House File 2786 - Enrolled

PAG LIN



  1  1                                             HOUSE FILE 2786
  1  2
  1  3                             AN ACT
  1  4 RELATING TO CIVIL ACTIONS AND THE FORECLOSURE OF REAL ESTATE
  1  5    MORTGAGES, AND PROVIDING FEES AND APPLICABILITY PROVISIONS.
  1  6
  1  7 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  1  8
  1  9    Section 1.  Section 602.8102, subsection 113, Code
  1 10 Supplement 2005, is amended by striking the subsection.
  1 11    Sec. 2.  Section 615.1, Code 2005, is amended to read as
  1 12 follows:
  1 13    615.1  EXECUTION ON CERTAIN JUDGMENTS PROHIBITED.
  1 14    From and after January 1, 1934, no A judgment in an action
  1 15 for the foreclosure of a real estate mortgage, deed of trust,
  1 16 or real estate contract upon property which at the time of
  1 17 judgment is either used for an agricultural purpose as defined
  1 18 in section 535.13 or a one=family or two=family dwelling which
  1 19 is the residence of the mortgagor, or in any action on a claim
  1 20 for rent or judgment assigned by a receiver of a closed bank
  1 21 or rendered upon credits assigned by the receiver of a closed
  1 22 bank when the assignee is not a trustee for depositors or
  1 23 creditors of the bank, the reconstruction finance corporation
  1 24 or any other federal governmental agency to which the bank or
  1 25 the receiver is or may be indebted shall be enforced null and
  1 26 void, all liens shall be extinguished, and no execution shall
  1 27 be issued thereon and no force or vitality given thereto for
  1 28 any purpose other than as a setoff or counterclaim after the
  1 29 expiration of a period of two years, exclusive of any time
  1 30 during which execution on the judgment was stayed pending a
  1 31 bankruptcy action, from the entry thereof.  As used in this
  1 32 section, "mortgagor" means a mortgagor or a borrower executing
  1 33 a deed of trust as provided in chapter 654 or a vendee of a
  1 34 real estate contract.
  1 35    Sec. 3.  Section 615.2, Code 2005, is amended to read as
  2  1 follows:
  2  2    615.2  REVIVAL OF CERTAIN JUDGMENTS PROHIBITED.
  2  3    After January 1, 1934, no An action or proceedings shall
  2  4 not be brought in any court of this state for the purpose of
  2  5 renewing or extending such judgment or prolonging the life
  2  6 thereof.  Provided, however, that nothing herein shall prevent
  2  7 the continuance of such judgment in force against the property
  2  8 subject to foreclosure only for a longer period by the
  2  9 voluntary written stipulation of the parties judgment creditor
  2 10 and the equitable titleholders, filed in said cause the action
  2 11 or proceedings.
  2 12    Sec. 4.  Section 624.23, Code 2005, is amended by adding
  2 13 the following new subsection:
  2 14    NEW SUBSECTION.  7.  If a case file has been sealed by the
  2 15 court, or if by law the court records in a case are not
  2 16 available to the general public, any judgments entered in the
  2 17 case shall not become a lien on real property until either the
  2 18 identity of the judgment creditor becomes public record, or
  2 19 until the judgment creditor, in a public document in the case
  2 20 in which judgment is entered, designates an agent and office,
  2 21 consistent with the requirements of section 490.501, on which
  2 22 process on the judgment creditor may be served.  Service may
  2 23 be made on the agent in the same manner as service may be made
  2 24 on a corporate agent pursuant to section 490.504.  An agent
  2 25 who has resigned without designating a successor agent and
  2 26 office and who is otherwise unavailable for service may be
  2 27 served in the manner provided in section 490.504, subsection
  2 28 2, at the agent's office of record.
  2 29    Sec. 5.  Section 626.78, Code 2005, is amended to read as
  2 30 follows:
  2 31    626.78  NOTICE TO DEFENDANT.
