintained to foreclose or
enforce any real estate mortgage, bond for
deed, trust deed, or contract for the sale or
conveyance of real estate, after twenty years
from the date thereof, as shown by the record
of such instrument, unless the record of such
instrument shows that less than ten years have
elapsed since the date of maturity of the
indebtedness or part thereof, secured thereby,
or since the right of action has accrued thereon,
or unless the record shows an extension of the
maturity of the instrument or of the debt or a
part thereof, and that ten years from the
expiration of the time of such extension have
not yet expired.” Iowa Code § 614.21.
ii. If mortgage or other instrument is not
recorded, but is described or referred to in an
instrument that is recorded, the limitation
period is reduced to 10 years. Iowa Code §
614.21. The 10-year limitation runs either from
the:
a) due date of the unrecorded mortgage or
other instrument if said due date can be
found in the record; or
14
b) date that the instrument which refers to
the unrecorded mortgage or other
instrument was recorded. Id.
f. Actions affecting ancient deeds.
i. In general, actions to attack a tax deed,
guardian’s deed, administrator’s deed,
executor’s deed, referee’s deed, assignee’s
deed, receiver’s deed or sheriff’s deed are
barred if not brought within 10 years of the
filing of the deed, without exception for mental
illness, disability, infancy or other cause, so
long as the property described in the deed is in
the possession of the party claiming title under
the deed. Iowa Code § 614.22.
ii. An affidavit of possession may be filed to show
the requisite possession. Iowa Code § 614.23.
g. Actions based on the failure of a spouse to sign a
deed.
i. Pre-1981 claims.
a) An action to claim the interest of a
spouse in real estate, where the spouse
did not join in the deed for a
conveyance that was prior to July 1,
1981, is barred if suit for recovery was
not brought within 1 year after July 1,
1991. Iowa Code § 614.15(1). However,
where the conveying spouse was not
deceased and the distributive share had
not accrued, the nonjoining spouse had
until 2 years from July 1, 1991, to file a
notice of claim to preserve the spouse’s
claim. Id.
ii. Post-1981 claims.
a) An action to claim the interest of a
spouse in real estate, where the spouse
did not join in the deed for a
conveyance that was after July 1, 1981, is
barred if suit for recovery is not brought
15
within 10 years of the conveyance. Iowa
Code § 614.15(2).
1. However, where the conveying spouse
is not deceased and the distributive
share has not accrued, the nonjoining
spouse has 10 years from the date of the
conveyance to file a notice of claim to
preserve the spouse’s claim. Id.
2. If proper notice of claim is filed, the
limitations period is extended 10 years
and additional notices may be filed to
further extend the period. Id.
4. Stale Uses and Reversions Act
a. Actions against the holder of record title, which are
based on a reversionary interest, reverted interest or
an interest in use, are barred if:
i. The record title holder is in possession of the
property;
ii. 21 years have passed since the recording of the
deed or contract which created the interest or
since the will reserving or providing for the
interest was admitted to probate; and
iii. The claimant did not file a proper verified
claim within the 21 year period. Iowa Code §
614.24(1).1
b. The requirement of filing a verified claim does not
apply to certain reversions of railroad property. Iowa
Code § 614.24(2).
c. The filing of a proper verified claim extends the
limitation period for 21 years and additional
extensions may be filed thereafter. Iowa Code §
614.25.
d. As with the 10-year Marketable Title Acts, minors and
person with mental illness do not receive the usual
1 However, if the deed creating the interest was recorded, or the will was admitted to probate, more than
20 years prior to July 4, 1965, the claim may have been filed within one year of July 4, 1965. Iowa Code § 614.24(1).
16
extension of the statute of limitations when the Stale
Uses and Reversions Act applies. Iowa Code § 614.27.
5. 40-year Marketable Record Title Act
a. A person is deemed to have marketable record title to
an interest in land, subject to certain interests and
rights (immediately below), if the person has had an
unbroken chain of title of record to said interest in the
land for at least 40 years. Iowa Code § 614.31. The
“certain interests and rights” to which the person’s
interest in land is subject include:
i. The rights of any person arising from a period
of adverse possession or user, which was in
whole or in part subsequent to the recording of
the root of title;
ii. Any interest or defect which is inherent in the
muniments of title;
iii. Any interest preserved pursuant to Iowa Code
section 614.34.
iv. Any interest created by an environmental
covenant established pursuant to the Uniform
Environmental Covenants Act (Iowa Code
Chapter 455I);
v. Any interest of a lessor or his or her successor
as a reversioner of the right to possession at the
expiration of a lease;
vi. Any easement or interest in the nature of an
easement, the existence of which is apparent
from or can be proved by physical evidence of
its use;
vii. Any interest arising out of a title transaction
that was recorded after the root of title,
provided however that such recording will not
revive or give validity to any interest
extinguished prior to the root of title; and
viii. Any interest of the United States. Iowa Code §
614.32.
17
b. Iowa Code section 614.34 provides that a person
claiming an interest in land may preserve their
interest by filing a proper verified notice of their claim
within the 40-year period. The 40-year period is not
tolled by disability or lack of knowledge, but the
notice may be filed by a party acting on behalf of the
disabled party or one who is unable to assert the
claim on their own behalf or a member of a class that
is uncertain. Iowa Code § 614.24(1).
c. Iowa Code Section 614.34 further provides that “[i]f
the same record owner of any possessory interest in
land has been in possession of such land continuously
for a period of forty years or more, during which
period no title transaction with respect to such
interest appears of record in the chain of title, and no
notice [of claim] has been filed…and such possession
continues to the time when marketability is being
determined, such period of possession shall be
deemed equivalent to the filing of the notice
immediately preceding the termination of the forty-
year period.”
d. The 40-year Marketable Record Title Act explicitly
provides that it is to “be liberally construed to effect
the legislative purpose of simplifying and facilitating
land title transactions by allowing persons to rely on a
record chain of title as described in section 614.31,
subject only to such limitations as appear in section
614.32.” Iowa Code § 614.30.
D. Title Guaranty
1. The sale of private title insurance in not permitted in Iowa.
Iowa Code § 515.48.
2. Consequently, the Iowa Legislature created Title Guaranty, a
division of Iowa Finance Authority, “to operate a program
that offers guaranties of real property titles in order to
provide, as an adjunct to the abstract-attorney’s title opinion
system, a low-cost mechanism to facilitate mortgage lenders’
18
participation in the secondary market and add to the
integrity of the land-title transfer system in the state.” Iowa
Admin. Code § 265-9.3(16).
3. Title Guaranty provides a manual containing a wealth of
information about the program, which can be found at:
http://www.iowafinanceauthority.gov/en/title_guaranty_
division/forms_documents/
4. Prior to the issuance of a title guaranty, the abstract to the
property for which the guarantee is sought must be brought
up to date and certified by an abstractor participating in the
title guaranty program and an attorney participating in the
program (“participating attorney”) must render a title
opinion. Iowa Code § 16.91(6).
5. Participating Attorneys. In order to qualify as a
participating attorney, the attorney must sign an Attorney
Participation Agreement, pay an annual renewal fee of
$25.00 and complete an annual questionnaire. TITLE
GUARANTY MANUAL, ARTICLE I, SECTION 1.01. As part of the
Attorney Participation Agreement, the attorney agrees to
“examine real estate titles in accordance with the most recent
Iowa Land Title Examination Standards of the Iowa Bar
Association, where applicable” and that any title opinion
issued by the attorney can be relied upon by Title Guaranty
in issuing guarantees as to the property. Id.
6. Services offered by Title Guaranty:
a. Commitments. A commitment is a written promise
from Title Guaranty that it will issue a Title Guaranty
certificate once any required premium is paid and any
requirements for ensuring title is marketable are met,
subject to certain conditions. TITLE GUARANTY
MANUAL, ARTICLE II, SECTION 2.01. The commitment
is issued at or around the time of the preliminary title
opinion, if at all. 17 DAVID M. ERICKSON &
CHRISTOPHER TALCOTT, IOWA PRACTICE SERIES §7:8
(2009-2010 ed.).
b. Owner’s Certificates.
19
i. Subject to the exclusions, exceptions and
conditions listed in the certificate, a Title
Guaranty Owner’s Certificate protects the
property owner against risks including, but not
limited to:
a) Unmarketable title;
b) Title being vested in a third party;
c) Defects in or liens or encumbrances on
title; and
d) A lack of right of access to the property.
TITLE GUARANTY MANUAL, ARTICLE III,
SECTION 3.04.
ii. The Title Guaranty Owner’s Certificate also
guarantees that Title Guaranty will pay
attorney’s fees and other costs and expenses
incurred in defending a guaranteed matter,
subject to certain conditions. TITLE GUARANTY
MANUAL, ARTICLE III, SECTION 3.04.
c. Lender’s Certificates.
i. Subject to the exclusions, exceptions and
conditions listed in the certificate, a Title
Guaranty Lender’s Certificate protects the
lender against the same risks that are covered
by an Owner’s Certificate, in addition to
guaranteeing against invalidity or
unenforceability of the mortgage lien or lack of
priority over other liens, among other things.
TITLE GUARANTY MANUAL, ARTICLE III, SECTION
3.01.
ii. The Title Guaranty Lender’s Certificate also
guarantees that Title Guaranty will pay
attorney’s fees and other costs and expenses
incurred in defending a guaranteed matter,
subject to certain conditions. TITLE GUARANTY
MANUAL, ARTICLE III, SECTION 3.01.
d. Endorsements. The coverage provided by an
Owner’s Certificate or a Lender’s Certificate may be
20
modified by an Endorsement. TITLE GUARANTY
MANUAL, ARTICLE IV.
e. Rapid Certificates. If the necessary conditions are
met, a Title Guaranty Certificate may be issued
through the Rapid Certification Program before a
paid mortgage has actually been released of record.
TITLE GUARANTY MANUAL, ARTICLE I, SECTION 1.01. If
a Rapid Certificate is issued and the paid but
unreleased mortgage is not paid within 4 months of
the closing of the guaranteed mortgage, the
participating attorney or other party responsible for
issuing the Rapid Certificate is required to apply to
Title Guaranty for a release of the mortgage. See
TITLE GUARANTY MANUAL, ARTICLE I, SECTION 1.01.
f. Closing Protection Letters. Title Guaranty “may issue
a closing protection letter to a person to whom a
proposed title guarantee is to be issued, upon the
request of the person, if the division issues a
commitment for title guaranty or title guarantee
certificate. The closing protection letter…may
indemnify a person to whom a proposed title
guaranty is to be issued against loss of settlement
funds due to only the following actions of the
division’s named participating attorney, participating
abstractor, or closer:
i. Theft of settlement funds.
ii. Failure by the participating attorney,
participating abstractor, or closer to comply
with written closing instructions of the person
to whom a proposed title guaranty is to be
issued relating to title certificate coverage
when agreed to by the participating attorney,
participating abstractor, or closer.” Iowa Code
§ 16.93.
The Closing Protection Letter is only available if the
participating attorney, participating abstractor or
21
closer is an authorized “division closer.” See Iowa
Admin. Code § 265-9.6(8).
g. Mortgage release certificates. If the final payment on
a mortgage is made in accordance with a payoff
statement, and 30 days have elapsed since said
payment and no mortgage release has been filed, the
lender or closer may request a mortgage release
certificate from Title Guaranty. Iowa Code § 16.92(2).
i. At least 30 days prior to executing any
certificate of release, Title Guaranty must send
a written notice of its intent to issue a
certificate of release to the mortgage servicer.
Iowa Code § 16.92(2).
ii. Mortgage release certificates are only available
if the original principal amount of the
mortgage, including any future advances, is
equal to or less than a certain amount. Iowa
Code § 16.92(8); Iowa Admin. Code § 265-
9.9(1).
7. Claims. If an attorney or abstractor receives notice of a
claim of potential loss or damage that might be covered by
any of the Title Guaranty services listed immediately above,
or for which Title Guaranty may be liable, the attorney
abstractor must provide written notification of such claim to
Title Guaranty within three business days, or possibly
sooner. Iowa Admin. Code § 265-9.11(2). Depending on the
circumstances, the attorney may or may not have to
reimburse Title Guaranty for any losses paid on the claim by
Title Guaranty. See Iowa Admin. Code § 9.11(3).
E. Curing title defects
1. The seller is typically responsible for curing any defects in
title identified in the preliminary title opinion of the buyer’s
attorney.
2. Defects cured by affidavit. “Affidavits explaining any
defect in the chain of title to any real estate may be recorded
as instruments affecting the same, but no one except the
22
owner in possession of such real estate shall have the right to
file such affidavit. Such affidavit or the record thereof,
including all such affidavits now of record, shall raise a
presumption from the date of recording that the purported
facts stated therein are true; after the lapse of three years
from the date of such recording, such presumption shall be
conclusive.” Iowa Code § 558.8.
a. An affidavit may be used to clarify an ambiguous
matter in the record or to set out facts showing that a
party who appears to have an interest in the property,
or used to have an interest, does not actually have any
such interest. 1 MARLIN M. VOLZ, JR., IOWA PRACTICE
SERIES § 2:2 (2009-2010 ed.). However, the affidavit
“cannot be used to cut off an existing interest of
record in another person.” Id.
b. “Affidavits or recitals should be made by persons
competent to testify in court, state facts rather than
conclusions and disclose the basis of the maker’s
knowledge. The value of an affidavit or recital is not
necessarily diminished by the fact that the maker is
interested in the title or the subject matter of the
affidavit or recital. However, the examiner should
consider the maker’s knowledge and interest in the
transaction.” IOWA LAND TITLE STANDARD 8.8.
