USA - IOWA Law and Practice Contributed by: David M Erickson, Robert J Douglas, Jr, Christopher S Talcott and Amy S Montgomery, Dentons Davis Brown
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 mort - gage in the county 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 pur - suant to a mortgage foreclosure, but must be paid if the foreclosing bank subsequently sells the property after acquiring title through the fore - closure process. 3.5 Legal Requirements Before an Entity Can Give Valid Security Iowa law does not impose any restrictions on an entity’s ability to give a valid security interest against its real estate assets unless such restric - tions 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 determine if they impose any special require - ments or procedures governing their enforce - ment. Under Iowa Code Section 654.2D, resi - dential 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 bor - rower is entitled to a 45-day notice of default and opportunity to cure under Iowa Code Section 654.2A, and, additionally, the lender must ordi - narily obtain a farm mediation release under the
are foreclosed in the same manner under Iowa Code Chapter 654. In addition to the mortgage, some lenders may require a separate assign - ment of any rents generated from the acquired real estate, though these may be granted within the mortgage instrument itself. A wide variety of security interests may also be granted against a borrower’s personal proper - ty, in the form of a general security agreement which may be supplemented and/or perfected by the filing of UCC financing statements. It is possible that a seller may choose to finance the buyer’s acquisition of the real estate, particu - larly in an environment of high interest rates for new bank loans. If so, the seller and buyer would typically enter into a real estate instalment con - tract, providing for a down payment to be made at closing and the balance of the purchase price to be paid to the seller in regular instalments with interest. 3.3 Restrictions on Granting Security Over Real Estate to Foreign Lenders Purely in terms of the nature of the documenta - tion and the process involved, there would be no special regulatory hurdles or restrictions affect - ing foreign lenders as compared with domes - tic lenders in a transaction involving Iowa real estate. However, foreign lenders should consider the facts and circumstances involved in the par - ticular transaction as well as other transactions the lender may be involved in within the state in order to evaluate whether the lender may be deemed to be transacting the business of bank - ing in Iowa. If so, then the lender would be sub - ject to the terms of the Iowa Banking Act.
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