  2 32    If the debtor is in actual occupation and possession of any
  2 33 part of the land levied on, the officer having the execution
  2 34 shall, at least twenty days previous to such sale, serve the
  2 35 debtor with written notice, stating that the execution is
  3  1 levied on said land, and mentioning the time and place of
  3  2 sale, which notice shall be served in the manner provided by
  3  3 rule of civil procedure 1.305(1).  However, upon the filing of
  3  4 an affidavit that the debtor is intentionally evading service
  3  5 of process or otherwise cannot be served despite repeated and
  3  6 diligent attempts, the notice may be served by placing the
  3  7 notice in a plain opaque envelope, addressed to the defendant
  3  8 and marked personal and confidential, by affixing the envelope
  3  9 to a main entrance of the premises subject to sale, and by
  3 10 mailing a copy of the notice to the debtor at the debtor's
  3 11 last known address by ordinary mail.
  3 12    Sec. 6.  Section 626.80, unnumbered paragraph 2, Code 2005,
  3 13 is amended to read as follows:
  3 14    The sheriff shall receive and give a receipt for a sealed
  3 15 written bid submitted prior to the public auction.  The
  3 16 sheriff may require all sealed written bids to be accompanied
  3 17 by payment of any fees required to be paid at the public
  3 18 auction by the purchaser, to be returned if the person
  3 19 submitting the sealed written bid is not the purchaser.  The
  3 20 sheriff shall keep all written bids sealed until the
  3 21 commencement of the public auction, at which time the sheriff
  3 22 shall open and announce the written bids as though made in
  3 23 person.  A party who has appeared in the foreclosure may
  3 24 submit a written bid, which shall include a facsimile number
  3 25 or electronic mail address where the party can be notified of
  3 26 the results of the sale.  If a party submitting a winning
  3 27 written bid does not pay the amount of the bid in certified
  3 28 funds in the manner in which the sheriff in the notice
  3 29 directs, such bid shall be deemed canceled and the sheriff
  3 30 shall certify the next highest bidder as the successful bidder
  3 31 of the sale either within twenty=four hours for an electronic
  3 32 funds transfer or forty=eight hours otherwise, of notification
  3 33 of the sale results.  A sheriff may refuse to accept written
  3 34 bids from a bidder other than the judgment creditor if the
  3 35 bidder or the bidder's agent in the action has demonstrated a
  4  1 pattern of nonpayment on previously accepted bids.
  4  2    Sec. 7.  NEW SECTION.  654.9A  RELEASE OF SUPERIOR LIENS BY
  4  3 BOND.
  4  4    At any time prior to the court's decree, the plaintiff, or
  4  5 a person guaranteeing title of the plaintiff's mortgage, may
  4  6 post a bond with sureties to be approved by the clerk and
  4  7 apply to the court to release the claim against the property
  4  8 of any person claiming a lien superior to that of the
  4  9 plaintiff in the property subject to foreclosure.  The bond
  4 10 shall be in an amount not less than twice the amount of the
  4 11 claim, and notice of the bond and the court's order of release
  4 12 shall be served on the claimant.  Unless the claimant has
  4 13 appeared in the foreclosure action, the service shall be by
  4 14 personal service.  Unless the claimant files an action on the
  4 15 bond within twelve months from service of the notice, the
  4 16 claimant shall be barred from any further remedy.  In a
  4 17 successful action on the bond, the court may award the
  4 18 claimant reasonable attorney fees.  A guarantor filing such a
  4 19 bond shall be subrogated to any defenses which the plaintiff
  4 20 may have against the adverse claimant, including but not
  4 21 limited to a defense of lack of equity in the mortgaged
  4 22 property to secure the adverse claim in its proper priority.
  4 23    Sec. 8.  NEW SECTION.  654.15A  NOTICE OF SALE TO JUNIOR
  4 24 CREDITORS.
  4 25    A junior creditor may file and serve on the judgment
  4 26 creditor a request for notice of the sheriff's sale.  Such
  4 27 notice shall include a facsimile number or electronic mail
  4 28 address where the creditor shall be notified of the sale.  At
  4 29 least ten days prior to the date of sale, the attorney for the
  4 30 junior creditor shall file proof of service of such request
  4 31 for notice.  Upon motion filed within thirty days of the sale,
  4 32 the court may set aside a sale in which a junior creditor who
  4 33 requests notice is damaged by the failure of the sheriff or
  4 34 the judgment creditor to give notice pursuant to this section.
