HSB 192 (LSB 1114YC (4) 86)

HOUSE FILE _____

BY  (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON BALTIMORE)

A BILL FOR

An Act relating to real estate, including redemption by certain persons of parcels sold at tax sale and requirements for timely filing of releases or satisfactions of mortgages.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
REDEMPTION FROM TAX SALES BY CERTAIN PERSONS
    Section 1.  Section 445.1, Code 2015, is amended by adding the following new subsections:
   NEW SUBSECTION.  3A.  “Legal representative” means a parent, guardian, or conservator of a person with a legal disability, a person appointed by a court to act on behalf of a person with a legal disability, or a person acting on behalf of a person with a legal disability pursuant to a power of attorney.
   NEW SUBSECTION.  4A.  “Person with a legal disability” means a minor or a person of unsound mind.
    Sec. 2.  Section 447.7, Code 2015, is amended by striking the section and inserting in lieu thereof the following:
   447.7  Redemption by minors and persons of unsound mind.
   1.  If a parcel of a person with a legal disability is sold at tax sale and the county treasurer has not delivered the treasurer’s deed, a legal representative of the person with the legal disability may redeem the parcel under section 447.1 and section 447.3.
   2.  a.  If a parcel of a person with a legal disability is sold at tax sale and the county treasurer has delivered the treasurer’s deed, the person with the legal disability or the person’s legal representative may redeem the parcel at any time prior to one year after the legal disability is removed by bringing an equitable action for redemption in the district court of the county where the parcel is located, unless the action is required to be brought sooner in time by operation of subsection 3 or subsection 4.
   b.  To establish the right to redeem, the person maintaining the action shall prove to the court that the owner of the parcel is a person with a legal disability entitled to redeem prior to the delivery of the treasurer’s deed. If the legal disability has been removed, the person maintaining the action shall establish the date the disability was removed and explain the manner by which the legal disability was removed.
   c.  The person maintaining the action shall name as defendants all persons claiming an interest in the parcel derived from the tax sale, as shown by the record.
   d.  If the court determines that the person maintaining the action or the person’s legal representative is entitled to redeem by virtue of legal disability or prior legal disability, the court shall so order. The order shall determine the rights, claims, and interests of all parties, including liens for taxes and claims for improvements made on or to the parcel by the person claiming under the tax title. The order shall establish the amount necessary to effect redemption. The redemption amount shall include the amount for redemption computed in accordance with section 447.1 or 447.3, whichever is applicable, including interest computed up to and including the date of payment of the total redemption amount to the clerk of court and the amount of all costs added to the redemption amount in accordance with section 447.13. In addition, if the person claiming under the tax title is determined by the court to have made improvements on or to the parcel after the treasurer’s deed was issued, the court shall enter judgment in favor of the person claiming under the tax title for an amount equal to the value of all such improvements, and such judgment shall be a lien on the parcel until paid. The order shall direct that the person maintaining the action shall pay to the clerk of court, within thirty days after the date of the order, the total redemption amount the order sets forth.
   e.  Upon timely receipt of the payment, the court shall enter judgment declaring the treasurer’s deed to be void and determining the resulting rights, claims, and interests of all parties to the action. In its judgment, the court shall direct the clerk of court to deliver the entire amount of the redemption payment to the person claiming title under the treasurer’s deed.
   f.  If the person maintaining the action fails to timely deliver payment of the total redemption amount to the clerk of court, the court shall enter judgment holding that all rights of redemption of the person with a legal disability who brought the action, or on whose behalf the action was brought, are terminated and that the validity of the tax title or purported tax title is conclusively established as a matter of law against the claims of such person with a legal disability.
   3.  If a person with a legal disability remains in possession of the parcel after the recording of the treasurer’s deed, and if the person claiming under the tax title properly commences an action to remove the person from possession, the person with a legal disability shall forfeit any rights of redemption that the person may have under this section, unless either of the following actions is timely filed by or on behalf of the person:
   a.  A counterclaim in the removal action asserting the redemption rights under subsection 2 of the person with a legal disability.
   b.  A separate action under subsection 2. Such action shall be filed within thirty days after the person with a legal disability and the person’s legal representative were served with original notice in the removal action. If an action under subsection 2 is filed by or on behalf of the person with a legal disability within the thirty-day period, the court may order the action consolidated with the removal action.
