Property Mortgage Laws in Iowa

In Iowa, which operates through lien theory; the property stays as assurance on the primary loan. A mortgage is the document through which lien is placed on the said property.

Lenders in Iowa go through a judicial foreclosure process that is followed through the court and the final ruling on the foreclosure is announced by the court. The sale of the property then takes place through a publicly notified sale. A complaint, in conjunction with a lis pendens, needs to be filed in the court. A document that is recorded to provide notice to the public about the property being foreclosed on is referred to as a lis pendens.

LEGAL INSTRUMENTS

The legal documents are called mortgage or note; and for commercial transactions, a security agreement. A deed of trust in Iowa can be used by the lender in place of a loan document however it needs to be foreclosed upon in the same way a mortgage is foreclosed. There are times when the security agreement is merged with the mortgage document. To validate the primary loan and its repayment terms, which are incorporated in the note, a mortgage needs to be filed.

TIME PERIOD

A foreclosure that is not contested generally takes in between 150 to 180 days to come into effect; this does depend on the schedule of the court though. If bankruptcy id filed for by the borrower or if the action is contested by the borrower and if the hearings are sought to be delayed or adjourned, the process can be stalled.

The sales notice needs to be posted in three different public-places within the county including the courthouse. Also, it needs to be published twice in a designated news paper within the county where the property is situated no later than four weeks prior to the scheduled sale date. The notice should also be served personally to the borrower at least 20 days before the sale’s date.

The sale needs to take place in between 09:00am and 04:00pm using sealed bids. A mediation process, as mentioned in the in Iowa Code Chapter 654.2C, is required for agricultural properties. A borrower who has defaulted usually has the right to take care of the default within 30 days of the notice of default being received.

RIGHT OF REDEMPTION

A statutory right of redemption where a foreclosed property can be reclaimed by the owner upon payment of the unpaid loan and costs exists in Iowa. In cases of homestead properties such a redemption has a one year time limit. If the deficiency rights are waived by a lender, this period is reduced to six months. Also, when it comes to abandoned properties, this period can be reduced to sixty days. These find a mention in Chapter 628.26 and 628.27 of the Iowa code.

DEFICIENCY JUDGMENT

If a property ends up selling for lesser than the amount on the loan that is secured by the mortgage at the public-sale, the lender can obtain a deficiency judgment. This is included in Chapter 654.6 of the Iowa Code. This implies that the borrower owes to the lender the difference in the original amount on the loan and what the property was sold for at the auction. The period of redemption can be shortened if the lender decides to waive the deficiency.

STATUTES

Foreclosures in Iowa are governed by laws that are part of Chapter 654 of Iowa Code. (Foreclosure of Real Estate Mortgages) Other relevant laws are part of Chapter 615 and Chapter 628 (Redemption).