3. Examples of curative affidavits.
a. Affidavit of identity. The Affidavit of identity can be
used to correct defects such as:
i. Name variations, such as where a person takes
title as a single person but later conveys using
their married named, without a recital in the
conveyance as to their former name. See IOWA
LAND TITLE STANDARD 8.4; 1 MARLIN M. VOLZ,
JR., IOWA PRACTICE SERIES § 2:31 (2009-2010 ed.).
a) If an actual correction to the name rather
than a mere clarification is needed, a
quit claim deed should be used instead
of an affidavit. 1 MARLIN M. VOLZ, JR.,
23
IOWA PRACTICE SERIES § 2:15 (2009-2010
ed.).
ii. An ambiguity arising from identical names, as
where the record reflects a judgment against
Tom Thompson, but it is not the same Tom
Thompson who is involved in the real estate
transaction in question. See 1 MARLIN M. VOLZ,
JR., IOWA PRACTICE SERIES § 2:23 (2009-2010 ed.).
b. Affidavit of no interest. Stray deeds between persons
having no apparent interest in the property may be
corrected by obtaining an affidavit or disclaimer from
the grantee in the stray deed, stating that they have
no interest in the property. IOWA LAND TITLE
STANDARD 4.5
i. A corrective deed, stating the true facts and
that the description in the prior deed was in
error, may also be used in this situation. Id.
c. Affidavit as to homestead. Where one spouse did not
join in the granting clause of a deed by a husband and
wife, and the deed contains a release of dower but not
a release of homestead, and the defect cannot be
cured by operation of Iowa Code section 614.15, the
defect can be cured by obtaining an affidavit stating
that the property was not occupied by the husband
and wife as a homestead on the date of execution and
delivery of the deed. IOWA LAND TITLE STANDARD 5.5.
d. Affidavit of death terminating life estate. See Iowa
State Bar Association Form 179 (2005).
e. Affidavit of certain surviving of joint tenants for
change of title to real estate. See Iowa State Bar
Association Form 339 (2006).
f. Affidavit of surviving spouse for change of title to
real estate held in joint tenancy. See Iowa Code §
558.66.
4. Defects cured by quit claim deed. A quit claim deed can
also be used to cure a variety of defects including, but not
24
limited to, defects arising from one of “the following
instances:
a. Where one of several owners does not join in a
conveyance.
b. Where one of the spouses has not joined in a
conveyance and the property is not a homestead…
c. Where there has been a jurisdictional defect in a
foreclosure or a quiet title action as to a person with
an interest.
d. Where there is a doubtful conveyance by a
conservator, or where a minor was not represented in
a court proceeding by a guardian ad litem, and the
minor has since reached majority.
e. Where there is a questionable administrator's or
executor's deed, and the heirs or devisees have been
determined.
f. Where there is an outstanding interest in a contract
for a deed or real estate contract.
g. Where there is an outstanding life estate.
h. Where there are contingent remaindermen.
i. Where there is an unexpired option or a lease with an
option.
j. Where there is an outstanding lease.
k. Where there are doubtful tax sale proceedings.
l. Where the divorce decree does not vest title in one of
the parties...” 1 MARLIN M. VOLZ, JR., IOWA PRACTICE
SERIES § 2:13 (2009-2010 ed.).
A quit claim deed may also be used to release an easement
or similar interest. Id. at § 2:16.
5. Defects cured by operation of law. Certain defects in title
may be cured by operation of Iowa’s Marketable Title Act,
described above, or a legalizing act adopted by the Iowa
General Assembly. The majority of said legalizing acts can
be found in Volume VI, Title XIV, Subtitle 4 of the Code of
Iowa and a comprehensive list of legalizing acts is contained
in Volume 38 of the Iowa Code Annotated (1992). For
25
example, one such legalizing act provides that
acknowledgements taken by notaries outside of their
jurisdiction are legalized and declared valid if more than ten
years have passed since the taking of the acknowledgment.
Iowa Code § 586.1(2).
III. MECHANIC’S LIENS
A. Persons entitled to a mechanic’s lien. “Every person who shall
furnish any material or labor for, or perform any labor upon, any
building or land for improvement, alteration, or repair thereof,
including those engaged in the construction or repair of any work of
internal or external improvement, and those engaged in grading,
sodding, installing nursery stock, landscaping, sidewalk building,
fencing on any land or lot, by virtue of any contract with the owner,
contractor or subcontractor shall have a lien upon such building or
improvement, and land belonging to the owner on which the same is
situated or upon the land or lot so graded, landscaped, fenced, or
otherwise improved, altered, or repaired, to secure payment for the
material or labor furnished or labor performed.” Iowa Code §
572.2(1).
1. The required contract with the owner, contractor or
subcontractor may be express or implied. A & W Elec.
Contractors, Inc. v. Petry, 576 N.W.2d 112, 114 (Iowa 1998).
2. The contract must be substantially complied with by the
party seeking the mechanic’s lien or the mechanic’s lien will
not be enforceable. Bidwell v. Midwest Solariums, Inc., 543
N.W.2d 293, 295 (Iowa Ct. App. 1995).
3. The definition of “material” provided in Iowa Code §
572.1(3) is broad and various items not expressly listed in the
statute may be lienable if they are provided for in the
contract. See Crane Co. v. Westerman, 233 Iowa 1394, 1397-
98, 8. N.W.2d 412, 413-14 (Iowa 1943)(allowing lien to
include mileage, lodging and board where contract provided
that payment was to include these items). But see Farmers
Co-op Co. v. DeCoster, 528 N.W.2d 536, 539 (Iowa
1995)(holding that gasoline, diesel and petroleum are not
lienable items under the mechanic’s lien statute).
26
4. A person who rents materials to the owner, contractor or
subcontractor is also entitled to a mechanic’s lien for the
reasonable rental value during any period of actual use and
any reasonable period of nonuse taken into account in the
rental agreement. Iowa Code § 572.2(2).
5. There can be no valid mechanic’s lien if no improvement
was made to the land. Gollehon, Schemmer & Assoc., Inc. v.
Fairway-Bettendorf Assoc., 268 N.W.2d 200, 201 (Iowa
1978)(holding architect’s lien was invalid where architect’s
services were not used past the planning stage, due to
abandonment of project).
6. If collateral security was taken by a party at the time of
making the contract or during the progress of the work, that
party will not be entitled to a mechanic’s lien. Iowa Code §
572.3. But see Iowa Code § 572.4 (providing that, unless
expressly agreed otherwise, the taking of security after
completion of the work does not affect the right to establish
a mechanic’s lien).
B. Perfection of the mechanic’s lien
1. The mechanic’s lien must be perfected before any action can
be brought to enforce the lien. Iowa Code § 572.24.
2. A mechanic’s lien is perfected by posting a notice to the
Secretary of State’s Mechanics’ Notice and Lien Registry
website (effective January 1, 2013), along with a verified
statement of account of the demand due, after allowing all
credits. Iowa Code § 572.8(1). Said statement must set forth
the following:
a. The dates on which the material or labor was first and
last furnished;
b. The legal description of the property to be charged
with the lien;
c. The name and last known mailing address of the
property owner;
d. The address of the property; and
e. The tax parcel identification number. Id.
27
3. Upon posting of the lien, the Secretary of State will mail a
copy of the lien to the owner. Iowa Code § 572.8(2).
4. A form of the required verified statement is available
through the Iowa State Bar Association (Form 137) and can
also be found in 3 MARLIN M. VOLZ, JR., IOWA PRACTICE
SERIES § 34:25 (2009-2010 ed.).
5. A general contractor is required to send an “Owner Notice”
to the owner of the property if the general contractor has or
will contract with a subcontractor to provide labor or furnish
material for the property. Iowa Code § 572.13(1). This can be
included in the building contract or sent in a separate letter.
a. The “Owner Notice” requires the following specific
language to be included:
“Persons or companies furnishing labor or materials
for the improvement of real property may enforce a
lien upon the improved property if they are not paid
for their contributions, even if the parties have no
direct contractual relationship with the owner. The
mechanics’ notice and lien registry provides a
listing of all persons or companies furnishing labor
or materials who have posted a lien or who may post
a lien upon the improved property.”
Iowa Code § 572.13(1).
b. The notice shall also contain the internet website
address and the toll-free telephone number of the
Mechanics’ Notice and Lien Registry. Iowa Code §
572.13(2).
6. A general contractor is also required to post a
“Commencement of Work Notice” on the Secretary of State’s
Mechanic’s Notice and Lien Registry website within ten
days of starting work. Iowa Code § 572.13A(1). This notice is
only effective as to any labor performed or material
provided after the posting has been made. Id. The Secretary
of State will send a copy of the “Commencement of Work
Notice” to the owner. Iowa Code § 572.13A(3)(a).
7. In order to preserve the right to a lien upon an improved
property, a subcontractor must post a “Preliminary Notice”
to the Mechanics’ Notice and Lien Registry website. Iowa
28
Code § 572.13B(1). The subcontractor should post the notice
within 90 days from the last day on which labor was
performed or material was provided. However, as long as
the notice is posted before the balance due to the general
contractor has been paid, the notice is effective as to all labor
performed and materials provided to the property by the
subcontractor. Id.
a. Upon the posting of the “Preliminary Notice” to the
website, the Secretary of State will send a notification
to the owner. Iowa Code § 572.13B(2).
b. The subcontractor has the burden of proving whether
or not the owner actually received the notice. Upon
request, the Secretary of State will provide an
affidavit of mailing at no cost. Iowa Code §
572.13B(3)(b)(1).
8. A principal contractor or subcontractor has two years and 90
days after the date on which the last labor or material was
furnished in order to perfect its lien. Iowa Code § 572.9.
However, in order to avoid additional restraints and
limitations on the mechanic’s lien, and preserve any priority
to which the lien may be entitled, the lien should be
perfected within 90 days of the furnishing of the last labor or
material. See Iowa Code §§ 572.10; 572.11; 572.14; 572.17;
572.18 and 572.20. Examples of additional restraints and
limitations imposed for failing to perfect the lien within 90
days include, but are not limited to, the following:
a. If the lien is not perfected within the initial 90 days,
the claimant is required to give written notice of the
claim to the property owner, served in the manner
original notices are required to be served, in addition
to filing the claim with the Clerk of Court. Iowa Code
§ 572.10.
b. If the lien is not perfected within the initial 90 days, a
subcontractor’s mechanic’s lien will generally be
limited to the balance still owed by the property
owner to the primary contractor on the date of service
29
of the written notice of the claim on the owner. Iowa
Code § 572.11.
C. Priority of the mechanic’s lien
1. As between mechanic’s liens, priority is determined in the
order of the filing of the verified statements of account
required to perfect a mechanic’s lien. Iowa Code § 572.17.
2. If the mechanic’s lien is perfected within the initial 90 days,
the mechanic’s lien is “superior to all other liens which may
attach to or upon a building or improvement and to the land
upon which it is situated, except liens of record prior to the
time of the original commencement of the claimant’s work
or the claimant’s improvements” and construction mortgage
liens recorded prior to the commencement of the claimant’s
particular work or improvement. Iowa Code § 572.18(1) &
(2).
3. If the mechanic’s lien is not perfected within the initial 90
days, the mechanic’s lien is inferior to the rights of
subsequent good faith purchasers and encumbrancers for
value without notice of perfection of the mechanic’s lien.
Iowa Code § 572.18(3).
4. Mechanic’s liens have priority over all garnishments of the
owner for contract debts. Iowa Code § 572.19.
5. Except as provided in Iowa Code sections 572.10 and 572.11,
a mechanic’s lien attaches to the building or improvement
for which the labor or material was furnished or done, in
preference to any prior liens, encumbrances or mortgages on
the land upon which the building or improvement is
situated or was erected. Iowa Code § 572.20. See also Iowa
Code § 572.21 (relating to foreclosure of mechanic’s liens
when there is a superior lien, encumbrance or mortgage
upon the land).
6. County tax liens have priority over mechanic’s liens.
Barker’s Inc. v. B.D.J. Dev. Co., 308 N.W.2d 78, 83 (Iowa
1981).
D. Special limitations on mechanic’s liens
30
1. Multiple unit cooperative or condominium housing. When
seeking to enforce a lien against a good faith purchaser of an
owner-occupied unit in a multiple unit cooperative or
condominium, the verified statement of account that is filed
to perfect the mechanic’s lien must specifically describe the
particular unit in order to be enforceable. Iowa Code §
572.31.
2. Owner-occupied dwellings. Where the contract involves an
owner-occupied dwelling, the original contractor is required
to give certain notices to the owner if the original contractor
uses subcontractors. See Iowa Code § 572.13(2). Other
claimants for labor or materials furnished for or upon an
owner-occupied dwelling also need to give the owner a
particular notice. See Iowa Code § 572.14(3). Furthermore,
unless otherwise agreed, a principal contractor who uses
subcontractors on an owner-occupied dwelling is required to
pay the subcontractors in full within 30 days of receiving full
payment from the owner. Iowa Code § 572.30.
3. Sub-subcontractors. A person furnishing labor or material to
a subcontractor is not entitled to a mechanic’s lien unless
that person does both of the following.
a. Provides the principal contractor with a one-time
written notice, within 30 days of first furnishing the
labor or materials, stating:
i. The name, mailing address and telephone
number of the person furnishing the labor or
materials and
ii. The name of the subcontractor to whom the
labor or materials were furnished.
b. Supports the claim for a mechanic’s lien with a
certified statement that the principal contractor was
given the required notice within 30 days of first
furnishing the labor or materials. Iowa Code § 572.33.
E. Discharge of the mechanic’s lien
The owner, principal contractor or intermediate subcontractor may
discharge the mechanic’s lien at any time by filing a bond with the
31
Clerk of Court in the proper county, which is twice the amount of
the mechanic’s lien, with sureties approved by the Clerk,
conditioned for the payment of any judgment upon the claim. Iowa
Code § 572.15.
F. Actions to enforce or challenge the mechanic’s lien
1. An action to enforce a mechanic’s lien, or upon the bond
given in lieu thereof, may be brought once the lien has been
perfected. Iowa Code § 572.24.
2. The action to enforce the mechanic’s lien must be brought in
the county in which all or part of the property affected by
the lien is located. Iowa Code § 572.25.