   4.  If a person with a legal disability is not in possession of the parcel at the time of the recording of the treasurer’s deed, the person or the person’s legal representative is forever barred and estopped from commencing an action under this section if either of the following occurs:
   a.  An affidavit is filed pursuant to section 448.15 and claims adverse to the tax title are barred by section 448.16.
   b.  An action under subsection 2 is not brought within three years after the recording of the treasurer’s deed.
    Sec. 3.  Section 447.8, subsection 1, Code 2015, is amended to read as follows:
   1.  a.  After the delivery of the treasurer’s deed, a person entitled to redeem a parcel sold at tax sale shall do so only by an equitable action in the district court of the county where the parcel is located. The action to redeem may be maintained only by a person who was entitled to redeem the parcel during the ninety-day redemption period in section 447.12, except that such a person may assign the person’s right of redemption or right to maintain the action to another person, or by a person entitled to redeem under section 447.7.
   b.  In order to establish the right to redeem, the person maintaining the action shall be required to prove to the court either that the person maintaining the action or a predecessor in interest was not properly served with notice in accordance with the requirements of sections 447.9 through 447.12, or that the person maintaining the action or a predecessor in interest acquired an interest in or possession of the parcel during the ninety-day redemption period in section 447.12. A person shall not be entitled to maintain such action by claiming that a different person was not properly served with notice of expiration of right of redemption, if the person seeking to maintain the action, or the person’s predecessor in interest, if applicable, was properly served with the notice. A After the execution and delivery of the treasurer’s deed, a person is not allowed to may only redeem a parcel sold for delinquent taxes in any other manner after the execution and delivery of the treasurer’s deed under this section or section 447.7.
    Sec. 4.  Section 448.6, subsection 1, Code 2015, is amended to read as follows:
   1.  A deed executed by the county treasurer in conformity with the requirements of sections 448.2 and 448.3 shall be presumed to effect a valid title conveyance, and the treasurer’s deed may be challenged only by an equitable action in the district court in the county in which the parcel is located.  If the action seeks an order of the court to allow redemption after delivery of the treasurer’s deed because the person seeking to redeem is a person with a legal disability who was entitled to redeem prior to the delivery of the treasurer’s deed, the action shall be brought in accordance with section 447.7. If the action seeks an order of the court to allow redemption after delivery of the treasurer’s deed based on improper service of notice of expiration of right of redemption, the action shall be brought in accordance with section 447.8. If the action is not brought on that basis under section 447.7 or section 447.8, the action shall be controlled by the provisions of this section.
    Sec. 5.  Section 448.16, subsection 3, Code 2015, is amended to read as follows:
   3.  An action to enforce a claim filed under subsection 1 shall be commenced within sixty days after the date of filing the claim. The action may be commenced by the claimant, or a person under whom the claimant claims title, under either section 447.7, 447.8, or 448.6. If an action by the claimant, or such other person, is not filed within sixty days after the filing of the claim, the claim thereafter shall be forfeited and canceled without any further notice or action, and the claimant, or the person under whom the claimant claims title, thereafter shall be forever barred and estopped from having or claiming any right, title, or interest in the parcel adverse to the tax title or purported tax title.

DIVISION II
RELEASES OR SATISFACTIONS OF MORTGAGES
    Sec. 6.  Section 535B.11, subsection 5, Code 2015, is amended by striking the subsection.
    Sec. 7.  Section 655.1, Code 2015, is amended to read as follows:
   655.1  Written instrument acknowledging satisfaction.
   1.  When the amount due on a mortgage is paid off, the mortgagee, the mortgagee’s personal representative or assignee, the mortgage servicer, or those legally acting for the mortgagee, and in case of payment of a school fund mortgage, the county auditor, must shall, within thirty days of payment in full, acknowledge satisfaction thereof by execution of an a proper instrument of satisfaction which is in writing, referring refers to the mortgage, and is duly acknowledged and recorded.  For purposes of this section, an instrument of satisfaction executed by a person other than the mortgagee, if the mortgagee is an individual, or other than a qualified officer of the mortgagee, if the mortgagee is an entity, is not proper if the authority of the person executing the instrument does not appear of record in relation to the mortgage or the property that is the subject of the mortgage in the county where the mortgage is recorded. 
   2.  For purposes of this chapter, “mortgage servicer” means a person, other than the mortgagee, to whom the mortgagee instructs the mortgagor or mortgagor’s successor in interest to send payments on a loan secured by the mortgage.
    Sec. 8.  NEW SECTION.  655.2  Written demand for satisfaction.
