So, if there is no right to prepay – then the buyer cannot sell the property to a buyer who would get a new mortgage. And if there is a prohibition on assignment in the contract, the buyer might not be able to take over payments.
Why wouldn’t this construed as a prohibition on alienation, which I thought was frowned on by the courts?
Rick Vesole
From: realestate-owner@iabar.org [mailto:realestate-owner@iabar.org] On Behalf Of Brian Eddy
Sent: Wednesday, December 27, 2017 4:14 PM
To: realestate@iabar.org
Subject: RE: [ISBA RealEstate] Real Estate Contract - Right to Prepay
Thank you for everyone’s comments / citations.
Very helpful.
Brian Eddy
From: realestate-owner@iabar.org [mailto:realestate-owner@iabar.org] On Behalf Of Bruce Nuzum
Sent: Wednesday, December 27, 2017 4:01 PM
To: realestate@iabar.org
Subject: Re: [ISBA RealEstate] Real Estate Contract - Right to Prepay
If this is a private contract (no bank involved as lender) then the rule is that the buyer cannot prepay unless the contract says so, or the seller agrees.
Lett v. Grummer, 300 NW2d 147 (Iowa 1980).
" III. In this court Donald still insists that he is entitled to pay off the balance of the contract and have his deed. As the trial court held, however, the law has long been to the contrary here and elsewhere. Mrs. Grummer cannot be compelled to take the money until it is due. Anderson v. Haskell, 45 Iowa 45, 47 (1876) ; Annot., 17 A.L.R. 866 (1922)." Prudential Insurance Company of America v. Rand & Reed Powers Partnership, 972 F.Supp 1194 (N.D. Iowa, 1997)
But if the language “on or before” a specific date appears in the contract document, that has been held to be prepayment authorization. (per Mike Gabor in a prior discussion).
Bruce Nuzum
Caldwell, Brierly, Chalupa & Nuzum, PLLC
211 First Avenue West
Newton IA 50208
Phone: 641-792-3614 or 641-792-4160
Fax: 641-792-2410
From: Jim Pickner <realestate@iabar.org>
To: "realestate@iabar.org" <realestate@iabar.org>
Sent: Wednesday, December 27, 2017 3:48 PM
Subject: RE: [ISBA RealEstate] Real Estate Contract - Right to Prepay
Hi Brian. I have always understood that there Is no right unless given in the contract. Jim
From: realestate-owner@iabar.org [mailto:realestate-owner@iabar.org] On Behalf Of Brian Eddy
Sent: Wednesday, December 27, 2017 3:31 PM
To: realestate@iabar.org
Subject: [ISBA RealEstate] Real Estate Contract - Right to Prepay
Good afternoon –
A year or so ago I recall an exchange on the List Serve about the right of a contract vendee to prepay on a real estate contract. I thought someone mentioned an Iowa Supreme Court case where the Court ruled that unless the real estate contract specifically prohibits the right to pay off the contract early, the contract vendee has the right to pay off the contract at any time. I researched Westlaw and couldn’t locate the recent case on this.
Does anyone recall what case that was? Or does anyone know of any authority on the right of a contract vendee to pay off a real estate contract early absent a clause in the real estate contract prohibiting early payment?
Thanks.
Brian C. Eddy
Attorney at Law
Roberts & Eddy, P.C.
2349 Jamestown Ave., Suite #4
Independence, IA 50644
Tel: 319.334.3704
Fax: 319.334.3421
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