SF 358 (LSB 1116SV (1) 85)

SENATE FILE 358

BY  COMMITTEE ON JUDICIARY

(SUCCESSOR TO SSB 1220)

A BILL FOR

An Act concerning title to real estate.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 558.5, Code 2013, is amended to read as follows:
   558.5  Contract for deed —— presumption of abandonment.
   1.  When the record shows that a contract or bond for a deed has been
 
was executed more than ten years earlier, and the record discloses no performance of the same and that more than ten years have elapsed since the contract by its terms was to be performed, the contract
 
or bond shall be deemed abandoned
 
by the vendee and of no effect
 
void and the land shall be freed from any lien or defect on account of the contract
 
or bond in any of the following situations:
   a.  The record does not indicate the contract or bond has been performed and more than ten years have elapsed since the contract or bond by its terms was to be performed.
   b.  A performance date for the contract or bond is not stated in the contract or bond or any extensions thereof and more than twenty years have elapsed from the date the contract or bond was executed.
   2.  On and after July 1, 1992, this
 
This section shall apply to a contract or bond described in this section, if the contract or bond is not filed of record but
 
is referred to in another instrument which is filed of record. The contract or bond shall be deemed abandoned
 
by the vendee ten years from the date that the contract or bond is to be performed according to the recorded instrument. However, if the recorded instrument does not refer to a performance date for the contract or bond, the contract or bond shall be deemed abandoned ten
 
twenty years after the date that the instrument containing the reference is recorded.
   3.  This section shall not apply to a vendee or a vendee’s successor in interest if the vendee or the vendee’s successor in interest is in possession of the property or has been continuously paying the total amount due, as defined in section 445.1, of the taxes levied against the property for the preceding five years.
    Sec. 2.  Section 614.21, Code 2013, is amended to read as follows:
   614.21  Foreclosure of ancient mortgages.
   1.  No
 
An 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,
 
shall be barred, unless the
 
either of the following:
   a.  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.
   b.  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.
   2.  The date of maturity, when different than as appears by the record of the instrument, and the date of maturity of any extension of said indebtedness or part thereof, may be shown at any time prior to the expiration of the above periods of limitation
 
specified in subsection 1 by the holder of the debt or the owner or assignee of the instrument filing an extension agreement, duly acknowledged as the original instrument was required to be acknowledged, in the office of the recorder where the instrument is recorded.

   3.  From and after July 4, 1946, this
 
This section shall also apply to any instrument of the kind described in this section which is not of record but which is described or referred to in any other instrument which is filed of record and the. The limitation shall be ten years from the due date of the instrument referred to if disclosed in the record and, if not so disclosed, then within ten years from the date of the record of the instrument containing such reference
 
is recorded.
   4.
  a.  A vendee of a real estate contract or bond for deed, or a vendee’s successor in interest, who is barred by this section from maintaining an action to foreclose or enforce the contract or bond and who is in physical possession of the property may serve the vendor with a demand for a deed as provided in the contract. The notice may be served personally or by publication, on the same conditions, and in the same manner as is provided for the service of original notices, except that when the notice is served by publication an affidavit shall not be required before publication. Service by publication shall be deemed complete on the day of the last publication. Service may be made on a judgment creditor of the deceased vendor or any other person who is, as a matter of record, interested in the estate of a deceased vendor, in the manner provided in section 654.4A, subsections 4 and 5.
   b.  The demand shall state that if a deed is not provided within forty-five days of service and an action to foreclose or forfeit the contract has not been commenced within such forty-five-day period, the vendee may file an affidavit showing service and compliance with this subsection whereupon the auditor shall correct the county records as provided in section 558.67 to indicate that the rights of the vendor have vested in the vendee. 
    Sec. 3.  Section 656.3, Code 2013, is amended to read as follows:
   656.3  Service.
   1.  Said
 