3. There is a two year statute of limitations for bringing an
action to enforce the mechanic’s lien, which begins to run 90
days after the date on which the last of the material is
furnished or the last of the labor is performed. Iowa Code §
572.27.
a. However, if the property owner serves a written
demand on the lienholder requiring the lienholder to
commence an action to enforce the mechanic’s lien,
the action to enforce the mechanic’s lien must be
commenced within 30 days or the lien is forfeited.
Iowa Code §572.28.
4. The action to enforce the mechanic’s lien is tried in equity
and joinder of other causes of action is not permitted. Iowa
Code § 572.26. However, when the action is an action to
challenge a mechanic’s lien, permissible claims and
counterclaims may be joined in the action. Iowa Code §
572.24(2).
5. A form of the Petition in Equity can be found in 3 MARLIN M.
VOLZ, JR., IOWA PRACTICE SERIES § 34:26 (2009-2010 ed.). The
owner, all parties in possession of the property and all other
parties who claim an interest in the property should be
named as defendants in the action to enforce the mechanic’s
lien and must be served with original notice as provided in
the Iowa Rules of Civil Procedure.
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6. The Plaintiff’s remedy in an action to enforce a mechanic’s
lien is foreclosure and sale of the premises.
7. Attorney fees:
a. If the Plaintiff in an action to enforce a mechanic’s lien
furnished labor or materials directly to the Defendant,
the Plaintiff may be awarded reasonable attorney fees
if the Plaintiff prevails in the action. Iowa Code §
572.32(1).
b. If the mechanic’s lien was filed on an owner-occupied
dwelling, the Plaintiff in an action challenging the
mechanic’s lien may be awarded reasonable attorney
fees and actual damages if the Plaintiff prevails in the
challenge. Iowa Code § 572.32(2). The owner will
also be entitled to an amount not less than $500.00 or
the amount of the lien, whichever is less, if the court
finds that the mechanic’s lien was filed in bad faith or
the supporting affidavit was false. Id.
G. Actions by a subcontractor against a principal contractor
1. If the principal contractor on an owner-occupied building
fails, without due cause, to pay a subcontractor in full within
30 days of full payment from the owner, and the parties did
not agree to different payment terms, the subcontractor may
commence an action against the principal to collect the
amount due. Iowa Code § 572.30. The action against the
principal contractor may also be brought by an owner by
subrogation. Id.
2. However, prior to initiating any such an action against the
principal contractor, the subcontractor or owner must give
proper written notice of the nonpayment to the principal
contractor. Id.
3. If an action against the principal contractor is brought,
exemplary damages may be available, in addition to actual
damages. See Id.
H. Satisfaction of the mechanic’s lien
If the claim is paid, thereby satisfying the mechanic’s lien, the
claimant is required to post a “Satisfaction of Lien Notice” to the
33
Mechanics’ Notice and Lien Registry website. Iowa Code § 572.23.
If the claimant fails to do so for thirty days after being personally
served with a written demand, the claimant is required to pay
$25.00 to the owner or contractor and is liable to any party injured
by the claimant’s failure to acknowledge satisfaction. Id.
a. If payment is made to the general contractor by the owner
within 90 days on which the last labor was performed or the
last material was provided, the owner will still liable to the
subcontractor for the full amount. Iowa Code § 572.14.
IV. OTHER MISCELLANEOUS LIENS ON PROPERTY
A. Real estate tax liens
1. “Real estate taxes become liens on the assessed real estate
against all persons except the State and are first liens
superior to all other encumbrances.” Merv E. Hilpipre
Auction Co. v. Solon State Bank, 343 N.W.2d 452, 455 (Iowa
1984); Iowa Code § 445.28.
2. The remedy available to counties for collection of delinquent
taxes is an annual tax sale, which is held on the third
Monday in June. Hilpipre Auction Co. at 456; Iowa Code §
446.7.
B. Special assessments
1. “A city may assess to private property within the city the
cost of construction and repair of public improvements
within the city, and main sewers, sewage pumping stations,
disposal and treatment plants, waterworks, water mains,
extensions, and drainage conduits extending outside the
city.” Iowa Code § 384.38.
2. The primary purpose of special assessments is to require
private property owners who receive a special benefit from a
public improvement to reimburse the city for that special
benefit. Uhlenhake v. City of Ossian, 418 N.W.2d 642, 646
(Iowa 1988).
a. Therefore, the amount of the special assessment
cannot exceed the special benefit conferred on the
private property. See Iowa Code § 384.61.
34
3. Once the city has followed the proper procedures for
adopting a Resolution of Necessity for the special
assessments, and the Resolution of Necessity, plat, and
schedule of assessments has been filed with the county
treasurer, the special assessments, with interest, become a
lien on the benefited properties until paid. Iowa Code §
384.65(5).
4. Liens for special assessments are not divested by judicial sale
and have equal priority with ordinary taxes. Iowa Code §
384.65(5).
5. The statute of limitations and procedure for challenging a
special assessment in district court is found in Iowa Code §
384.66.
C. State income tax liens
1. Unpaid state income taxes, including any interest, penalty or
costs that accrue, are liens upon all of the taxpayer’s
property, both real and personal. Iowa Code § 422.26(1).
2. The lien attaches when the tax becomes due and payable and
continues for 10 years unless discharged or released. Iowa
Code § 422.26(2). The lien may also be extended for an
additional 10 years if the proper notice is filed. Id.
D. Federal income tax liens
1. Federal taxes, including interest, additions, penalties and
costs that accrue, are a lien upon the taxpayer’s property,
both real and personal, if the taxes remain unpaid by the
taxpayer after demand. 26 U.S.C. § 6321.
2. The government perfects its federal tax lien against
purchasers, holders of security interests, judgment lien
creditors and mechanic’s lienors, by filing a Notice of
Federal Tax Lien. 26 U.S.C. § 6323(a).
a. Even if a Notice of Federal Tax Lien is filed, certain
interests are given special protection. See 26 U.S.C. §
6323(b)-(e).
b. Furthermore, in order to continue the effect of the
Notice of Federal Tax Lien, the government must re-
file the Notice during “the one-year period ending 30
35
days after the expiration of 10 years after the date of
assessment of the tax” or, for subsequent re-filings,
during “the one-year period ending with the
expiration of 10 years after the close of the preceding
required refilling period for such notice of lien.” 26
U.S.C. § 6323(g). See also 26 C.F.R. § 301.6323(g)-1.
3. In general, the government may only collect the tax by levy
or court proceedings if the levy or court proceedings to
collect the tax are commenced within the 10 years following
assessment of the tax. 26 U.S.C. § 6502(a)(1).
E. Federal estate tax liens
1. Generally, federal estate taxes are a lien on the property in
the gross estate of the decedent for 10 years from the date of
death, unless the taxes are paid or become unenforceable
due to lapse of time. 26 U.S.C. § 6324(a)(1).
2. However, the part of the gross estate that is used to pay the
expenses of estate administration and charges against the
estate, as allowed by the court, is divested of the estate tax
lien. Id.
F. Federal gift tax liens
Generally, gift taxes are a lien upon all property contained in the
gift(s) for which the particular return is filed, for a period of 10 years
from the date of the gift(s), unless the gift tax is paid or becomes
unenforceable due to lapse of time. 26 U.S.C. § 6324(b).
G. Inheritance tax liens
1. With the exception of property passing to the surviving
spouse and certain relatives of the decedent, Iowa’s
inheritance tax is a lien upon the estate subject to tax “and all
property of the estate or owned by the decedent from the
death of the decedent until paid…” Iowa Code § 450.7(1).
2. The inheritance tax lien is no longer enforceable after 10
years from the date of death of the decedent, except to the
extent taxes can be attributed to deferred or remainder
interests and have been properly deferred. Iowa Code §
450.7(1).
36
3. The state is not required to record notice of the inheritance
tax lien. Iowa Code §450.7(2).
4. A conveyance of property that is subject to an inheritance
lien does not discharge the inheritance tax lien, unless it is a
“sale, exchange, mortgage, or pledge of property by the
personal representative pursuant to a testamentary direction
or power, pursuant to section 633.387, or under order of
court…” Iowa Code §§ 450.17 & 450.7(3).
H. Judgment liens
1. A judgment in the district or appellate courts of Iowa, or in
the Iowa federal district courts or the Eighth Circuit Court of
Appeals, is a lien upon any real estate the defendant owned
at the time of the judgment, or which was acquired by the
defendant after the judgment, for a period of 10 years from
the date of judgment. Iowa Code § 624.23(1).
a. However, judgment liens usually do not attach to real
estate of the defendant which is occupied as a
homestead. See Iowa Code § 624.23(2).
b. Furthermore, the judgment lien will not attach to real
estate acquired by the defendant subsequent to the
judgment if the defendant’s personal liability on the
judgment has been discharged in bankruptcy. Iowa
Code § 624.23(3).
2. If the judgment was rendered by the Iowa Supreme Court or
the Iowa Court of Appeals, or the defendant’s real estate is
located outside of the county where the judgment was
rendered, a verified copy of the judgment must, in most
cases, be filed with the Clerk of Court of the county in which
the real estate lies before the judgment lien will attach to the
real estate. Iowa Code § 624.24.
3. “A court-ordered child support judgment becomes a lien
when payment is due.” Broyles v. Iowa Dept. of Social
Serv., 305 N.W.2d 718, 721 (Iowa 1981).
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I. Mortgage liens
1. A lien arising from a mortgage or other pledge of real estate
as security attaches to the real estate described in the
instrument.
2. The mortgage lien is valid against subsequent purchasers for
value, without actual notice of the lien, only if it is filed and
recorded in the county where the real estate is situated.
Iowa Code § 558.41.
3. Priority of mortgage liens:
a. In general, priority of mortgages is determined by the
date of filing of the mortgage.
b. However, purchase money mortgages “have priority
over and [are] senior to preexisting judgments against
the purchaser and any other right, title, interest, or
lien arising either directly or indirectly by, through or
under the purchaser[,]” so long as the mortgage states
that it is a purchase money mortgage. Iowa Code §
654.12B.
i. A purchase money mortgage is a mortgage
that is either:
a) Taken by a lender who is providing
funds to allow the buyer to acquire
rights in the real estate; or
b) Taken by the seller to secure all or part
of the purchase price of the real estate.
Id.
c. Furthermore, if a prior recorded mortgage contains a
proper notice regarding potential future loans and
advancements, amounts later loaned or advanced
pursuant to the prior mortgage may be senior to
indebtedness under subsequently recorded
mortgages or liens, even if the prior mortgagee had
actual notice of the indebtedness under the
subsequent mortgage or lien at the time the additional
amounts were loaned or advanced by the prior
mortgagee. Iowa Code § 654.12A.
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J. Homestead exemption
1. “The homestead of every person is exempt from judicial sale
where there is no special declaration of statute to the
contrary.” Iowa Code § 561.16.
2. However, certain classes of debts may be satisfied by a sale
of the homestead, including, but not necessarily limited to:
a. Debts contracted prior to acquisition of the
homestead, but only to the extent necessary to satisfy
any deficiency remaining after exhausting the
debtor’s non-exempt property;
b. Debts “incurred for work done or material furnished
exclusively for the improvement of the homestead”;
c. Debts created by a written contract expressly
stipulating that the homestead will be liable and
signed by the person(s) having power to convey the
property, but only to the extent necessary to satisfy
any deficiency remaining after exhausting all other
property pledged for payment of the debt by the same
contract; and
d. Debts for which the property could be sold, if it had
never been held as a homestead, if the debtor is
deceased and has no survivor or issue. Iowa Code §
561.21.
3. If a written contract contains a waiver of the homestead
exemption, and the contract affects agricultural land or
dwellings, buildings or appurtenances located on the land,
the contract must contain the following statement in bold
type that is at least 10 points in size and must be signed and
dated by the person waiving the exemption: “I understand
that homestead property is in many cases protected from
claims of creditors and exempt from judicial sale; and that
by signing this contract, I voluntarily give up my right to
this protection for this property with respect to claims based
upon this contract.” Iowa Code § 561.22. This requirement
only applies if the agricultural land in question is 40 acres or
more. Id.
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V. QUIET TITLE ACTIONS
A. Persons entitled to bring a quiet title action. “An action to
determine and quiet the title of real property may be brought by
anyone, whether in or out of possession, having or claiming an
interest therein, against any person claiming title thereto, though not
in possession.” Iowa Code § 649.1.
B. Function of the quiet title action. The essential function of an action
to quiet title is to remove all clouds on the title of the Plaintiff, not
merely to settle a particular claim. Smith v. Cretors, 181 Iowa 189,
164 N.W. 338, 340-41 (1917).
1. The decree quieting title only bars the claims of parties who
are named as defendants in the action and properly served
with notice of the action. Therefore, any parties that might
possibly have a claim, which could cloud the Plaintiff’s title to
the property, including successors in interest and spouses,
should be named in the action. 1 MARLIN M. VOLZ, JR., IOWA
PRACTICE SERIES §3:2 (2009-2010 ed.). Furthermore, it may be
advisable to include as defendants “any unknown claimants
of the real estate.”
2. Examples of clouds on title that may be removed by an
action to quiet title include:
a. Unreleased mortgages, where the mortgage has been
paid in full but the mortgagee is unwilling to provide
a release;
b. Disputes as to boundaries; and
c. Gaps in title that cannot be cured by other curative
acts.
C. Nature of the action to quiet title. Actions to quiet title are tried by
equitable proceedings. Iowa Code § 649.6.
D. Content of the petition to quiet title.
1. The petition must be under oath and must include the
following:
40
a. A statement of the nature and extent of the Plaintiff’s
estate;
b. An accurate description of the property;
c. A statement that “the [Plaintiff] is credibly informed
and believes the [D]efendant makes or may make
some claims adverse to the [Plaintiff]”; and
d. A prayer “for the establishment of the [P]laintiff’s
estate, and that the [D]efendant be barred and forever
estopped from having or claiming any right or title to
the premises adverse to the [P]laintiff.” Iowa Code §
649.2.
i. If the Plaintiff is not currently in possession of
the property, the prayer may also ask for
recovery of possession of the property. Bates
v. Bates, 237 Iowa 1408, 24 N.W.2d 460, 463
(1946).
