USA – IOWA Law and Practice Contributed by: David M. Erickson, Christopher S. Talcott, Amy S. Montgomery and Shannon M.H. Hasse, Dentons Davis Brown PC
3.4 Taxes or Fees Relating to the Granting and Enforcement of Security Iowa law does not impose a mortgage tax on the granting or enforcement of a mortgage against real estate. Nominal recording fees on a per-page basis are charged in order to file the mortgage in the coun - ty recorder’s office. Normally, a transfer tax equal to USD1.60 per USD1,000 of consideration in excess of USD500 is due upon a transfer of real estate. Such transfer tax is not due upon the issuance of a sheriff’s deed pursuant to a mortgage foreclosure, but must be paid if the foreclosing bank subsequently sells the property after acquiring title through the foreclosure process. 3.5 Legal Requirements Before an Entity Can Give Valid Security Iowa law does not impose any restrictions on an enti - ty’s ability to give a valid security interest against its real estate assets unless such restrictions are set forth in the entity’s organisational documents (ie, articles of incorporation, by-laws, operating agreement, etc). 3.6 Formalities When a Borrower Is in Default A Defaulting Borrower When a borrower is in default under a mortgage loan, the lender must review the loan documents to deter - mine whether they impose any special requirements or procedures governing their enforcement. Under Iowa Code Section 654.2D, residential borrowers are entitled to a 30-day notice of default and opportunity to cure before a lender may enforce the mortgage for a borrower default under a mortgage against the homestead. If the mortgaged property is agricultural land, the borrower is entitled to a 45-day notice of default and opportunity to cure under Iowa Code Sec - tion 654.2A, and, additionally, the lender must ordinar - ily obtain a farm mediation release under the proce - dures of Iowa Code Chapter 654A prior to enforcing the default. While there is no legal requirement to provide a notice of default and opportunity to cure to a borrower under a mortgage encumbering commercial real estate, under Iowa Code Section 654.4B applying to all mortgages, a lender must provide at least a 14-day demand for the accelerated balance due under the mortgage loan
prior to commencing a foreclosure action in order to qualify for an award of attorney fees in such action. Iowa law does not recognise a “power of sale” in a mortgage instrument purporting to grant the lender authority to conduct a private sale of the mortgaged property to satisfy the secured debt. Rather, all mort - gages and deeds of trust must be foreclosed judicially under the procedures set forth in Iowa Code Chap - ter 654 or under statutory non-judicial procedures. In general, the judicial process involves a civil action to establish the validity of the debt and mortgage and the borrower’s default thereunder, and, if successful, will result in a decree of foreclosure issued by a judge that directs the county sheriff to conduct a public auc - tion under statutory procedures to sell the mortgaged property in satisfaction of the debt. A lender may avoid the judicial procedures of Chapter 654 by pursuing the statutory non-judicial foreclosure procedures provided under Iowa Code Section 654.18 and Iowa Code Chapter 655A, but each alternative procedure requires the assent of the borrower to some degree in order to avoid the need for a judicial action. While certain moratoria were put in place during the COVID-19 pandemic, no such restrictions are ongo - ing and there do not appear to be any lingering pan - demic effects on lenders’ decisions to enforce or for - bear enforcement of security interests in the current market. Lender Security Interest A lender perfects its security interest against real estate by recording the mortgage in the county recorder’s office at the time of the loan closing. No further action is required to maintain the priority of the security interest as against other persons acquir - ing an interest in the real estate so long as the mort - gage remains unsatisfied of record, except that an extension of the maturity date must be recorded if the mortgage is more than 20 years old and ten years have passed since the original maturity date. When a foreclosure action is filed in district court, the clerk of court will enter the action in the clerk’s lis pendens index, and any person acquiring an interest in the property subsequent to such entry will be subject to
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