The notice
 
provided for in section 656.2 may be served personally or by publication, on the same conditions, and in the same manner as is provided for the service of original notices, except that when the notice is served by publication no
 
an affidavit therefor shall
 
not be required before publication. Service by publication shall be deemed complete on the day of the last publication.
   2.  The notice provided for in section 656.2 may be served on a judgment creditor of a deceased vendor or on any other person who is, as a matter of record, interested in the estate of a deceased vendor in the manner provided in section 654.4A, subsections 4 and 5.
    Sec. 4.  Section 656.9, Code 2013, is amended to read as follows:
   656.9  Defect in forfeiture proceedings —— limitation of actions.
   1.  An action shall not be commenced after July 1, 1992, which
 
that asserts a claim against real estate previously subject to a forfeiture proceeding,
 
and such claim is based upon a defect in the forfeiture proceeding, in which the proof and record of service of notice of forfeiture required by section 656.5 has been filed for record in the office of the county recorder prior to July 1, 1991.
   2.
  a.  An action shall not be commenced by a vendee who is not in possession of the property, or by a party to the forfeiture proceeding who is other than a vendee or vendor, that asserts a claim against real estate previously subject to a forfeiture proceeding, and such claim is based upon a defect in the forfeiture proceeding, in which the proof and record of service of notice of forfeiture required by section 656.6 has been filed of record for more than ten years.
   b.  A vendee who is not in possession of the property, or a party to the forfeiture proceeding who is other than the vendee or vendor, may commence an action described in paragraph “a” at any time prior to July 1, 2014, if, as of June 30, 2013, more than nine years but ten years or less have elapsed since the proof and record of service of notice of forfeiture required by section 656.6 was filed of record.
   c.  This subsection is repealed July 1, 2014. 
EXPLANATION
   This bill makes changes relating to the sale of real estate by contract or bond.
   The bill amends Code section 558.5, relating to a presumption of abandonment of a contract or bond for the sale of real estate. Under current law, a contract or bond for the sale of real estate is presumed abandoned and of no effect if the record of the contract or bond was executed or recorded, as applicable, more than 10 years earlier and no performance had been made on the contract or bond and 10 years have elapsed since the performance date stated in the record of the contract or bond. The bill provides that if the record of the contract or bond for the sale of real estate executed more than 10 years earlier does not indicate a performance date, the contract or bond is presumed abandoned and of no effect when more than 20 years have elapsed since the record of the contract or bond was executed or recorded, as applicable. Code section 558.5 is also amended to remove a July 1, 1992, date relating to prospective applicability of Code section 558.5 to a contract or bond for the sale of real estate that is not recorded but is referred to in another recorded instrument. 
   This bill amends Code section 614.21, relating to the foreclosure of ancient mortgages. Current law provides that an action to foreclose or enforce any real estate mortgage, bond for deed, trust deed, or contract for the sale or conveyance of real estate, after 20 years from the date thereof, as shown by the record of such instrument, shall not be barred under certain circumstances. The bill provides that a vendee of a real estate contract or bond for deed, or a vendee’s successor in interest, who is barred under Code section 614.21 from maintaining an action to foreclose or enforce the contract or bond and who is in physical possession of the property may serve the vendor with a demand for a deed as provided in the contract. The written notice may be served personally or by publication, on the same conditions, and in the same manner as is provided for the service of original notices, except that when the notice is served by publication an affidavit shall not be required before publication. Service by publication shall be deemed complete on the day of the last publication. The bill also provides for service on a judgment creditor of a deceased vendor or any other person who is, as a matter of record, interested in the estate of a deceased vendor. The demand shall state that if a deed is not provided within 45 days of service and an action to foreclose or forfeit the contract has not been commenced within such period, the vendee may file an affidavit showing service. In such a case the county auditor is required to correct the county records to indicate that the rights of the vendor have vested in the vendee.
   The bill amends Code section 656.3 to specify that the written notice that a vendor is required to serve on a vendee pursuant to Code section 656.2 to forfeit a contract for the sale of real estate located in this state may be served on a judgment creditor of a deceased vendor or on any other person who is, as a matter of record, interested in the estate of a deceased vendor in the manner provided for service of process in Code section 654.4A.
   The bill provides that an action that asserts a claim against real estate previously subject to a forfeiture proceeding, based upon a defect in the forfeiture proceeding, shall not be commenced by a vendee who is not in possession of the property, or by a party to the forfeiture proceeding who is other than a vendee or vendor, in which the proof and record of service of notice of forfeiture has been filed of record for more than 10 years. A vendee who is not in possession of the property, or a party to the forfeiture proceeding who is other than the vendee or vendor, may commence such an action at any time prior to July 1, 2014, if, as of June 30, 2013, more than nine years but 10 years or less have elapsed since the proof and record of service of notice of forfeiture was filed of record. The bill repeals this provision on July 1, 2014.