2. A form Petition in Equity to Quiet Title can be found in 1
MARLIN M. VOLZ, JR., IOWA PRACTICE SERIES §3:11 (2009-2010
ed.).
E. Service of notice.
1. All defendants must be properly served with notice of the
action to quiet title and the notice must accurately describe
the property and the nature and extent of the Plaintiff’s
claim. Iowa Code § 649.3.
2. Service of the notice must comply with the Iowa Rules of
Civil Procedure and be served as in other cases. See Iowa
Code § 649.3.
a. Personal service should be used, if possible. Service
by publication may be used for unknown claimants
and non-residents, if personal service cannot be had
in Iowa. See I.R.C.P. 1.310.
F. Appointment of a guardian ad litem.
1. It may be necessary to have a guardian ad litem appointed
for any defendant who is a minor, prisoner, or incompetent.
I.R.C.P. 1.212.
41
2. If unknown claimants are named as defendants, it will be
necessary to have a guardian ad litem appointed, as one or
more of the unknown claimants could be a minor, prisoner,
or incompetent.
3. A form Application for Appointment of Guardian ad Litem
and Order Appointing Guardian ad Litem can be found in 1
MARLIN M. VOLZ, JR., IOWA PRACTICE SERIES §§ 3:13 and 3:14
(2009-2010 ed.).
G. Servicemembers Civil Relief Act (SCRA).
1. Pursuant to the SCRA, the Court cannot enter a default
judgment in favor of the Plaintiff until the Plaintiff files an
affidavit stating either:
a. That the Defendant is or is not in the military; or
b. Stating that Plaintiff cannot determine if the
Defendant is in the military. 50 App. U.S.C.A. §
521(b)(1).
2. If the affidavit makes a statement as to whether or not the
Defendant is in the military, facts necessary to support the
affidavit must also be stated in the affidavit. 50 App.
U.S.C.A. § 521(b)(1).
3. If the Defendant is in the military service, an attorney must
be appointed by the court to represent the Defendant before
a judgment can be entered against him or her. 50 App.
U.S.C.A. § 521(b)(2).
4. When in doubt as to the military or non-military status of a
defendant, it may be advisable to have an attorney
appointed to represent any defendants who may be in the
military, or may have been discharged from the military
within 6 months prior to the action to quiet title, in order to
protect the default judgment from subsequent attacks. See
50 App. U.S.C.A. § 521(g)(providing that, under proper
conditions, a default judgment against a servicemember may
be reopened on application of the servicemember made not
later than 90 days after termination of his or her military
service).
42
5. A form Affidavit as to military service, Application for
Appointment of an Attorney and Order Appointing
Attorney can be found in 1 MARLIN M. VOLZ, JR., IOWA
PRACTICE SERIES §§ 3:15, 3:16 and 3:17 (2009-2010 ed.).
H. Costs. The taxing of costs is left to the court’s discretion, except
where the Defendant appears in the action and disclaims all right
and title adverse to the Plaintiff. Iowa Code § 649.4. In the event of
such a disclaimer by the Defendant, the Defendant is allowed to
recover his or her costs. Iowa Code § 649.4. However, if the
Plaintiff, at least 20 days prior to filing the action to quiet title, asked
the Defendant to execute a quit claim deed and gave the Defendant
$1.25, and the Defendant failed to do so, the Defendant cannot
recover his or her costs, despite the disclaimer. Iowa Code § 649.5.
In this situation, if the Plaintiff succeeds, the court may also award
nominal attorney’s fees to the Plaintiff. Iowa Code § 649.5.
VI. REAL ESTATE CLOSINGS
A. Closing Documents. Typically, the following documents are
necessary for the real estate closing and are prepared by the seller’s
attorney:
1. A Closing Statement;
2. The Deed;
3. A Declaration of Value; and
4. A Groundwater Hazard Statement.
B. The Closing Statement.
1. Generally, the closing statement will set forth the expenses
to be paid as part of the closing, the parties responsible for
paying said expenses, any credits to which a party is entitled
and the net amount to be paid by the buyer to the seller.
2. Details that are often included on the closing statement
include, but are not limited to:
a. The amount of any earnest money already paid by the
buyer;
43
b. The amount of any outstanding mortgages or other
liens on the property to be paid by the seller;
c. The amount of any filing fees for recording a release
of any mortgage and other lien on the property,
which is typically paid by the seller;
d. The amount of any realtor’s commission to be paid as
part of the closing;
e. The amount of any attorney’s fees to be paid as part
of the closing;
f. The amount of any real estate taxes the real estate
purchase agreement may require the seller to pay
(check the agreement for details regarding the
proration of taxes for the current fiscal year);
g. The amount of the transfer tax, which is typically paid
by the seller; and
h. The amount of any abstracting fees.
3. A typical closing statement starts with the total sale price
and then deducts any earnest money already paid by the
buyer, in addition to any expenses to be paid by the seller,
and then adds any credits to which the seller is entitled, in
order to arrive at a net amount to be paid by the buyer at the
closing.
4. Depending on the circumstances, the buyer’s attorney or the
attorney for the lender may also prepare a closing statement
or may prepare the closing statement instead of the seller’s
attorney.
5. The closing statement should be provided to all of the
parties for review at least one day prior to the closing.
C. The Deed.
1. Types of deeds. The type of deed used will depend
primarily on the type of warranty the seller agreed to give to
the buyer and the particular circumstances under which the
real estate transfer is occurring. The following are the most
common types of deeds used:
a. General warranty deed. The general warranty deed
contains the most comprehensive warranty and is
44
frequently referred to as a just a “warranty deed.” In
the general warranty deed, the grantor (seller)
covenants that the grantor “hold[s] the real estate by
title in fee simple; that they have good and lawful
authority to sell and Convey the real estate; that the
real estate is free and clear of all liens and
encumbrances except as may be [stated in the deed];
and the [grantor] Covenant[s] to Warrant and Defend
the real estate against lawful claims of all persons
except as [stated in the deed].” Iowa State Bar
Association Form 101 (2006). Numerous different
forms of general warranty deeds are available from
the Iowa State Bar Association.
b. Special warranty deed. In the special warranty deed,
the grantor only agrees to warrant and defend
“against the lawful claims of all persons claiming by,
through or under [the grantor], except as [provided in
the deed].” Iowa State Bar Association Form 105
(2005).
c. Quit claim deed. The quit claim deed makes no
warranty and only transfers whatever interest the
grantor may have in the property. See Iowa State Bar
Association Form 106 (2006). Quit claim deeds are
often used to correct title defects.
d. Deed in fee simple without warranty. Just as it
sounds, the deed in fee simple without warranty
conveys the property, but makes no warranty as to
title, defense against third parties or authority to
convey. Cf. Iowa Code § 558.19(2).
e. Court officer deed. The court officer deed is used
only by court appointed or supervised fiduciaries,
such as executors, administrators, conservators, and
trustees, and may have fewer warranties than the
general or special warranty deed. See Iowa State Bar
Association Form P201 (2008).
2. Designating the grantor in the deed.
45
a. The grantor’s name should appear on the deed in the
same form as it appears on the instrument by which
the grantor originally obtained title. If the grantor’s
name has changed since he or she originally obtained
title, the deed should state the grantor’s current legal
name, followed by the phrase “formerly known as”
and the name under which original title was acquired
by the grantor. 1 MARLIN M. VOLZ, JR., IOWA PRACTICE
SERIES §7:13 (2009-2010 ed.).
b. If the grantor is married, both the grantor and the
grantor’s spouse should execute the deed. See Iowa
Code §§ 561.13 (relating to deeds to homestead
property) & Iowa Code §§ 633.211 (relating to the
intestate share of the surviving spouse) and 633.238
(relating to the surviving spouse’s elective share).
Conversely, if the grantor is single, the deed should
indicate this fact.
c. If the grantor is a non-individual, such as a
corporation or a fiduciary, special deed forms are
available through the Iowa State Bar Association
(Form 104, 107, 108, 111, 335 and P201).
3. Properly conveying ownership to the grantee in the deed.
a. Joint tenancy
i. Under Iowa law, “conveyances to two or more
in their own right create a tenancy in common,
unless a contrary intent is expressed.” Iowa
Code § 557.15.
ii. Therefore, if the buyers wish to own the
property as joint tenants with full rights of
survivorship, the deed needs to state that the
property is being conveyed to the buyers “as
joint tenants with full rights of survivorship
and not as tenants in common.”
b. Tenancy in common
Although it is not absolutely required, the phrase “as
tenants in common” should follow the buyers’ names
in the deed, if the buyers wish to so own the property,
46
in order to ensure that the buyers’ intent is clear.
James C. Wine, Drafting Instruments of Conveyance,
REAL ESTATE PRACTICE MANUAL, IOWA STATE BAR
ASSOCIATION (2003).
c. Inter vivos trust
i. If the buyer(s) wishes to convey the property to
an inter vivos trust, the trustee should be
named as the grantee and the trustee’s name
should be followed by a phrase which
identifies the individual as the trustee of the
inter vivos trust. Id.
a) For example, the deed could convey the
property to “John Doe, Trustee of the
Mary Doe Trust #1 created July 1, 1988.”
Id.
ii. The inter vivos trust needs to be established,
and a qualified trustee appointed, prior to the
date of the conveyance of the property. Id.
D. Declaration of Value.
1. The Declaration of Value is a statement showing the total
amount paid for the real estate, which must be signed by the
buyer, the seller or their agents and submitted to the county
recorder with the deed. Iowa Code § 428A.1.
a. However, certain property transfers, such as those
between a parent and child for which no
consideration is paid or those made pursuant to a
decree of dissolution of marriage, do not require a
Declaration of Value be filed. Id.
2. A form Declaration of Value is available from the Iowa State
Bar Association.
E. Groundwater Hazard Statement.
1. A Groundwater Hazard Statement, containing information
relating to wells, solid waste disposal, hazardous wastes,
underground storage tanks, private burial sites and private
sewage disposal systems on the property, must be
47
completed and signed by the seller or the seller’s agent and
submitted to the county recorder. Iowa Code § 558.69.
2. Only a form that has been approved by the Iowa DNR will
be accepted by the county recorder. A proper form is
available through the Iowa State Bar Association. New
requirements relating to inspection of private sewage
disposal systems went into effect in July of 2010, and,
therefore, caution must be exercised in order to ensure that
the most current version of the Groundwater Hazard
Statement is used by the seller and that any inspection
requirements are complied with prior to the closing. See
Iowa Code § 455B.172.
F. HUD-1 Statement. If a bank or other financial institution is making
a loan as part of the real estate transaction, and the real estate
involved is a residential property designed principally for occupancy
by 1 to 4 families, the Real Estate Settlement Procedures Act (RESPA)
requires that a HUD-1 statement be prepared and completed. See 12
U.S.C. § 2601 et seq. The HUD-1 is essentially a more formal form of
a closing statement.
G. Post-closing.
1. The party responsible for closing the real estate transaction
may need to file Form 1099-S with the IRS after the closing.
2. Form 1099-S contains information regarding the gross
proceeds of the real estate transaction and a copy must be
provided to the seller (transferor) as well.
3. Additional information regarding Form 1099-S, and the
deadline for filing Form 1099-S in any given year, can be
found on the IRS website at www.irs.gov.
VII. FORFEITURE
A. Forfeiture is one of the remedies that may be available to the seller
(vendor) under a real estate contract if the buyer (vendee) breaches
the contract. The result of a successful forfeiture is that the real
estate contract is cancelled and the seller is allowed to regain
48
possession of the real estate while also retaining any payments
already made by the buyer.
B. “Forfeiture is a harsh remedy and is not favored in either law or
equity.” Sheeder v. Lemke, 564 N.W.2d 1, 3 (Iowa 1997). See also
Lett v. Grummer, 300 N.W.2d 147, 149 (Iowa 1981)(stating “[e]quity
abhors forfeitures” and refusing to permit forfeiture where buyer’s
breach was de minimis).
C. The remedy of forfeiture is only available if the real estate contract
expressly provides “for the forfeiture of the [buyer]’s rights in [the]
contract in case the [buyer] fails, in specified ways, to comply with
said contract…” Iowa Code § 656.1.
D. Furthermore, the real estate contract cannot be forfeited unless the
seller strictly complies with the forfeiture procedures found in Iowa
Code Chapter 656 and is not herself in default. Iowa Code § 656.1;
Jensen v. Schreck, 275 N.W.2d 374, 385 (Iowa 1979); Youngblut v.
Wilson, 294 N.W.2d 813, 818 (Iowa 1980).
E. Where agricultural property, as defined in Iowa Code section
654A.1, is involved and the outstanding obligation on the contract is
$20,000.00 or more, the seller must secure a mediation release under
Iowa Code section 654A.11, prior to initiating the forfeiture. Iowa
Code §656.8.
1. However, the mediation release is not required if the court,
after notice and hearing, determines that the delay caused by
mediation would result in irreparable harm to the person.
Id.
F. If the buyer is a member of the armed forces, and the real estate
contract was entered into prior to the buyer’s entry into military
service, a court order may be necessary in order to proceed with
forfeiture if the contract breach occurred during the buyer’s military
service. See Iowa Code §29A.102.
49
G. In order to initiate forfeiture, the seller must serve a written notice on
the buyer which does all of the following:
1. Reasonably identifies, by a document reference number, the
contract at issue and accurately describes the real estate
covered by the contract. Iowa Code § 656.2(1)(a).
2. Specifies the terms of the contract that have been breached
by the buyer. Iowa Code § 656.2(1)(b).
a. It is important that the buyer be put “on specific
notice of each and every alleged default.” Brown v.
Nevins, 499 N.W.2d 736, 738 (Iowa Ct. App. 1993).
b. However, a seller is not allowed to accelerate
payments under an acceleration clause contained in
the contract and then demand that the entire contract
price be paid in order to avoid forfeiture. Hampton
Farmers Co-op Co. v. Fehd, 257 Iowa 555, 559, 133
N.W.2d 872, 874 (Iowa 1965).
