Practical suggestion: Call the local non-profit that filed the retention agreement.
Barbara F. Orzechowski
Klass Law Firm, L.L.P.
4280 Sergeant Road
Mayfair Center, Suite 290
Sioux City, IA 51106
Phone: 712-252-1866, ext. 224
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From: realestate-owner@iabar.org [mailto:realestate-owner@iabar.org]
On Behalf Of Timothy L. Gartin
Sent: Wednesday, June 6, 2018 9:21 PM
To: realestate@iabar.org
Cc: Rousseau, Matthew <matthew.rousseau@ifa.iowa.gov>
Subject: [ISBA RealEstate] Retention agreements as liens
Hi Colleagues,
I would value your insight into how to think about instruments called “Retention Agreements” where the retention period has passed. Should they be treated like mortgages
where we are within ten years of the maturity date or like financing statements that legally expire after five years unless renewed? I have attached the instrument in question with the identifying information masked. In this situation, the retention agreement
was filed 1/28/11 and provides for a five-year “retention period” beginning on the last date on which the Owner receives financial assistance under the program. The document is silent as to the precise date but let’s assume that it was more than five years
ago. My specific question is whether retention agreements filed longer than their retention periods need to be released.
A few observations:
1.
The document does not define itself as a mortgage or a financing statement as defined by the Iowa Code.
2.
Whatever we call it (a mortgage, something else), the retention agreement initially encumbered the real estate in a defined amount, in this case $4,712.54.
3.
The balance of the obligation is reduced by 1/5 for every full year the Owner owns the property. Thus, because more than 5 years have passed since January 2011, it could be presumed that there is no further balance. However, you could make the same presumption
with a mortgage beyond its maturity date.
4.
The full amount becomes due and payable if any of the events in section four of the agreement occur: (1) sale of property, (2) the property is surrendered as the principal residence of the Owner, or (3) the property is rented. How would an examining
attorney know whether the Owner has moved out or rented the property based on the examination of the abstract? Should we presume compliance with the agreement? If the property was rented in year 2, the balance would then come due. Would the retention agreement
continue as a lien against the property beyond the original five years. If so, for how long?
Thanks,
Tim
Timothy L. Gartin
Hastings Gartin & Boettger LLP
409 Duff
Ames, IA 50010
T: 515-232-2501 / F: 515-232-2525
timothygartin@amesattorneys.com