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