3. States that the contract will be forfeited unless, within 30
days after completion of service of the notice on the buyer,
the buyer performs the terms in default and pays the
reasonable costs of serving the notice. Iowa Code §
656.2(1)(c).
4. Specifies the amount of any attorney fees claimed by the
seller and informs the buyer that payment of such fees is not
required to comply with the notice and prevent forfeiture.
Iowa Code § 656.2(1)(d).
a. The amount of the seller’s attorney fees for which the
buyer can be held liable is capped at $50.00 and the
demand for such fees must be stated in the notice.
Iowa Code § 656.7.
b. Since the buyer cannot be forced to pay the claimed
attorney fees as part of the forfeiture proceeding, the
seller is authorized to file a small claims action to
collect such fees. Id.
H. The written notice of forfeiture must also be served on any other
parties in possession of the real estate, the buyer’s mortgagees of
record, and any person who asserts a claim against the buyer’s
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interest, other than a governmental agency holding a lien for real
estate taxes, who has recorded a proper Request for Notice. Iowa
Code § 656.2(2).
I. Service of the written notice of forfeiture can be made personally or,
if personal service is not possible, by publication. Iowa Code § 656.3.
J. A form written notice of forfeiture is available through the Iowa
State Bar Association (Form 175).
K. If the buyer, or a mortgagee of the real estate, does not perform the
breached terms and pay the reasonable costs of serving the written
notice of forfeiture within the 30 days, the contract is forfeited and
the seller may record a copy of the notice, with proper proof of
service of the notice attached, with the county recorder. Iowa Code §
656.5. A form affidavit in support of forfeiture for this purpose is
available through the Iowa State Bar Association (Form 176). By so
recording, the seller gives all parties constructive notice of the
forfeiture. Iowa Code § 656.5.
L. A seller who chooses to exercise the right of forfeiture loses his or
her right to sue the buyer for any unpaid amounts due under the
contract. Gray v. Bowers, 332 N.W.2d 323, 325 (Iowa 1983).
M. The burden of proof is on the party seeking to forfeit the contract
and “[f]orfeitures will be enforced only ‘when those claiming
them…show that the equities are clearly on their side.’” Sheeder v.
Lemke, 564 N.W.2d 1, 3 (Iowa 1997)(quoting Kilpatrick v. Smith, 236
Iowa 584, 593, 19 N.W.2d 699, 703 (1945)).
N. It is possible for the seller to waive the right of forfeiture, even after
serving a notice of forfeiture, based on conduct of the parties during
the 30-day cure period. Gottschalk v. Simpson, 422 N.W.2d 181, 184
(Iowa 1988).
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VIII. FORECLOSURE2
A. Notice and Opportunity to Cure. The mortgagee (the creditor) may
need to give the mortgagor (the borrower) proper notice and an
opportunity to cure the default, prior to the commencement of
foreclosure proceedings, under the following circumstances:
1. Where the note or mortgage requires notice and opportunity
to cure be given to the mortgagor.
2. Where the mortgaged property is a one or two family
dwelling which is the residence of the mortgagor and the
mortgagee is not an individual or individuals. Iowa Code §
654.2D.
3. Where the mortgaged property is agricultural land. Iowa
Code § 654.2A.
4. Where the mortgagee will be seeking attorney’s fees from
the mortgagor as part of the foreclosure proceedings. Iowa
Code § 625.25. See also Iowa Code § 654.4B(1).
5. Where the mortgage secures a “consumer credit loan,” as
defined by the Iowa Consumer Credit Code. Iowa Code §
537.5110.
6. Where the mortgagee is pursuing non-judicial foreclosure on
a nonagricultural mortgage, as provided in Iowa Code
Chapter 655A. Iowa Code § 655A.3.
The requirements for the notice to cure, and the cure period, varies
depending on which of the above referenced circumstances exist in
the particular case and, therefore, the applicable statute should be
reviewed carefully prior to proceeding with sending the notice to
cure.
B. Notice of Mortgage Mediation Assistance for One and Two-Family
Dwellings. Until at least July 1, 2011, prior to commencement of
foreclosure proceedings on a one or two-family dwelling that is the
residence of the mortgagor, the mortgagee must send the mortgagor
a notice regarding the availability of counseling and mediation, on a
2 This section specifically discusses foreclosure of mortgages. However, the same statutory procedure can
be used to foreclose the rights of a vendee (i.e. buyer) pursuant to a real estate installment contract. See Iowa Code §§ 654.11 and 654.12.
52
form prescribed by the attorney general. Iowa Code § 654.4B(2).
Said notice must also be served with the original notice and petition
seeking foreclosure. Id.
C. Mediation Releases for Agricultural Property. Where the
mortgaged property is agricultural property, and the debt is
$20,000.00 or more, foreclosure proceedings cannot be initiated until
a mediation release pursuant to Iowa Code section 654A.11 has been
issued. Iowa Code § 654.2C. However, a mediation release is not
required if the court, after notice and hearing, determines that the
person would suffer irreparable harm due to the delay caused by
mediation. Id.
D. Special Protection for Members of the Armed Forces. Members of
the armed forces are afforded special protection against foreclosure.
See Iowa Code § 654.17C and 29A.103. Therefore, before proceeding
with a foreclosure against a mortgagor who is a servicemember, or
their dependents, a careful review of the Iowa National Guard Civil
Relief Act (Iowa Code Chapter 29A), the federal Servicemembers
Civil Relief Act of 2003 (50 App. U.S.C.A. §§ 501 et seq.) and Iowa
Code section 654.17C is necessary.
E. Judicial Foreclosure
1. The foreclosure action must be brought in the county in
which all or part of the mortgaged property is situated.
Iowa Code § 654.3.
2. All parties having any interest in the property, including the
spouse of the property owner and any parties in possession,
should be named as defendants in the foreclosure action.
See Chase v. Abbott, 20 Iowa 154, 1866 WL 137 at *3 (Iowa
1866); Francksen v. Miller, 297 N.W.2d 375, 377 (Iowa 1980).
a. However, there is an alternative to naming all
judgment creditors as defendants, which can be
found in Iowa Code section 654.15B.
3. In general, actions founded on written contracts must be
brought within 10 years. Iowa Code § 614.1(5). However, as
described in section II, above, a special statute of limitations
53
applies to foreclosure of ancient mortgages. See Iowa Code
§ 614.21.
4. Sale free of liens. After the foreclosure action has been
filed, but prior to the entry of the judgment of foreclosure,
the mortgagee “may apply to the court for an order
approving an offer for a commercially reasonable sale of the
property free of the claims of the parties to the action and
other persons served with notice pursuant to Iowa Code §
654.15B.” Iowa Code § 654.17A. However, all equitable
titleholders who have not abandoned the property must
consent to the sale and parties in interest must be given the
opportunity to object. Id.
5. Agreements to modify the loan. Where the mortgaged
property is a nonagricultural one or two-family dwelling,
which is resided in by the mortgagor, a procedure exists
whereby the mortgagor and mortgagee can divest the
property of junior liens, provided that a written modification
of the mortgage obligation is agreed upon by the mortgagor
and mortgagee, allowing the mortgagor to continue to reside
on the property, and said modification reduces the net
present value of the mortgage debt by at least 10%. Iowa
Code § 654.17B. However, this procedure may only be
available until July 1, 2014. See Iowa Code § 654.17B(2)
(stating that the section is repealed July 1, 2014).
6. General definitions of foreclosure terms.
a. Redemption: The right, following a foreclosure sale,
to recover the sold property by paying outstanding
debts and charges on the property within a specific
period of time. See BLACK’S LAW DICTIONARY 591 (2nd
pocket ed. 2001).
b. Deficiency judgment: “A judgment against a debtor
for the unpaid balance of the debt if a foreclosure
sale…fails to yield the full amount of the debt due.”
BLACK’S LAW DICTIONARY 378 (2nd pocket ed. 2001).
7. Foreclosure without redemption. So long as the mortgaged
property is not used for an agricultural purpose, the
mortgagee has the option of electing foreclosure without
54
redemption. Iowa Code § 654.20. If the mortgagee so elects,
the first page of the Petition in Equity must include, in
capital letters the same font and size as the rest of the
Petition, a notice of the election to foreclose without
redemption, the particular text of which is found in Iowa
Code section 654.20. If the Petition does not also include a
waiver of deficiency judgment, additional text is required in
the notice. Id.
a. If the mortgagee elects foreclosure without
redemption, the mortgagor loses the right to redeem
the property after the sale, but may file a demand for
delay of sale at any time prior to entry of the
judgment. Iowa Code §§ 654.23 & 654.21.
i. If a proper demand for delay of sale is filed,
and the mortgaged property is a one or two-
family dwelling and the residence of the
mortgagor, the sale will be delayed for 12
months from the entry of judgment. Iowa Code
§ 654.21. However, if the Petition for
foreclosure included a waiver of deficiency
judgment, the sale will only be delayed for six
months. Id.
a) If the Petition did not include a waiver
of deficiency judgment, and the
mortgaged property is a one or two-
family dwelling where the mortgagor
resides, the mortgagor may be subject to
a deficiency judgment if, and only if, a
demand for delay of sale was filed and
the proceeds from the sale of the
property are not enough to satisfy the
mortgage debt and costs. Iowa Code §§
654.6 and 654.26.
ii. If a proper demand for delay of sale is filed,
and the mortgaged property is not the
residence of the mortgagor or is not a one or
two-family dwelling, the sale is delayed for 2
55
months from the entry of judgment, regardless
of whether the Petition included a waiver of
deficiency judgment. Iowa Code § 654.21. If
the Petition for foreclosure did not include a
waiver of deficiency judgment, the mortgagor
may be subject to a deficiency judgment if the
sale proceeds are not enough to satisfy the
mortgage debt and costs, regardless of whether
or not a demand for delay of sale is filed. Iowa
Code §§ 654.6 and 654.20.
iii. A delay of the sale may allow the mortgagor to
cancel the sale, despite the foreclosure
judgment having been entered, if the
mortgagor is able to satisfy the judgment
during the period of delay. Iowa Code §
654.21.
b. Junior lienholders also lose the right to redeem when
the mortgagor elects foreclosure without redemption.
Iowa Code § 654.23.
i. However, both the junior lienholder and the
mortgagor can purchase the property at the
sale. Id.
a) The mortgagor need only pay an
amount equal to the judgment in order
to be entitled to ownership of the
property, even if higher bids are
received by other parties. Id.
b) If the property is purchased by the
mortgagor, the junior lienholder’s
interest in the property is preserved,
rather than extinguished, as occurs with
purchases of the property by parties
other than the mortgagor. Id.
c) In both a foreclosure without
redemption and a foreclosure with
redemption, junior creditors have the
right to file a request for notice of the
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sheriff’s sale and serve it on the
mortgagee in whose favor the
foreclosure judgment was rendered.
Iowa Code § 654.15A. If the request for
notice is properly served and the junior
creditor still does not receive notice of
the sale, the court may set aside the sale
if the junior creditor was damaged by
not receiving the notice. Id.
c. After the sale of the property, where the mortgagee
elected foreclosure without redemption, the
purchaser is entitled to immediate possession of the
property and an immediate deed to the property.
Iowa Code § 654.24.
8. If the mortgagee in the foreclosure action is successful, the
court will enter a judgment for the entire amount due and
order all or part of the mortgaged property sold in order to
satisfy the judgment, with interest and costs. Iowa Code §
654.5. The court will also determine issues of title raised in
the pleadings to the extent necessary to allow clear title to
pass to the purchaser at the tax sale. Id.
a. “As far as practicable, the property sold must be only
sufficient to satisfy the mortgage foreclosed.” Iowa
Code § 654.10.
9. Once a judgment of foreclosure has been entered, the Clerk
of Court will issue a special execution for the sale, to the
sheriff, upon demand of the mortgagee. Iowa Code §§ 654.5
and 626.7.
a. However, the sale will be delayed if the mortgagee
elected foreclosure without redemption and the
mortgagor filed a demand for delay of sale prior to
the entry of the judgment of foreclosure. Iowa Code §
654.21.
b. If the mortgagee did not elect foreclosure without
redemption, the purchaser at the sale is only entitled
to a sheriff’s certificate, until the applicable
redemption period has passed. Iowa Code § 626.95.
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10. Use of proceeds from the sale of the mortgaged property:
a. If there are proceeds remaining after the senior
mortgage and costs are satisfied, remaining liens are
paid off in the order of their priority. Iowa Code §
654.9.
b. If the senior mortgage and costs have been satisfied,
and there are no remaining liens on the property, any
remaining proceeds must be paid to the mortgagor.
Iowa Code § 654.7.
11. Foreclosure with redemption. Unless the mortgagee elected
foreclosure without redemption, the mortgagor has stayed
execution of the judgment of foreclosure, or the foreclosed
estate was leasehold with less than two years remaining, the
mortgagor has a right to redeem the property after the sale.
Iowa Code §§ 654.5, 628.4, and 628.2. In general, the
redemption period for the mortgagor is one year from the
date of sale and the mortgagor is entitled to possession of
the property during that year. Iowa Code § 628.3. However,
the redemption period can vary greatly, depending on the
circumstances. See Iowa Code §§ 628.26 through 628.28. For
example, the redemption period is shortened to 180 days if
the mortgaged property is not used for agricultural purposes
or is not a one or two-family dwelling that is the residence of
the debtor and the mortgagee has not waived the right to a
deficiency judgment. Iowa Code § 628.28.
a. Creditors with an interest in the mortgaged property
may also have the opportunity to redeem the
property, including redeeming from each other. See
Iowa Code Chapter 628.
b. If the mortgaged property is agricultural land, a
separate procedure exists whereby separate
redemption of the homestead can be made by the
mortgagor. Iowa Code § 654.16. Furthermore, the
mortgagor of agricultural land has a right of first
refusal on the land. Iowa Code § 654.16A.
12. Sample foreclosure petitions can be found in 3 MARLIN M.
VOLZ, JR., IOWA PRACTICE SERIES § 33:30 (2009-2010 ed.) and
58
17 DAVID M. ERICKSON & CHRISTOPHER TALCOTT, IOWA
PRACTICE SERIES §§ 16:9 & 16:10.