   1.  At any time after payment in full of the mortgage, the owner of the property subject to the mortgage, or the owner’s legal representative or agent, may personally serve upon the current record holder of the mortgage a demand for the record holder to record a proper instrument of satisfaction of the record holder’s interest in the mortgage. The demand must include a description of the mortgage to be satisfied, and include any specific requirements necessary for the mortgage to be satisfied.
   2.  In addition to any other manner permitted by law for personal service, the demand may be served as follows:
   a.  By certified mail, return receipt requested, on a natural person who is a resident in the state or on the Iowa registered agent of a person authorized to do business in Iowa.
   b.  In the manner provided in section 490.1510, subsection 3, on a person who is a nonresident and does not have a current certificate of authority to transact business in Iowa.
   c.  A notice of intent to execute and record a certificate of release sent to the mortgagee or mortgage servicer by the title guaranty division of the Iowa finance authority under section 16.92.
   3.  If notice is served under subsection 2, paragraph “a” or “b”, the notice is effective at the earliest of the date the record holder receives the certified mail, the date shown on the return receipt, if signed on behalf of the record holder, and five days after its deposit in the United States mail, as evidenced by the postmark, if mailed postpaid and correctly addressed. If notice is served under subsection 2, paragraph “c”, notice is effective under any of the circumstances described in section 16.92, subsection 3, paragraph “d”.
    Sec. 9.  Section 655.3, Code 2015, is amended to read as follows:
   655.3  Penalty for failure to discharge.
   1.  If a mortgagee, or a mortgagee’s personal representative or assignee, or mortgage servicer, upon full performance of the conditions of the mortgage, fails to discharge record the satisfaction of such mortgage within in accordance with section 655.1 by the later of ten days after service of a notice is effective under section 655.2 or thirty days after a request for discharge payment in full of the mortgage, the mortgagee is liable to the mortgagor and the mortgagor’s heirs or assigns, for a damage award that is an amount equal to the greater of the sum of all actual damages caused by such the failure, including reasonable attorney fees and expert witness fees, if any, to obtain such discharge, reasonable attorney fees to collect the amounts due the mortgagor or the mortgagor’s heirs, assigns, or grantees under this section, and court costs or the minimum damage award, as defined in subsection 2, in effect at the commencement of an action to collect such damages, plus court courts. A claim for such damages a damage award may be asserted in an action for discharge of the mortgage. If the defendant is not a resident of this state, such action may be maintained upon the expiration of thirty days after the conditions of the mortgage have been performed, without such previous request or tender.
   2.  a.  The minimum damage award for the period beginning July 1, 2015, and ending June 30, 2020, is seven hundred dollars.
   b.  For each subsequent five-year period, if the consumer price index for all urban consumers published by the United States bureau of labor statistics in June of the most recently ended five-year period has increased over the consumer price index for all urban consumers in June of the fifth year of the five-year period immediately preceding the most recently ended five-year period, the minimum damage award amount will increase by the same ratio that the consumer price index increased over those time periods. If the consumer price index did not increase over those time periods, the minimum damage award amount will remain the same as for the most recently ended five-year period.
   c.  If the United States bureau of labor statistics ceases to publish the consumer price index for all urban consumers, the calculation in paragraph “b” shall be based on the increase in inflation over the most recently ended five-year period, as measured by a nationally recognized index of changes in inflation selected by the state treasurer and published in the Iowa administrative bulletin.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill relates to real estate by modifying the mechanism by which minors or persons of unsound mind, or their legal representatives, who own real estate which was sold at a tax sale may redeem such parcels and the requirements for timely filing of releases or satisfactions of mortgages and the remedies for the failure to do so.
   The bill defines “legal representative” as a parent, guardian, or conservator of a person with a legal disability, a person appointed by a court to act on behalf of a person with a legal disability, or a person acting on behalf of a person with a legal disability pursuant to a power of attorney. The bill defines “person with a legal disability” as a minor or a person of unsound mind.
   DIVISION I —— REDEMPTION FROM TAX SALES BY CERTAIN PERSONS.  Under current law, if a person with a legal disability is the owner of a parcel that is sold at a tax sale and the treasurer’s deed has been delivered, the person with a legal disability may redeem the parcel at any time within one year after the disability is removed, in the manner specified in Code section 447.8. Code section 447.8 specifies the manner of redemption by an owner who alleges a failure by the holder of the tax title to serve the parcel owner with notice of the tax sale and the parcel owner’s redemption rights.
