House Study Bill 597 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON ANDERSON) A BILL FOR An Act relating to civil actions relating to real estate, 1 including mortgage foreclosure actions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 5459YC (3) 84 rh/sc

H.F. _____ Section 1. Section 617.11, Code 2011, is amended to read as 1 follows: 2 617.11 Lis pendens. 3 1. When so indexed said action When a petition or municipal 4 infraction citation affecting real estate is indexed pursuant 5 to section 617.10, either action shall be considered pending so 6 as to charge all third persons with notice of its pendency, and 7 while pending no interest can be acquired by third persons in 8 the subject matter thereof as against the plaintiff’s rights. 9 2. If a claim of interest against the property is acquired 10 prior to the indexing of the petition or citation and such 11 claim is not filed of record prior to indexing, it is subject 12 to the pending action as provided in subsection 1, unless any 13 of the following occurs: 14 a. The claimant intervenes in the pending action prior to 15 entry of judgment. 16 b. The claimant, prior to transfer of an interest in the 17 property to a bona fide third-party transferee, records an 18 affidavit showing that the party seeking relief under the 19 pending action had, prior to the indexing of the petition or 20 citation, actual notice of the claim of interest and of the 21 identity of the claimant. 22 3. This subsection does not apply to a mechanic’s lien filed 23 pursuant to chapter 572 or to a person who has taken possession 24 of the property for value prior to the indexing of the petition 25 or citation. 26 Sec. 2. Section 654.4A, unnumbered paragraph 1, Code 2011, 27 is amended to read as follows: 28 In addition to any other form of service authorized by 29 law, where in rem relief is the only relief requested in a 30 foreclosure action or nonjudicial foreclosure under section 31 654.18 or chapter 655A against either a party or a person to be 32 served with a notice pursuant to section 654.15B , all of the 33 following shall apply: 34 Sec. 3. Section 654.18, subsection 1, paragraph e, Code 35 -1- LSB 5459YC (3) 84 rh/sc 1/ 3

H.F. _____ 2011, is amended to read as follows: 1 e. (1) The mortgagee shall send by certified mail a 2 notice of the election to all junior lienholders as of the 3 date of the conveyance under paragraph “a” , stating that the 4 junior lienholders have thirty days from the date of mailing 5 to exercise any rights of redemption. The notice may also be 6 given in the manner prescribed in section 656.3 in which case 7 the junior lienholders have thirty days from the completion of 8 publication to exercise the rights of redemption. 9 (2) In addition to any other form of service authorized by 10 law, service of process in an alternative nonjudicial voluntary 11 foreclosure procedure filed pursuant to this section where in 12 rem relief is the only relief requested shall be served in the 13 manner provided in section 654.4A. 14 Sec. 4. Section 655A.3, subsection 1, paragraph b, Code 15 2011, is amended to read as follows: 16 b. The notice shall contain the following in capital letters 17 of the same type or print size as the rest of the notice: 18 WITHIN THIRTY DAYS AFTER YOUR RECEIPT OF THIS NOTICE, YOU 19 MUST EITHER CURE THE DEFAULTS DESCRIBED IN THIS NOTICE OR FILE 20 WITH THE RECORDER OF THE COUNTY WHERE THE MORTGAGED PROPERTY 21 IS LOCATED A REJECTION OF THIS NOTICE AND SERVE A COPY OF YOUR 22 REJECTION ON THE MORTGAGEE IN THE MANNER PROVIDED BY THE RULES 23 OF CIVIL PROCEDURE FOR SERVICE OF ORIGINAL NOTICES IN SECTION 24 655A.4 . IF YOU WISH TO REJECT THIS NOTICE, YOU SHOULD CONSULT 25 AN ATTORNEY AS TO THE PROPER MANNER TO MAKE THE REJECTION. 26 IF YOU DO NOT TAKE EITHER OF THE ACTIONS DESCRIBED ABOVE 27 WITHIN THE THIRTY-DAY PERIOD, THE FORECLOSURE WILL BE COMPLETE 28 AND YOU WILL LOSE TITLE TO THE MORTGAGED PROPERTY. AFTER THE 29 FORECLOSURE IS COMPLETE THE DEBT SECURED BY THE MORTGAGED 30 PROPERTY WILL BE EXTINGUISHED. 31 Sec. 5. Section 655A.4, Code 2011, is amended to read as 32 follows: 33 655A.4 Service. 34 Notice under this chapter shall be served as provided in 35 -2- LSB 5459YC (3) 84 rh/sc 2/ 3

H.F. _____ the rules of civil procedure for service of original notice 1 or as provided in section 654.4A . Rejection of notice under 2 this chapter shall be served by ordinary or electronic mail 3 addressed as provided in the notice, or if no address is 4 provided, to the last address of the mortgagee known to the 5 mortgagor. 6 EXPLANATION 7 Current law provides that when a petition or municipal 8 infraction citation affecting real estate is indexed pursuant 9 to Code section 617.10, either action is considered pending, 10 placing third parties on notice of its pendency, and while 11 pending no interest can be acquired by third persons. The bill 12 provides that if a claim of interest against real estate is 13 acquired prior to the indexing of a petition or citation and 14 such claim is not filed of record prior to indexing, it is 15 subject to the pending action unless the claimant intervenes in 16 the pending action prior to entry of judgment or the claimant, 17 or prior to transfer of an interest in the property to a bona 18 fide third-party transferee, the claimant records an affidavit 19 showing that the party seeking relief under the pending action 20 had, prior to the indexing of the petition or citation, actual 21 notice of the claim of interest and of the identity of the 22 claimant. The bill does not apply to a mechanic’s lien filed 23 pursuant to Code chapter 572 or to a person who has taken 24 possession of the property for value prior to indexing of the 25 petition or citation. 26 The bill extends service of process requirements currently 27 in effect for foreclosure actions to nonjudicial voluntary 28 foreclosures and nonjudicial foreclosures of nonagricultural 29 mortgages and makes conforming Code changes. 30 -3- LSB 5459YC (3) 84 rh/sc 3/ 3