F. Non-judicial Foreclosure
1. Two forms of non-judicial foreclosure are available in Iowa.
See Iowa Code § 654.18 and Iowa Code Chapter 655A.
2. Non-judicial foreclosures pursuant to section 654.18 must be
done pursuant to a mutual written agreement between the
mortgagee and the mortgagor, which is entered into
voluntarily. Iowa Code § 654.18(1). Furthermore, the
statutory procedure found in section 654.18 must be
followed, which includes giving notice to all junior
lienholders. Id.
a. Where a voluntary non-judicial foreclosure pursuant
to section 654.18 is used, the mortgagor loses their
right of redemption and their right to any sale
proceeds in excess of the outstanding debt and costs.
Id. However, the mortgagor also does not have to
pay any deficiency. Id.
3. The non-judicial foreclosure procedure provided for in Iowa
Code Chapter 655A is only available when the mortgaged
property is not agricultural land and is not a one or two-
family dwelling that is the residence of an equitable
titleholder. Iowa Code § 655A.9.
4. The mortgagee does not need an agreement with the
mortgagor in order to initiate a non-judicial foreclosure
pursuant to Iowa Code Chapter 655A, but the statutory
procedure found in said chapter must be followed. See Iowa
Code § 655A.2. The effect of a non-judicial foreclosure
pursuant to Iowa Code Chapter 655A is that all junior liens
are extinguished, as is the indebtedness that was secured by
the foreclosed mortgage, and all of the mortgagor’s interest
in the property passes to the mortgagee. Iowa Code §
655A.8.
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G. Deed in Lieu of Foreclosure.
1. The parties may agree that, in lieu of foreclosure proceedings, the mortgagor will deed the mortgaged property to the mortgagee, in satisfaction of part or all of the outstanding debt. If there are additional parties having an interest in the property, the interest of said additional parties will not be cancelled by the deed in lieu of foreclosure and it may not be possible or advisable to proceed with a deed in lieu of foreclosure.
2. Where this remedy is used, the mortgagor’s right of
redemption will not be barred unless it is clear that an
absolute sale, rather than a mere continuation of the security,
was intended by the parties to the deed. Tom Riley Law
Firm, P.C. v. Padzensky, 430 N.W.2d 416, 417 (Iowa 1988).
Equity favors redemption rights and, therefore, when a
mortgagor deeds property to a mortgagee, there is a
presumption that the deed is a continuation of the security
and the right of redemption endures. Id. However, if the
mortgaged property is agricultural land, different rules may
apply. See Iowa Code § 654.19.
IX. PARTITION
A. Basis for the action. Where property, real or personal, is owned
jointly or in common by two or more parties, a partition action may
be brought in equity to divide the property into individually owned
interests.3 See I.R.C.P. 1.1201(1).
B. Governing statutes and rules. Iowa Rule of Civil Procedure 1.1201
et seq. and Iowa Code Chapter 651 govern partition actions in Iowa.
C. Partition by sale v. Partition in-kind. Partition by sale is favored
over partition in-kind and the burden is on the party requesting
partition in-kind to show that partition in-kind is equitable and
3 The parties may instead agree to a voluntary partition of the property, thereby avoiding the necessity of
judicial proceedings. See 1 MARLIN M. VOLZ, JR., IOWA PRACTICE SERIES §12.1 (2009-2010 ed.). However, the discussion of partition contained hereinafter will be confined to partition by judicial proceedings.
60
practicable. I.R.C.P. 1.1201(2). See also Spies v. Prybil, 160 N.W.2d
505, 508 (Iowa 1968).
1. If only a portion of the property can be conveniently
partitioned in-kind, the court may order that portion divided
in-kind and the remainder of the property, which cannot be
conveniently partitioned in-kind, sold. I.R.C.P. 1.1201(3).
See also Iowa Code § 651.3.
2. If partition of personal property is sought, and any part of
the personal property is subject to a lien, partition in-kind is
not an available option. I.R.C.P. 1.1201(2).
D. Parties having a right to partition.
1. In general, partition is only allowed between joint tenants
and tenants in common and a partition suit cannot be
brought against a person who holds only a remainder
interest in the property. Morris v. Morris, 383 N.W.2d 527,
528 (Iowa 1986).
2. However, a partition action may be brought against the
holder of a future interest in the property if such an action is
specifically authorized by statute. See Iowa Code § 557.9
(allowing the court to partition by sale upon the petition of a
life tenant, if the holder of the reversion consents to the sale).
E. Limitation on commencement where probate is pending. “Where
the entire interest in real estate is owned by a decedent on whose
estate administration or probate is pending, the [partition] action
cannot be brought until four months after the second publication of
the notice of appointment of the personal representative, or at any
time while application for authority to sell such real estate is
pending in the probate proceeding.” I.R.C.P. 1.1202.
F. Content of the petition for partition.
1. Iowa Rule of Civil Procedure 1.1203 requires that the
Petition in Equity contain the following information:
a. A description of the property;
b. A description of the Plaintiff’s interest in the property;
c. The name of any “indispensable parties” (as provided
immediately below); and
61
d. A description of the nature and extent of each interest
or lien in the property.
2. A form Petition in Equity can be found in 1 MARLIN M.
VOLZ, JR., IOWA PRACTICE SERIES §12.23 (2009-2010 ed.).
G. Necessary and optional parties to the partition action.
1. The following parties are “indispensable” to the partition
action and, therefore, must be named as parties:
a. All owners of undivided interests;
b. All holders of liens against less than the entire real
estate; and
c. All holders of any liens on personal property. I.R.C.P.
1.1205(1).
2. The following are parties may also be named as parties to the
partition action:
a. All other parties having actual, apparent, claimed or
contingent interests; and
b. All holders of liens on the entire real estate. I.R.C.P.
1.1205(2).
3. Only parties who are named in the partition action will be
bound by the court’s judgment and, therefore, it may be
advisable to name all potentially interested parties in the
partition action. See Curtis v. Reilly, 188 Iowa 1217, 177 N.W.
535 (1920).
H. Joinder of claims and counterclaims.
1. Joinder of claims and counterclaims in the partition action
may only be used for the following purposes:
a. To perfect or quiet title to the property; or
b. To “have an adjudication of the rights of any or all
parties as to any or all matters growing out of or
connected with the property, including liens between
them.” I.R.C.P. 1.1207.
2. This restriction on joinder of claims and counterclaims does
not prevent a party from requesting partition of several
pieces of real or personal property, which are owned by the
62
same parties, in the same partition action. See I.R.C.P.
1.1201(4).
I. The decree. If partition is granted, the decree of partition will
establish each owner’s interest and share in the property, make a
determination as to whether the partition will be in-kind or by sale,
and appoint referee(s) to effectuate the in-kind division or sale.
I.R.C.P. 1.1210.
J. Costs.
1. The Plaintiff advances the costs of the partition action but,
ultimately, all parties will be required to pay the costs
proportionate to their interests in the property. I.R.C.P.
1.1224. However, if costs are created by a contest, only the
losing contestant is responsible for such costs, unless the
court orders otherwise. I.R.C.P. 1.1224.
2. In actions involving partition of real estate, the fees of the
Plaintiff’s attorney, in an amount deemed reasonable by the
court, will be taxed as costs. I.R.C.P. 1.1225.
3. In all partition actions, such reasonable compensation as the
court allows for appraisers, referees and attorneys employed
by a referee with court approval will be taxed as costs.
I.R.C.P. 1.1226.
X. ADVERSE POSSESSION
A. Elements of adverse possession claim. “A party claiming title by
adverse possession must establish hostile, actual, open, exclusive
and continuous possession, under claim of right or color of title for at
least 10 years.” C.H. Moore Trust Estate by Warner v. City of Storm
Lake, 423 N.W.2d 13, 15 (Iowa 1988).
B. Hostile. The hostility requirement is satisfied when the claimant’s
conduct shows “his [or her] intention to hold title exclusive of all
other titles or against the world.” Burgess v. Leverett & Assoc., 252
Iowa 31, 105 N.W.2d 703, 706 (Iowa 1960). See also Collins Trust v.
Allamakee County Bd. of Supervisors of Allamakee County, 599
N.W.2d 460, 464 (Iowa 1999)(stating “[h]ostility does not impute ill-
63
will, but refers to declarations or acts revealing a claim of exclusive
right to the land.”). Examples of such conduct include selling the
property and promising to provide marketable title, renting the
property out to others, and paying taxes on the property. Burgess at
706.
C. Actual. The actual possession requirement is satisfied if the claimant
has, for the 10 year period, exercised the type of possession or
control over the property that owners of comparable pieces of
property would exercise. Burgess at 706. If the claimant rented out
the property during the 10 year period, the tenant’s possession of the
property constitutes possession by the claimant. Id. Furthermore,
“possession of grantors claiming title may be tacked to possession of
the claimant.” Id.
D. Open. Possession by the claimant must be open enough that the
true owner of the property could have learned of the claimant’s
possession of the property, though actual notice by the landowner is
not required. 17 DAVID M. ERICKSON & CHRISTOPHER TALCOTT, IOWA
PRACTICE SERIES §11:9 (2009-2010 ed.).
E. Exclusive. As with the actual possession requirement, the exclusive
possession requirement involves comparing the claimant’s exertion
of control over the property with “the conduct of owner’s in general,
in holding, managing, and caring for property of like nature and
condition.” C.H. Moore Trust Estate by Warner v. City of Storm
Lake, 423 N.W.2d 13, 15 (Iowa 1988)(quoting Whalen v. Smith, 183
Iowa 949, 953, 167 N.W. 646, 647 (1918)). Therefore, mere use of the
property by third parties does not necessarily bar a claim for adverse
possession. Id. at 15-16.
F. Continuous. Continuous possession of the property means that,
during the 10 year period, the claimant’s possession was not “at any
time interrupted or broken by anyone claiming title adverse to the
[claimant] or those in privity with [the claimant]” Burgess at 706.
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G. Under claim of right or color of title.
1. The requirement of possession under claim of right or color
of title prevents mere squatters from acquiring title by
adverse possession. See Carpenter v. Ruperto, 315 N.W.2d
782, 785 (Iowa 1982).
2. With regard to a claim of right, the Iowa Supreme Court has
stated that “‘[i]t is not necessary to establish a claim of
right…by an express declaration…; it is sufficient
if…(claimant) has acted so as to clearly indicate he did claim
title…(It) need not be based on writing…The actual
occupation, use, and improvement of the premises by the
claimant, as if he were in fact the owner thereof without
payment of rent or recognition of title in another or
disavowal of title in himself, will be sufficient to raise a
presumption of his entry and holding as absolute owner
and, unless rebutted, will establish the fact of a claim of
right.’” Council Bluffs Sav. Bank v. Simmons, 243 N.W.2d
634, 636 (Iowa 1976)(quoting 3 Am. Jur. 2D Adverse
Possession § 101 (1962)).
3. However, a party making a claim of right to the property
must have a good faith basis for the claim. Carpenter at 786.
4. Color of title means that the claimant appeared to have valid
title but, in actuality, did not have valid title. Grosvenor v.
Olson, 199 N.W.2d 50, 52 (Iowa 1972). For example, it has
been held that “[a] void deed taken in good faith affords
sufficient color of title to sustain the plea and claim of
adverse possession by one who, relying thereon has taken
and held the possession for the required length of time.” Id.
XI. DISPUTED BOUNDARIES
A. Potential theories for resolving boundary disputes. There are
numerous potential theories for resolving boundary disputes
between adjoining landowners, including:
1. Adverse possession (as described above);
2. Boundary by acquiescence;
3. Special action pursuant to Iowa Code Chapter 650;
4. Boundary by written agreement; and
65
5. Estoppel.
B. Boundary by acquiescence.
1. “Adjoining land owners may establish a boundary line by
mutually acquiescing in a dividing line definitely marked by
a fence of in some other manenr [sic] for a period of at least
ten consecutive years, even though a survey may show
otherwise and neither party intended to claim more than
called for by his deed….Acquiescence may be inferred from
the silence or inaction of one party who knows of the
boundary line claimed by the other and fails to take steps to
dispute it for the ten year period.” Ivener v. Cowan, 175
N.W.2d 121, 122 (Iowa 1970). However, mere acquiescence
in a fence as a barrier, rather than as a boundary, is not
sufficient to establish a boundary by acquiescence. Id.
2. Where the landowner has acquiesced in the boundary line
for the ten year period, subsequent purchasers of the
property cannot question the boundary line. Dart v.
Thompson, 261 Iowa 237, 154 N.W.2d 82, 84 (Iowa 1967).
C. Chapter 650 special actions.
1. “When one or more owners of land, the corners and
boundaries of which are lost, destroyed, or in dispute, desire
to have the same established, they may bring an action in the
district court of the county where such lost, destroyed, or
disputed corners or boundaries, or part thereof, are situated,
against the owners of the other tracts which will be affected
by the determination or establishment thereof, to have such
corners or boundaries ascertained and permanently
established. Iowa Code § 650.1. A county must be included
as a defendant, if there is a public road that is likely to be
affected by the action. Iowa Code § 650.2.
2. Once the action is filed, the court appoints a commission of
one or more disinterested surveyors, to survey and locate
the boundaries and corners, taking testimony of witnesses if
necessary, and file a report with the court within 60 days of
the commission’s appointment. Iowa Code §§ 650.7, 650.9 &
650.11.
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a. The commission’s report may be filed later than 60
days after its appointment if there is good reason for
the delay. Iowa Code § 650.11.
b. Any interested party may file exceptions to the
commission’s report within 20 days of the report.
Iowa Code § 650.12.
3. The common law doctrine of boundary by acquiescence has,
more or less, been codified in Chapter 650 and can be
addressed by the commission and the court as part of the
special action pursuant to Chapter 650, if the issue is
properly raised by one of the parties. See Iowa Code §§
650.6, 650.10 & 650.14.
a. The court also has discretion to try the issue of
acquiescence, prior to the appointment of the
commission. Iowa Code § 650.6.
