Senate Study Bill 1042 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON FRAISE) A BILL FOR An Act relating to the release and satisfaction of judgments. 1 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 2 TLSB 1049SC (4) 84 rh/nh

S.F. _____ Section 1. Section 624.23, subsection 2, paragraph c, Code 1 2011, is amended to read as follows: 2 c. A party serving a written demand under this subsection 3 may obtain an immediate court order releasing the claimed lien 4 by posting with the clerk of court a cash bond in an amount of 5 at least one hundred twenty-five percent of the outstanding 6 balance owed on the judgment. The court may order that in 7 lieu of posting the bond with the clerk of court, the bond 8 may be deposited in either the trust account of an attorney 9 licensed to practice law in this state or in a federally 10 insured depository institution, along with the restriction that 11 the bond not be disbursed except as the court may direct. A 12 copy of the court order shall be served along with a written 13 demand under this subsection . Thereafter, any execution on 14 the judgment shall be against the bond, subject to all claims 15 and defenses which the moving party had against the execution 16 against the real estate, including but not limited to a lack 17 of equity in the property to support the lien in its proper 18 priority. The bond shall be released by the clerk of court 19 upon demand of its principal or surety if no execution is 20 ordered on the judgment within thirty days of completion of 21 service of the written demand under this subsection . 22 Sec. 2. Section 624.37, Code 2011, is amended to read as 23 follows: 24 624.37 Satisfaction of judgment —— penalty. 25 1. When the amount due upon judgment is paid off, or 26 satisfied in full, the party entitled to the proceeds thereof, 27 or those acting for that party, must acknowledge satisfaction 28 of the judgment by the execution of an instrument referring to 29 it, duly acknowledged or notarized in the manner prescribed 30 in chapter 9E, and filed in the office of the clerk in every 31 county wherein the judgment is a lien. A failure to do so 32 acknowledge satisfaction of the judgment in such manner 33 within thirty days after having been requested to do so in 34 a writing containing a draft release of the judgment shall 35 -1- LSB 1049SC (4) 84 rh/nh 1/ 4

S.F. _____ subject the delinquent party to a penalty of one four hundred 1 dollars plus reasonable attorney fees incurred by the party 2 aggrieved, to be recovered in an action for the satisfaction 3 or acknowledgment by the party aggrieved by a motion filed by 4 the judgment debtor in the court that rendered the original 5 judgment requesting that the judgment debtor be subrogated to 6 the rights of the judgment creditor, that the court determine 7 the amount currently owed on the judgment, or any other relief 8 as may be necessary to accomplish payment and satisfaction of 9 the judgment . If the motion relates to a lien of judgment as to 10 specific property, the motion may be filed by a person with an 11 interest in the property. 12 2. Upon the filing of an affidavit to the motion that 13 a judgment creditor cannot be located or is unresponsive 14 to requests to accept payment within the thirty-day period 15 described in subsection 1, payment upon a judgment may be 16 made to the treasurer of state as provided in chapter 556 and 17 the treasurer’s receipt for the funds is conclusive proof of 18 payment on the judgment. 19 Sec. 3. Section 631.1, Code 2011, is amended by adding the 20 following new subsection: 21 NEW SUBSECTION . 8. The district court sitting in small 22 claims has concurrent jurisdiction of motions and orders 23 relating to releases of judgments in whole or in part including 24 motions and orders under section 624.23, subsection 2, 25 paragraph “c” and section 624.37, where the amount owing on 26 the judgment, including interests and costs, is five thousand 27 dollars or less. 28 EXPLANATION 29 This bill relates to the release and satisfaction of 30 judgments. 31 Current law provides that a party serving a written demand 32 on a judgment lien against a homestead may obtain an immediate 33 court order releasing the claimed lien by posting a cash bond 34 with the clerk of court. The bill provides that the court 35 -2- LSB 1049SC (4) 84 rh/nh 2/ 4

S.F. _____ may order that, in lieu of posting the bond with the clerk of 1 court, the bond may be deposited in either the trust account 2 of an attorney licensed to practice law in this state or in 3 a federally insured depository institution, along with the 4 restriction that the bond not be disbursed except as the court 5 may direct. 6 Current law provides that when the amount due on a judgment 7 is paid off or satisfied in full, the judgment creditor must 8 acknowledge satisfaction of the judgment by executing and 9 filing an instrument with the clerk of court in every county 10 where the judgment is a lien. Failure to do so within 30 11 days subjects the judgment creditor to a penalty of $100 plus 12 reasonable attorney fees. The bill amends this law to provide 13 that the judgment creditor may instead have the instrument 14 acknowledging satisfaction of the debt notarized in the manner 15 prescribed in Code chapter 9E. The bill increases the penalty 16 for failing to acknowledge the satisfaction of the debt in 17 such a manner to $400 but eliminates the recovery of attorney 18 fees. The bill provides that the penalty may be recovered by a 19 motion filed by the judgment debtor in the court that rendered 20 the original judgment requesting that the judgment debtor be 21 subrogated to the rights of the judgment creditor, that the 22 court determine the amount currently owed on the judgment, or 23 any other relief as may be necessary to accomplish payment and 24 satisfaction of the judgment. If the motion relates to a lien 25 of judgment as to specific property, the motion may be filed by 26 a person with an interest in the property. 27 The bill also provides that upon the filing of an affidavit 28 that a judgment creditor cannot be located or is unresponsive 29 to requests to accept payment, payment upon a judgment may be 30 made to the treasurer of state as provided in Code chapter 556 31 and the treasurer’s receipt for the funds is conclusive proof 32 of payment on the judgment. 33 The bill provides that the district court sitting in small 34 claims has concurrent jurisdiction of motions and orders 35 -3- LSB 1049SC (4) 84 rh/nh 3/ 4

S.F. _____ relating to releases of judgments where the amount owing on the 1 judgment, including interests and costs, is $5,000 or less. 2 -4- LSB 1049SC (4) 84 rh/nh 4/ 4