USA - IOWA Law and Practice Contributed by: David M Erickson, Robert J Douglas, Jr, Christopher S Talcott and Amy S Montgomery, Dentons Davis Brown
the subject of negotiation under the purchase agreement and will typically take the form of the representations and warranties – and cor - responding indemnities – that a seller is willing to provide. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law As in all jurisdictions, the cities and counties in Iowa restrict the use of real estate through zon - ing ordinances. Given the differences in desig - nations and permitted uses across counties and municipalities, the most efficient mechanism for determining the permitted uses of any particu - lar tract of real estate is by requesting a zoning report from the local zoning authority. Develop - ers of real estate may find it advisable to enter into development agreements with the locality (and are quite frequently required to do so). These development agreements can serve as useful mechanisms to attempt to effectuate a change in zoning designations for particular parcels of property. The change in zoning des - ignation will, however, almost always require the consent of several levels or departments of local government, after notice and public hear - ing regarding any change in zoning designation. 2.9 Condemnation, Expropriation or Compulsory Purchase Condemnation or eminent domain are possible in the state of Iowa through a statutory process. The state, city, or county identifies properties affected by a particular project, inspects and values the property, and makes an offer to the owner. If the property owner does not accept the government’s offer, there is a quasi-judicial process which unfolds, including determination of “just compensation” by an appointed county commission.
Either party may appeal the determination of the commissioners. The appeal is heard by ordinary judicial process. 2.10 Taxes Applicable to a Transaction Iowa imposes a transfer tax, which is collected at the time the conveyance document is recorded with the county recorder. Transfer tax is incurred at the rate of 80 cents for every USD500 of con - sideration paid in excess of USD500. Transfer tax is typically paid by the seller. Aside from transactions in which consideration is less than USD500, there are a host of excep - tions, including transfers to newly created busi - ness entities or as part of reorganisation of busi - ness entities. Note that transfer or sale of shares of a company which owns real estate does not trigger the obligation for payment of transfer tax in Iowa. Conversely, real estate taxes are usually pro - rated between buyers and sellers as of the date of possession of the property. In Iowa, property taxes are incurred on a fiscal calendar (ending 30 June) and are paid in arrears (the first half payable 30 September and the second half pay - able 31 March of the following calendar year). Because of this, some care is required when it comes to payment and responsibility for pay - ment of real estate taxes between buyers and sellers. In a typical real estate transaction, the seller will pay the cost of transfer tax, preparation of the instruments transferring title, and the cost to update the abstract for review by the buyer’s attorney. The seller will also generally be respon - sible for the preparation and recording fees relat - ed to any instruments necessary to cure defects in the seller’s title. Buyers will typically pay the cost related to examination of the abstract, the
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