4. The boundaries and corners established by the court in the
final judgment, or on appeal therefrom, are binding upon
the parties. Iowa Code § 650.13.
5. A form Chapter 650 Petition can be found in 1 MARLIN M.
VOLZ, JR., IOWA PRACTICE SERIES §4:9 (2009-2010 ed.).
D. Boundary by written agreement.
1. If all of the parties affected by a lost or disputed boundary
or corner enter into a written agreement which designates
the boundary or corner, is accompanied by a plat thereof, is
signed and acknowledged by each of the parties and is
properly recorded, the determination of the boundary or
corner in the written agreement is binding upon the heirs,
successors, and assigns of said parties. Iowa Code § 650.17.
E. Estoppel
1. “…[W]hen one has innocently invaded the right of another,
thinking he is within his own property, and this invasion is
known to the one whose right is invaded and he makes no
protest but permits the invader to make substantial
improvements upon the invaded ground, the principle of
estoppel comes into play.” Schauland v. Schmalta, 252 Iowa
426, 107 N.W.2d 68, 71 (Iowa 1961).
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a. However, a permanent or substantial improvement
must have been made to the property or the estoppel
claim will fail. Dart v. Thompson, 261 Iowa 237, 154
N.W.2d 82, 87 (Iowa 1967).
XII. EASEMENTS
A. Nature of the interest. An easement is essentially a right to use the
land of another for a particular purpose or use.
B. Definitions.
1. Dominant estate: “An estate that benefits from an
easement.” BLACK’S LAW DICTIONARY 246 (2nd pocket ed.
2001).
2. Servient estate: “An estate burdened by an easement.”
BLACK’S LAW DICTIONARY 246 (2nd pocket ed. 2001).
3. Easement appurtenant: “An easement created to benefit
another tract of land, the use of the easement being incident
to the ownership of the other tract.” BLACK’S LAW
DICTIONARY 227 (2nd pocket ed. 2001). See also Rank v.
Frame, 522 N.W.2d 848, 852 (Iowa Ct. App. 1994). An
easement appurtenant runs with the land. Rank v. Frame,
522 N.W.2d 848, 852 (Iowa Ct. App. 1994).
4. Easement in gross: “An easement benefiting a particular
person and not a particular piece of land. The beneficiary
need not, and usually does not, own any land adjoining the
servient estate.” BLACK’S LAW DICTIONARY 227 (2nd pocket
ed. 2001). An easement in gross does not run with the land.
17 DAVID M. ERICKSON & CHRISTOPHER TALCOTT, IOWA
PRACTICE SERIES § 10:1 (2009-2010 ed.).
C. Methods for creating easements. An easement may be created by
any of the following methods:
1. By express grant or reservation;
2. By prescription;
3. By necessity; or
4. By implication. Nichols v. City of Evansdale, 687 N.W.2d
562, 568 (Iowa 2004).
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D. Easement by express grant or reservation.
1. “An express easement is an interest in land, which is within
the statute of frauds and must be in writing.” Nichols v.
City of Evansdale, 687 N.W.2d 562, 568 (Iowa 2004).
2. Although the express easement must be in writing, no
particular document form or words are required. Gray v.
Osborn, 739 N.W.2d 855, 861 (Iowa 2007). The primary
consideration in determining whether an express easement
exists is the intention of the parties. Id.
a. “An easement created via a plat map is valid under
Iowa law.” Id.
b. An easement may also be created by a separate
easement agreement or by language in a deed. Cf.
Hawk v. Rice, 325 N.W.2d 97, 98-99 (Iowa 1982).
E. Easement by prescription.
1. An easement by prescription is distinguished from an
interest acquired by adverse possession in that the easement
holder merely acquires the right to use the property, rather
than acquiring title to the property. Nichols v. City of
Evansdale, 687 N.W.2d 562, 568 (Iowa 2004).
2. However, the basic elements required to prove an easement
by prescription are very similar to those for adverse
possession. “Under Iowa law, an easement by prescription
is created when a person uses another’s land under claim of
right or color of title, openly, notoriously, continuously, and
hostilely for ten years or more.” Nichols v. City of
Evansdale, 687 N.W.2d 562, 568 (Iowa 2004)(quoting Collins
Trust v. Allamakee County Bd. of Supervisors, 599 N.W.2d
460, 463-64 (Iowa 1999)).
3. Easements by prescription are not only governed by
common law, but also by Iowa Code Chapter 564. Notably,
Chapter 564 requires that adverse possession of the
easement be “be established by evidence distinct from and
independent of its use, and that the party against whom the
claim is made had express notice thereof…” Iowa Code §
69
564.1. Chapter 564 also articulates a procedure whereby the
landowner can serve a notice on the party using, or claiming
a right to use, an easement and disrupt the 10 year statutory
period. See Iowa Code §§ 564.4 through 564.8.
F. Easement by necessity.
1. An easement by necessity may be established, regardless of
whether an easement was intended, if it can be shown that
there was at one point in time unity of title between the
dominant and servient estate, which was later severed, and
an easement is a necessity. Nichols v. City of Evansdale,
687 N.W.2d 562, 568 (Iowa 2004).
2. The most common use of the easement by necessity is where
a landowner has conveyed a landlocked portion of his land
to another party. Nichols v. City of Evansdale, 687 N.W.2d
562, 568 (Iowa 2004). “Under these circumstances, courts
may imply an easement by necessity across the seller’s land
to provide the purchaser of the landlocked parcel with
access to a public road. Id.
G. Easement by implication.
1. “An easement by implication exists when the owner of two
parcels employs one so as to create a servitude on the other
and then transfers one parcel without a specific grant or
reservation of easement in the conveyance.” Nichols v. City
of Evansdale, 687 N.W.2d 562, 569 (Iowa 2004).
2. Stated more specifically, “[a]n easement by implication,
upon severance of the unity of ownership in an estate, arises
when these factors appear (1) a separation of title; (2) a
showing that, before the separation took place, the use
giving rise to the easement was so long continued and
obvious that it was manifest it was intended to be
permanent; and (3) it must appear that the easement is
continuous rather than temporary, and that it is essential to
the beneficial enjoyment of the land granted or retained.”
Rank v. Frame, 522 N.W.2d 848, 851 (Iowa Ct. App. 1994).
70
3. The intent of the parties is controlling when determining the
extent of the easement by implication. Rank v. Frame, 522
N.W.2d 848, 851 (Iowa Ct. App. 1994).
H. Termination, release or loss of easements.
1. If an easement is abandoned, it terminates. Allamakee
County v. Collins Trust, 599 N.W.2d 448, 451 (Iowa 1999).
2. If the easement was granted for a particular purpose, and
that particular purpose is accomplished, ceases to exist or is
abandoned, the easement terminates. Beim v. Carlson, 209
Iowa 1001, 227 N.W.2d 421, 424 (Iowa 1929).
3. If the same owner acquires title to both the servient and the
dominant estates, any existing easements are extinguished.
Tamm, Inc. v. Pildis, 249 N.W.2d 823, 837 (Iowa 1976).
4. The easement can be terminated voluntarily by the easement
holder agreeing to release the easement. One method for
accomplishing such a release is through a quit claim deed
signed by the easement holder. 1 MARLIN M. VOLZ, JR., IOWA
PRACTICE SERIES §14:8 (2009-2010 ed.).
XIII. COVENANTS
A. Covenants may be found in the deed itself, or may be set out in a
separate recorded instrument.
B. A covenant is either affirmative, meaning it requires the covenanter
to do something, or negative, meaning it requires that the covenanter
not do something. RESTATEMENT (THIRD) OF PROP.: SERVITUDES § 1.3
(2000). “A ‘restrictive covenant’ is a negative covenant that limits
permissible use of land.” Id.
C. “Courts of equity will enforce a restrictive covenant in conveyances
of real estate where the intention of the parties is clear in creating
them and [the] restrictions are reasonable.” Thodos v. Shirk, 248
Iowa 172, 79 N.W.2d 733, 736 (Iowa 1956).
71
D. However, the Stale Uses and Reversions Act (described in Section
II(c)(iv) of this outline) applies to covenants and may bar
enforcement of the covenant. Fjords North, Inc. v. Hahn, 710
N.W.2d 731, 735 (Iowa 2006). Additional defenses to enforcement of
covenants include, but are not necessarily limited to, abandonment,
acquiescence, laches and estoppel. Thodos at 739-41. Furthermore,
where a building restriction is involved, the Court may refuse to
enforce the covenant if there has been “a change in the character of
the surrounding neighborhood sufficient to make it impossible any
longer to secure in a substantial degree the benefits sought to be
realized through the performance of the building restriction.” Id. at
742.
E. A covenant will run with the land if it “is the intention of the parties
to impose a servitude upon the land as distinguished from a
personal promise of the present owner.” Thodos at 736. “As a
general rule, if the required performance touches and concerns the
land, and tends necessarily to enhance its value or render it more
beneficial to the owner for the use contemplated, it is a covenant
running with the land.” Id. at 739.
F. A property use that is permitted by a zoning ordinance may still be
prohibited by a restrictive covenant. Burgess v. Magarian, 214 Iowa
694, 243 N.W. 356, 358 (Iowa 1932).
XIV. LAND USE AND DEVELOPMENT
A. Condominiums
1. Iowa Code Chapter 499B is known as the “Horizontal
Property Act” and governs condominiums in Iowa.
2. In order to form a condominium development, all of the
owners or all of the lessees of the parcel of real property
must file a declaration to submit the property to the
horizontal property regime with the county recorder of the
county in which the property is located. Iowa Code §
499B.3.
72
a. The necessary contents of the declaration are
enumerated in Iowa Code section 499B.4.
b. Documents to be attached to the declaration include:
a full and exact copy of the floor plan of the building
and a true copy of the bylaws under which the
property will be governed. Iowa Code §§ 499B.6 and
499B.14.
i. The necessary contents of the bylaws are
enumerated in Iowa Code section 499B.15.
ii. Bylaws cannot later be amended or modified
unless the amendment or modification is set
forth in an amendment to the declaration and
recorded. Iowa Code § 499B.14.
c. If the declaration seeks to convert an existing
structure, it must be filed with either the city where
the structure is located, or the county if the structure
is not located within a city, at least sixty (60) days
prior to recording the declaration with the county
recorder. Iowa Code § 499B.3. However, if the city or
county, whichever is applicable, has no building code,
the declaration should instead be filed with the state
building code commissioner at least sixty (60) days
prior to recording the declaration with the county
recorder. Id.
d. Once the declaration is filed with the county recorder,
and for so long as the property remains enrolled in
the horizontal property regime, liens and
encumbrances will not attach to the entirety of the
property, but can attach to the individual apartments
and the general and limited common elements
appurtenant to the individual apartments. Iowa Code
§ 499B.12.
3. Once the property is committed to the horizontal property
regime, “each individual apartment located in the building
and the interests in the general common elements and
limited common elements if any, appurtenant thereto, shall
constitute for all purposes a separate parcel of real property
73
and shall be as completely and freely alienable as any
separate parcel of real property is or may be under the laws
of [the State of Iowa], except as limited by the provisions of
[Chapter 499B of the Code of Iowa].” Iowa Code § 499B.10.
a. The necessary contents of the deed to a single
apartment in the condominium regime are
enumerated in Iowa Code section 499B.5.
b. When a condominium unit is the subject of a real
estate sale, a statement of outstanding condominium
association fees for the condominium unit should be
obtained from the association and the closing
statement should take into account any such
outstanding fees, due to the fact that unpaid
association fees constitute a lien against the
condominium unit. See Iowa Code §§ 499B.17 &
499B.19.
c. Real estate taxes and special assessments are assessed
against each individual apartment and its share of the
land and the general and limited common elements,
rather than the entire horizontal property regime.
Iowa Code § 499B.11.
B. Cooperatives
1. The various forms of cooperative associations are governed
by Iowa Code Chapters 497-499A and 501-501A.
2. The Iowa Supreme Court has recently held that, where a
multiple housing cooperative is properly organized under
Iowa Code Chapter 499A, the property is to be classified as
residential and taxed at residential property rates. Krupp
Place 1 Co-Op, Inc. and Krupp Place 2 Co-Op, Inc., v. Bd. of
Review of Jasper County, 801 N.W.2d 9, 16 (Iowa 2011).
3. In so holding, the Krupp Court rejected the Board of
Review’s argument that the Court should “look beyond the
mere act of filing papers of incorporation and look to the
actual operation of the property in classifying the property
for tax purposes[,]” due to the fact that no such “actual use”
test was contemplated in the relevant statute. Id. at 14.
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C. Divisions and Subdivisions of Land
1. When a parcel or tract of land is to be divided into two
parcels by a conveyance or for tax purposes, using a metes
and bounds description, the grantor must have a plat of
survey made for the division, unless the grantor is an agency
of the government or other party having eminent domain
powers. Iowa Code § 354.4. If the grantor is an agency of
the government or other party having eminent domain
powers, an acquisition plat is required instead of a plat of
survey. Id.
a. A plat of survey must comply with Iowa Code
Chapter 355 (Standards for Land Surveying), be
reviewed by the county auditor and be recorded. Id.
b. The necessary contents of a conveyance of a parcel
shown on a recorded plat of survey can be found in
Iowa Code § 354.5.