  4 35    Sec. 9.  NEW SECTION.  654.15B  RIGHT TO INTERVENE ==
  5  1 NOTICE.
  5  2    A lender may serve a judgment creditor in a foreclosure
  5  3 action with notice in substantially the following form
  5  4 advising the creditor that the property that is the subject of
  5  5 the foreclosure action shall be foreclosed and describing the
  5  6 creditor's interest in the action and that unless such
  5  7 creditor intervenes in the foreclosure action such creditor
  5  8 shall lose the creditor's interest in the mortgaged property.
  5  9 Unless the creditor intervenes within thirty days of the
  5 10 service of notice, the court may adjudicate the creditor's
  5 11 rights against the property as if the creditor had been added
  5 12 as a defendant and default had been entered against the
  5 13 defendant.  If a creditor cannot be located for personal
  5 14 service, the plaintiff may, at any time prior to sixty days
  5 15 before the date of trial, amend the petition as a matter of
  5 16 right to add the creditor as a defendant for service by
  5 17 publication as provided by rule.  The notice prescribed by
  5 18 this section is as follows:
  5 19                  NOTICE OF PENDING FORECLOSURE
  5 20 To:  (Name of creditor)
  5 21 Date:  (Enter date)
  5 22    Plaintiff has filed a foreclosure of mortgage against the
  5 23 property of (titleholder) located at (street address of
  5 24 property) which is legally described as (legal description).
  5 25 This foreclosure was filed as (Plaintiff v. Defendant), Case #
  5 26 (   ), in the Iowa District Court for (   ) County.  You have
  5 27 an apparent interest in the property because (description of
  5 28 creditor's interest).  If you desire to protect this interest,
  5 29 you have the right to intervene in the foreclosure action
  5 30 within thirty days of the service of notice by filing an
  5 31 intervention with the clerk of court in (   ) County.  Unless
  5 32 you intervene in the foreclosure the foreclosure may eliminate
  5 33 any interest you have in the property but will not otherwise
  5 34 affect your rights.  If you have any questions about this
  5 35 notice, contact your attorney.  Whether or not you intervene,
  6  1 the foreclosure may have certain tax consequences to you about
  6  2 which you should consult your tax advisor.
  6  3                               
  6  4 Name, address, and telephone number of attorney representing
  6  5 plaintiff.
  6  6    Sec. 10.  NEW SECTION.  654.17  RECISION OF FORECLOSURE.
  6  7    At any time prior to the recording of the sheriff's deed,
  6  8 and before the mortgagee's rights become unenforceable by
  6  9 operation of the statute of limitations, the judgment
  6 10 creditor, or the judgment creditor who is the successful
  6 11 bidder at the sheriff's sale, with the written consent of the
  6 12 mortgagor may rescind the foreclosure action by filing a
  6 13 notice of recision with the clerk of court in the county in
  6 14 which the property is located along with a filing fee of fifty
  6 15 dollars.  In addition, such person shall pay a fee of
  6 16 twenty=five dollars for documents filed in the foreclosure
  6 17 action which the plaintiff requests returned.  Upon the filing
  6 18 of the notice of recision, the mortgage loan shall be
  6 19 enforceable according to the original terms of the foreclosure
  6 20 and the rights of all persons with an interest in the property
  6 21 may be enforced as if the foreclosure had not been filed.
  6 22 However, any findings of fact or law shall be preclusive for
  6 23 purposes of any future action unless the court, upon hearing,
  6 24 rules otherwise.  The mortgagor shall be assessed costs,
  6 25 including reasonable attorney fees, of foreclosure and
  6 26 recision if provided by the mortgage agreement.
  6 27    Sec. 11.  NEW SECTION.  654.17A  SALE FREE OF LIENS.
  6 28    At any time during the pendency of the foreclosure, the
  6 29 plaintiff may apply to the court for an order approving an
  6 30 offer for a commercially reasonable sale of the property free
  6 31 of the claims of the parties to the action and other persons
  6 32 served with notice pursuant to section 654.15B.  A copy of the
  6 33 offer shall be attached to the application and the application
  6 34 shall contain a written consent to the proposed sale by all
  6 35 equitable titleholders who have not abandoned the property.
