Real Estate Section Legislative Update

Fellow attorneys Walter Conlon, Jim Nervig, Ron Fadness, and I are scheduled to present the Real Estate Section’s legislative update at the Iowa State Bar Association’s Annual Meeting. This is a part of the Commercial & Bankruptcy/Real Estate Track on Wednesday June 22. I am planning to present on HF 243 “Relating To Instruments Used To Update The County Transfer Books And Index Maintained By The County Auditor” and SF 493 “An act relating to the operations of certain common interest communities.”

As the legislative session has gone into a stall, so has the progress on what remains of the affirmative agenda for the real estate section. Here is a quick recap of the affirmative agenda of the real estate section of the Iowa State Bar Association:

SF 244 Judgment Lien Release Bill — Approved; effective July 1. (1) Amends Iowa Code § 624.23(2)(c) to allow alternatives to filing a bond with the clerk; (2) amends Iowa Code § 624.37 to specify a motion procedure in a case reduced to judgment to obtain a satisfaction, allows for remittance to State Treasurer for missing creditors, and increases penalty for wrongfully withholding satisfaction; and (3) amends Iowa Code § 631.1 to provide small claim jurisdiction to accomplish certain releases.

HF 565 Service on Foreign Corporations in in rem Actions; Revised LLC Act Corrections — Approved; effective July 1. (1) Amends Iowa Code § 490.1510 to allow serving process on a foreign corporation of an in rem action if it does not have a certificate of authority, and (2) amends Iowa Code § 489.1103 to allow a professional LLC to use “professional limited company” or “P.L.C.” as under the previous law.

HF 243 Change of Title Bill — Approved; effective July 1. Rewrites section 558.66, Code of Iowa, to provide update of county auditor’s records on filing of an affidavit or articles of merger, consolidation, or name change with specified information and legal description.

SF 493 Common Interest Ownership — Passed Senate 50-0; Alive, but stalled in House. (1) repeals 2010 G.A. ch 1080 (SF 2224), now paragraph 2 of Iowa Code section 499B.15 (2011); (2) adds new open meetings, open records, and notice requirements for all types of property owner associations; (3) adds a new provision for “as built” certificates for buildings constructed after the filing of a declaration in horizontal property regimes. This bill (or whatever may be left of it) is still stuck in the Iowa House of Representatives. Certain special interests believe that the bill adds costs to their process and are unconvinced that it will provide the relief to property owners that they want, especially when the project is still under construction.

HF 539 Mineral Rights Bill — Dead for 2011 session. Generally would allow dormant mineral rights to be extinguished in favor of the fee owner of the surface unless preserved by recording a notice of claim.

SF 494 Foreclosure of Real Estate Mortgages (“White Knight”) Bill — Dead for 2011 session. Would amend Iowa Code § 654.5 to allow a successful bidder at a sale to elect to receive, in lieu of sheriff’s deed or certificate of purchase, an assignment of the judgment creditor’s interest in the judgment, and any policies of title, property and similar insurance or guaranty owned by the judgment creditor in respect of the property. This bill passed the Senate 50-0, but the House Judiciary Committee did not act.

House Judiciary Kills White Knight Bill for 2011

SF 494 died for the session in committee yesterday. SF 494 is one of the Iowa State Bar Association Real Estate Section’s legislative priorities. The “white knight” bill would allow for an assignment of the mortgage at the sheriff’s sale in a foreclosure.

This was the bar’s attempt to “think outside the box” on ways to keep Iowans in their homes amidst the foreclosure crisis. This basically would allow a private work-out on the loan while taking out the foreclosing third party lender. (Let’s face it, the white knight in these situations would be grandma or some other well-to-do relative.)

The bill will be alive for the 2012 session. Legislators apparently fretted over potential for bad actors to sneak in and do more injury to borrowers. The Real Estate Section felt that these concerns had all been adequately addressed. In the mean time, this new approach remains unavailable for another year.

Optional Assignment in Mortgage Foreclosure bill

The Iowa Senate amended and passed the Iowa State Bar Association Real Estate Section’s Optional Assignment in Mortgage Foreclosure bill (SF 494) late this afternoon on a 50-0 vote. Attorney Walter Conlon was the primary drafter of the bill.

The bill allows a “white knight” bidder to become the new lender. The lending company would get the cash paid by the white knight at the sheriff’s sale in respect of its winning bid. In most cases (where deficiency is waived, which occurs in 99% of residential foreclosures) the old lender would be out of the picture, presumably to the great relief of the homeowners.