   The bill specifies the procedure by which a person with a legal disability can redeem a parcel sold at a tax sale after the delivery of the treasurer’s deed. Before delivery of the treasurer’s deed, the bill provides that the person with a legal disability or the person’s legal representative may redeem under Code sections 447.1 and 447.3, which is the same as current law. After delivery of the treasurer’s deed, the person with a legal disability or the person’s legal representative must bring an equitable action for redemption in the district court of the county where the parcel is located and prove to the court that prior to the delivery of the treasurer’s deed, the person with a legal disability or the person’s legal representative was entitled to redeem by virtue of such disability. All persons claiming an interest in the parcel from the tax sale must be named as defendants. If the court determines that the person with a legal disability or the person’s legal representative is entitled to redeem, the court will determine the rights, claims, and interests of all of the parties, and will establish the amount necessary to effect redemption. The person with a legal disability or the person’s legal representative has 30 days after the date of the order to pay the redemption amount. Upon timely receipt of payment, the court shall declare the treasurer’s deed to be invalid. If the person with a legal disability or the person’s legal representative fails to timely deliver payment, such person’s redemption rights are terminated.
   The action may be brought until one year after the disability is removed unless otherwise barred. The bill bars bringing the action if the person with a legal disability remained in possession of the parcel, the person claiming under the tax title properly commenced an action to remove the person with a legal disability, and the person with a legal disability or the person’s legal representative fails to timely file a counterclaim or separate action asserting the right of redemption. The bill also bars the action if the person with a legal disability is not in possession of the parcel and the action is barred by Code section 448.16. Code section 448.16 bars actions where the person claiming under tax title records an affidavit with the county recorder of the county where the parcel is located and a person with redemption rights fails to file a claim within 120 days after the filing of the affidavit. Finally, the bill bars the action if it is not filed within three years of the recording of the treasurer’s deed.
   DIVISION II —— RELEASES OR SATISFACTIONS OF MORTGAGES. The bill makes changes with regard to requirements of written instruments of satisfaction of mortgages and the penalties for failure of mortgagees or mortgage servicers to timely deliver releases of mortgages.
   The bill strikes Code section 535B.11, subsection 5. Code section 535B.11, subsection 5, requires a licensee or other mortgagee who services mortgages on residential real estate to execute and deliver a release after payoff and within 45 days after receipt of payment. If the licensee or mortgagee fails to do so within 15 days, the mortgagor may notify the superintendent of the division of banking of the department of commerce. If the licensee or mortgagee fails to make the release and deliver it to the superintendent, the superintendent may assess a penalty not to exceed $50 for each day of delinquency after the 15 days.
   Under current Code section 655.1, when the amount due on a mortgage is paid off, the mortgagee or the mortgagee’s personal representative must acknowledge satisfaction by execution of an instrument, which is duly recorded. The bill requires that such an instrument of satisfaction must be recorded within 30 days after receipt of payment in full and extends the requirement to a mortgage servicer. The bill defines “mortgage servicer” as a person, other than the mortgagee, to whom the mortgagee instructs the mortgagor or mortgagor’s successor in interest to send payments on a loan secured by the mortgage. The bill provides if the mortgagee is an entity, the authority of the person executing the instrument of satisfaction must appear of record in relation to the mortgage or the property in the county where the mortgage is recorded. 
   The bill also provides that after payment of the mortgage in full, the owner of the property may serve the current record holder of the mortgage and demand the recording of a proper instrument of satisfaction. If the record holder of the mortgage fails to record the written instrument of satisfaction by the later of 10 days after the mortgagor has served notice of a demand for the recordation of the written instrument of satisfaction and 30 days after payment in full, the mortgagee is liable. Damages are the greater of (a) all actual damages caused by the failure to record the written instrument of satisfaction, including reasonable attorney fees and expert witness fees necessary to obtain the discharge, reasonable attorney fees to collect the damages, and court costs and (b) a minimum damage award plus court costs. The minimum damage award amount from July 1, 2015, to June 30, 2020, is $700. The bill provides for a calculation of the minimum damage award amount for each five-year period after the initial five-year period. For each subsequent five-year period, if the consumer price index for all urban consumers has increased in the five-year period, the minimum damage award amount will increase by the same ratio that the consumer price index increased. If the consumer price index did not increase, the minimum damage award amount will remain the same as for the most recently ended five-year period.