  7  1 The court may grant the motion unless a party in interest
  7  2 objects in writing during such time as the court may
  7  3 prescribe.  A person filing an objection with a claim junior
  7  4 to the plaintiff shall either apply for assignment of senior
  7  5 claims pursuant to section 654.8, otherwise provide adequate
  7  6 protection to senior creditors, or establish that a sheriff's
  7  7 sale is substantially more likely than the proposed sale to
  7  8 provide the creditor with more favorable satisfaction of its
  7  9 lien.  Pending resolution of the rights of the parties and
  7 10 persons served with notice pursuant to section 654.15B, the
  7 11 court shall place the net proceeds of the sale in escrow after
  7 12 payment of reasonable closing costs.  The rights of such
  7 13 persons to the escrowed funds shall be determined in the same
  7 14 manner as their rights to the property that was sold.
  7 15    Sec. 12.  Section 655.5, Code 2005, is amended by striking
  7 16 the section and inserting in lieu thereof the following:
  7 17    655.5  INSTRUMENT OF SATISFACTION.
  7 18    When the judgment is paid in full, the mortgagee shall file
  7 19 with the clerk a satisfaction of judgment which shall release
  7 20 the mortgage underlying the action.  A mortgagee who fails to
  7 21 file a satisfaction within thirty days of receiving a written
  7 22 request shall be subject to reasonable damages and a penalty
  7 23 of one hundred dollars plus reasonable attorney fees incurred
  7 24 by the aggrieved party, to be recovered in an action for the
  7 25 satisfaction or acknowledged by the party aggrieved.
  7 26    Sec. 13.  Section 655A.3, Code 2005, is amended by adding
  7 27 the following new subsection:
  7 28    NEW SUBSECTION.  2A.  The mortgagee may file a written
  7 29 notice required in subsection 1 together with proof of service
  7 30 on the mortgagor with the recorder of the county where the
  7 31 mortgaged property is located.  Such a filing shall have the
  7 32 same force and effect on third parties as an indexed notation
  7 33 entered by the clerk of the district court pursuant to section
  7 34 617.10 and shall commence on the filing of proof of service on
  7 35 the mortgagors and terminate on the filing of a rejection
  8  1 pursuant to section 655A.6, an affidavit of completion
  8  2 pursuant to section 655A.7, or the expiration of ninety days
  8  3 from completion of service on the mortgagors, whichever occurs
  8  4 first.
  8  5    Sec. 14.  Section 655A.9, Code 2005, is amended to read as
  8  6 follows:
  8  7    655A.9  APPLICATION OF CHAPTER.
  8  8    This chapter does not apply to real estate used for an
  8  9 agricultural purpose as defined in section 535.13, or to a one
  8 10 or two family dwelling which is, at the time of the initiation
  8 11 of the foreclosure, occupied by an equitable titleholder.
  8 12    Sec. 15.  Section 655.4, Code 2005, is repealed.
  8 13    Sec. 16.  APPLICABILITY.
  8 14    1.  Except as provided in subsection 2, this Act applies to
  8 15 actions commenced on or after July 1, 2006.
  8 16    2.  The section of this Act enacting section 624.23,
  8 17 subsection 7, applies to judgments entered on or after July 1,
  8 18 2007.
  8 19
  8 20
  8 21                                                             
  8 22                               CHRISTOPHER C. RANTS
  8 23                               Speaker of the House
  8 24
  8 25
  8 26                                                             
  8 27                               JEFFREY M. LAMBERTI
  8 28                               President of the Senate
  8 29
  8 30    I hereby certify that this bill originated in the House and
  8 31 is known as House File 2786, Eighty=first General Assembly.
  8 32
  8 33
  8 34                                                             
  8 35                               MARGARET THOMSON
  9  1                               Chief Clerk of the House
  9  2 Approved                , 2006
  9  3
  9  4
  9  5                            
  9  6 THOMAS J. VILSACK
  9  7 Governor