2. When a tract of land “is subdivided by repeated divisions or
simultaneous division into three or more parcels, any of
which are described by metes and bounds description for
which no plat of survey is recorded[,]” a subdivision plat
must be made, unless the division is made by conveyance to
a government agency for public improvements. Iowa Code
§ 354.6.
a. The subdivision plat must be given a succinct, unique
name that is approved by the auditor in the county in
which the real property is situated. Id.
b. Further requirements for the content of the
subdivision plat can be found in Iowa Code section
354.6. See also Iowa Code section 354.11 (requiring
certain documents to accompany the subdivision plat
at the time of recording).
c. “A proposed subdivision plat lying within the
jurisdiction of a governing body shall be submitted to
that governing body for review and approval prior to
recording.” Iowa Code § 354.8. Cf. Iowa Code 354.18
(requiring plats of survey and subdivision plats to be
75
recorded and filed with the county auditor and
assessor).
i. The governing body has sixty (60) days from
the date of the application for final approval to
approve or reject the subdivision plat. Iowa
Code § 354.8.
ii. If the governing body refuses to approve the
proposed subdivision plat, the applicant has
twenty (20) days in which to make an appeal to
the district court. Iowa Code § 354.10.
d. A city may, by ordinance, establish an area up to two
miles distance from the city boundaries, wherein city
review and approval of subdivision plats and plats of
survey is required. Iowa Code § 354.9. If the
subdivision lies in a county that also regulates the
division of land, the subdivision plat or plat of survey
must be submitted to both the county and the city for
approval. Id.
e. Certain land within the subdivision, such as streets,
alleys and parks, may be dedicated to the public if a
dedication to the public by the proprietors is attached
to the plat and the dedication is approved by the
governing body. Iowa Code § 354.19. Furthermore,
“the recording of a subdivision plat shall dedicate to
the public any utility, sewer, drainage, access,
walkway, or other public easement shown on the
plat.” Id.
D. Zoning
1. Zoning is “[t]he legislative division of a region, esp. a
municipality, into separate districts with different
regulations within the districts for land use, building size,
and the like.” BLACK’S LAW DICTIONARY 779 (2nd pocket ed.
2001).
2. Depending on the location of the real property, it may be
governed by either a city or a county zoning ordinance. See
76
Iowa Code Chapters 335 (County Zoning) and Chapter 414
(City Zoning).
a. However, certain land used for agricultural purposes
may be exempt from county zoning ordinances. See
Iowa Code § 335.2.
b. A city may extend its zoning ordinance to include
unincorporated areas up to 2 miles beyond the city
limits, if there is no county zoning ordinance covering
those areas. Iowa Code § 414.23.
3. Prior to the acquisition of real property, any zoning
ordinance covering the real property should be reviewed in
order to confirm that the use for which the real property is
being acquired is permissible under the relevant zoning
ordinance.
4. Where the property is being used in a certain manner, and a
zoning ordinance is thereafter adopted which makes that use
illegal, the prior use of the property may be allowed to
continue as a non-conforming use. See City of Jewell
Junction v. Cunningham, 439 N.W.2d 183 (Iowa 1989); City
of Okoboji v. Okoboji Barz, Inc., 746 N.W.2d 56 (Iowa 2008);
17 DAVID M. ERICKSON & CHRISTOPHER TALCOTT, IOWA
PRACTICE SERIES § 13:8 (2009-2010 ed.).
5. Where development of a piece of property has commenced,
and a zoning ordinance is thereafter adopted which makes
the prior plan of development illegal, the property owner
may be allowed to complete development of the property in
accordance with the prior plan if (1) the property owner
made “substantial expenditures toward the use in question
prior to the zoning change; and” (2) the expenditures made
were lawful. Quality Refrigerated Serv., Inc., v. City of
Spencer, 586 N.W.2d 202, 206 (Iowa 1998). See also 17 DAVID
M. ERICKSON & CHRISTOPHER TALCOTT, IOWA PRACTICE SERIES
§ 13:9 (2009-2010 ed.).
6. If a city or county zoning ordinance exists, a board of
adjustment must be appointed, which has the following
powers:
77
a. “To hear and decide appeals where it is
alleged there is error in any order,
requirement, decision, or determination
made by an administrative official in the
enforcement of [Chapter 335 or Chapter
414] or of any ordinance adopted pursuant
thereto.
b. To hear and decide special exceptions to
the terms of the ordinance upon which
such board is required to pass under such
ordinance.
c. To authorize upon appeal in specific cases
such variance from the terms of the
ordinance as will not be contrary to the
public interest, where owing to special
conditions a literal enforcement of the
provisions of the ordinance will result in
unnecessary hardship, and so that the
spirit of the ordinance shall be observed
and substantial justice done.” Iowa Code
§§ 335.15 & 414.12. 7. Appeals to the board of adjustment must be made “within a
reasonable time, as provided by the rules of the board of
adjustment…” Iowa Code § 335.13. See also Iowa Code §
414.10.
8. Persons aggrieved by the decision of the board of
adjustment may file a petition with the Court setting forth
the grounds of any illegality within thirty (30) days of the
board’s decision. Iowa Code §§ 335.18 and 414.15.
BUYER
SELLER
NEGOTIATION
PURCHASE AGREE-MENT DRAFTED/ OFFER MADE
MAKE DISCLOSURES: 558A; LEAD BASED PAINT
CONTINGENCIES MET: e.g. - FINANCING - INSPECTION
OFFER ACCEPTED
ABSTRACT CONTINUED
PRELIMINARY TITLE OPINION (PTO)/ TITLE GUARANTY
TITLE DEFECTS CURED
TRANSFER DOCUMENT INFORMATION PROVIDED
TRANSFER DOCUMENT PREPARED
SELLER CLOSING STATEMENT PREPARED
TITLE CORRECTIONS, TRANSFER DOCUMENTS, AND CLOSING FIGURES APPROVED
CLOSING
CLOSING
FINAL TITLE OPINION (FTO)
TIMELINE and RESPONSIBILITIES IN A TYPICAL REAL ESTATE TRANSACTION
Assumptions • For Sale by Owner • Representing either Seller or Buyer
Premium Paid for Efficiency Outline
• Pre-sale disclosures • Purchase contract • Abstract examination/title opinion • Title Guaranty • Closing/closing statements • Title defects/correction
2
Residential Property Seller Disclosure Statement - Iowa Code Chapter 558A
Must include information “relating to the condition and important characteristics of the property and structures located on the property, including significant defects in the structural integrity of the structure….”
ISBA Form 155
3
4
Failure to disclose per Iowa Code Chapter 558A does not invalidate the transfer
Must exercise “ordinary care” in obtaining information
Transferor subject to liability for actual damages suffered due to errors, inaccuracies or omissions
Caveat Emptor? Home inspections
5
Lead-Based Paint Disclosure EPA and HUD rules Applies if home was build prior to 1978 Disclosure + pamphlet: “Protect Your
Family From Lead in Your Home” ISBA Form 156 http://www.epa.gov/lead/pubs/leadpdfe.pdf
6
7
Must be in writing – Statute of Frauds Who prepares the purchase agreement? Content:
• Parties (+ Seller’s spouse) • Legal description • Purchase price • Payment terms (cash v. contract; earnest $) • Statement of intent to sell and buy
8
Additional content: • Date of possession • Date of closing • Real estate taxes • Risk of loss • Abstract/conveyance requirements • Fixtures; personal property • Warranties; remedies
9
Contingencies? • Financing • Inspections – home, septic, radon, termite,
environmental • Survey • Sale of Home • Other?
ISBA Form 152 & 153
10
11
What is an abstract? How is it used? The certificate says it all…
12
“…hereby certifies that the foregoing abstract consisting of ___ entries numbered ___ to ___ inclusive is a true and correct abstract of everything in the public record of Johnson County, Iowa, affecting the title to:
[legal description]
From [date], at [time] to [date] at [time].
• Effective January 1, 2013, all Mechanic’s Liens are filed with the Secretary of State of the State of Iowa. This Certificate includes search of the Secretary of State’s Lien Registry for Mechanic’s Liens, if any, filed against the real estate described above.
• Ancient mortgages are omitted pursuant to Iowa Land Title Examination Standards of the Iowa State Bar Association.
• Mortgages duly released of record, and related matters thereto, are omitted from this abstract continuation.
• All instruments abstracted herein have been duly executed and acknowledged in proper form unless otherwise shown.
• We make no examination of or certification for any instruments filed under the provisions of the Uniform Commercial Code unless indexed in the mortgage indices.
Personal lien searches were conducted against the following names:
13
Iowa Land Title Standards • Updated regularly
Title Standard 1.1: • Attorney attitude in examining
Title Opinions – preliminary and final Content of title opinions:
• legal description; • abstractor’s certification; • opinion as to title;
14
Content of title opinions: • liens – mortgages, unpaid taxes, judgments,
other recorded liens; • information regarding use – restrictive
covenants, easements, zoning; and • statement regarding information not shown on
abstract
15
Information not shown on an abstract: • rights of parties in possession; • easements by virtue of usage; • location of boundary lines; • unpaid sewage disposal bills; • labor or material supplied within the past 90
days;
16
Information not shown on an abstract: • special assessments not yet certified; • Dissolution of Marriage proceedings under seal; • UCC Financing Statements; or • environmental audits/reports.
17
Develop a system – use it consistently Keep notes Start at the back of the abstract – work back
to the root of title Look for efficiencies Use plain English If you have objections, be clear about what
you want Distribute your Title Opinion to everyone –
opposing counsel, realtors, banker
18
Sale of private title insurance is not permitted in Iowa
Title insurance is a standard requirement for secondary market lending
Title Guaranty fills the void – makes Iowa mortgages marketable
ALTA Forms Low cost: residential purchase <$500 = $110; $1
per thousand above $500; residential refinance = $90
Division of the Iowa Finance Authority www.iowafinanceauthority.gov
19
Must be a participating attorney Not a substitute for abstracts and title
opinions Commitments; Owner’s and Lender’s
Certificates Rapid Certification Program – additional
training required for participation Consult the Title Guaranty Manual
20
Basics: • Marital Status of Grantor • Signatures of Appropriate Parties (Spouse) • Proper Notarial Information • Open Ended Mortgages/Lines of Credit
Identified • Provide Clearance Information with
Identification of Title Issues
21
Attorneys in the field provide 90% of issued Commitments and Certificates
Title Guaranty provides training and closing protection letters.
Stats from FY2013: • Total Participating Attorneys: 1,118 • Certificates Issued: 89,952 • Value of Covered Real Estate: $14.1 Billion
Questions: www.TitleGuaranty.gov and the Help Desk at 515-725-4357.
22
Responsibility for clearing title defects, including mortgage payoffs
Responsibility for meeting contingencies Preparation of title transfer documents:
• Deed • Groundwater Hazard Statement • Declaration of Value
23
Buyer, seller, date, property Price, earnest money Deductions from seller’s proceeds: • Mortgage payoffs • Other lien satisfactions • Association fees (if any) • Commissions • Transfer tax – Iowa Code Chapter 428A: $.80
per each $500 of consideration paid, after the first $500 Example: $100,250 purchase price; round up to $100,500;
subtract $500; multiply $100,000 x .0016 = $160
24
• Unpaid real estate taxes −Will be shown on the abstract – but are easily
accessed online or by calling the County Treasurer −Fiscal Year – payable in September and March (due
on the 1st – delinquent on 30th/31st) −Paid in the subsequent FY −FY 2013-14: On Sept. 1, 2014, taxes are due for the 1st
half of FY 2013-2014 (Jul. 1, 2013-Dec. 31, 2013) and on Mar. 1, 2015, taxes will be due for the 2nd half of FY 2013-2014 (Jan. 1, 2014-June 30, 2014)
25
• Real estate tax proration −Review purchase agreement −Once assessed taxes are paid, proration is calculated
for FY in which closing takes place −Based on prior year taxes? Not necessarily. −For 9/22/14: 84/365 x full year tax = proration
• Abstracting (pre-closing) • Recording fees (mortgage release, other title
clearing documents) • Attorney fees
Net Seller proceeds
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BUYER: SELLER: CLOSING DATE: September 22, 2014 PROPERTY: PURCHASE PRICE: $100,000.00 Earnest Money ($1,000; delivered to ABC Bank @ Closing - NET PURCHASE PRICE/DUE @ CLOSING $100,000.00 DEDUCTIONS FROM SELLER’S PROCEEDS
• Mortgage Payoff – XYZ Bank 50,000.00 • Real Estate Taxes (FY2013-14: 1st ½ ; 2nd ½ ; $1,000 + $1,000 = $2,000) 2,000.00 • Real Estate Tax Proration – FY 2014-15 (84/365 x $2,000) 460.27 • Abstracting – Title Company 200.00 • Transfer stamps 159.20 • Attorney fees (title opinions, etc.) 500.00 Total Deductions 53,319.47
NET PROCEEDS: $ 46,680.53
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Use of HUD-1 Buyer closing statements Post-closing
• 1099-S • Final title opinion/title guaranty
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Many title defects are or can be “cured” by operation of law:
40 Year Marketable Title Act – Iowa Code Sections 614.29 through 614.38
Title Standards – Chapter 11 Unbroken chain of record title extending
back at least 40 years to the “root of title”
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What is an “unbroken chain of title”? Exceptions – “certain interests and
rights” • Examples: rights established by adverse possession within 40
years; interests or defects inherent in the muniments of title; easements; interests of the United States.
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Main tool for extinguishing ancient title defects
Impact on abstract creation
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10 Year Marketable Title Act • Bars claims vs. holder of record title in
possession • Pre-1980 claims – Iowa Code Section 614.17 • Post-1992 actions – Iowa Code Section 614.17A • The Affidavit of Possession – ISBA Form 154 • Title Standard 10.1
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Ancient Mortgages – Iowa Code 614.21: 20 years from date of mortgage – 10 years from maturity
Stale Uses and Reversions – Iowa Code 614.24: bars claims based on reversionary interests or interests in use after 21 years, unless the claim is preserved
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• Iowa Code 558.8 • Title Standard 8.8 • Examples:
− Affidavit of identity (Title Standard 8.4) − Affidavit of no interest (Title Standard 4.5) − Affidavit as to homestead (Title Standard 5.5) − ISBA Form 179 − ISBA Form 339
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•Quit Claim Deed −Outstanding lease −Release an easement or similar interest
•Quiet Title Action −Unreleased mortgages −Disputes as to boundaries −Gaps in title that cannot be cured by other curative acts
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•Basic Skills outline •Iowa Practice Series •Iowa Land Title Standards •Marshall’s Iowa Title Opinions and Standards (1978) •ISBA Real Estate Practice Manual •ISBA listserve
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