From: realestate-owner@iabar.org [mailto:realestate-owner@iabar.org] On Behalf Of Douglas Daggett
Sent: Thursday, October 15, 2015 9:42 AM
To: realestate@iabar.org
Subject: Re: RE: [ISBA RealEstate] Forfeiture Available?

Yes, the contract was recorded.

Douglas D Daggett
Creston, IA 50801-0404
641-782-3170

This E-mail (including attachments) is covered by the Electronic Communications Privacy Act, 18 USC Sections 2510-2521, is confidential and may be legally privileged.

Sent: Thursday, October 15, 2015 at 9:18 AM
From: "Dan Connolly" <realestate@iabar.org>
To: "realestate@iabar.org" <realestate@iabar.org>
Subject: RE: [ISBA RealEstate] Forfeiture Available?

If you look at 656.6 Scope of Chapter, I would say yes. Obviously, the 15 days to vacate language would be unenforceable. Forfeiture requires a 30 day notice to cure.

The bigger question may be, was the contract filed of record with the County Recorder? Section 558.46(3) forbids the forfeiture of an unrecorded installment contract.

558.46 Mandatory recording of certain residential real estate installment sales contracts. 1. Every real estate installment sales contract transferring an interest in residential property shall be recorded by the contract seller with the county recorder in the county in which the real estate is situated not later than ninety days from the date the contract was signed by the contract seller and contract purchaser. 2. Failure to record a real estate contract required to be recorded by this section by the contract seller within the specified time limit is punishable by a fine not to exceed one hundred dollars per day for each day of violation. The county recorder shall record a real estate contract presented for recording even though not presented within ninety days of the signing of the contract. The county recorder shall forward to the county attorney a copy of each real estate contract recorded more than ninety days from the date the contract was signed by the contract seller and contract purchaser. The county attorney shall initiate action in the district court to enforce the provisions of this section. Fines collected pursuant to this subsection shall be deposited in the general fund of the county. 3. Failure to timely record shall not invalidate an otherwise valid real estate contract. However, a contract seller is prohibited from initiating forfeiture proceedings on the basis of a failure to comply with the terms of a real estate contract, if the contract has not been recorded.

Sincerely,

Daniel B. Connolly J.D.

Connolly Law Firm, P.L.L.C.

Telephone: (515) 331-1301

Facsimile: (515) 252-1739

Email: dan@connollylawpractice.com

Website: www.connollylawpractice.com

Connolly Law Firm, P.L.L.C.

3913 Horton Trail

Urbandale, Iowa 50322-2182

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From: realestate-owner@iabar.org [mailto:realestate-owner@iabar.org] On Behalf Of Douglas Daggett
Sent: Thursday, October 15, 2015 8:51 AM
To: realestate
Subject: [ISBA RealEstate] Forfeiture Available?

A contract seller (and potential new client) wrote his own Contract for Deed. The only language concerning remedies: "Any violation of said conditions and terms will forfeit all agreements of purchase. Buyer will be given 15 days to vacate house and property." The terms and conditions are monthly installments of $600 per month, pay all property taxes, and keep the house insured.

Buyer has not paid the last four monthly installments. Seller asks for contract forfeiture.

Does this language satisfy Iowa Code sec. 656.1?

If not, how does one terminate the contract for default of payment?

Received: from dsmdc-mail-smtp.mcomdc.com [68.66.77.73] by iabar.org with ESMTP (SMTPD-12.5.3.93) id e469000005000698; Thu, 15 Oct 2015 09:45:53 -0500 Received: from njtozmbv08.mcomdc.com ([10.0.20.26]) by njtocomv02.mcomdc.com with bizsmtp id VSlt1r00B0ZlYsS01SltTJ; Thu, 15 Oct 2015 10:45:53 -0400 X-Outbound-Route: W X-Authenticated-Sender: davidhanson@mchsi.com X-Authority-Analysis: v=1 cv=PoQfm9 c=sm=tr= a=7Mc+Rjd7LuP37p3AAzgQ=117 a=EARZ09AAAA:8 a=4JvI9PAAAA:8 a=krIqjQGGEA:10 a=onBFOu_QkA:10 a=cTkHD0fZMA:10 a=XNOOUIAAAA:8 aLCL6Zgz9bAgt1WyBfsA:9 a=jq5yzfKquMeZ1x:21 a=ZH5CJB5VSLK4EC:21 a=XdDO2ut3YA:10 a=lp_c03yVAA:10 a=pqv1XXqpgA:10 aGR0PAWeH0A:10 a=wR8fyn3PQA:10 a=DtO6y8okgA:10 Date: Thu, 15 Oct 2015 10:45:53 -0400 (EDT) From: To: realestate@iabar.org Message-ID: In-Reply-To: References: Subject: =tf-8?Q?[ISBA RealEstate]? Forfeiture Available MIME-Version: 1.0 Content-Type: text/plain; charset=f-8 Content-Transfer-Encoding: quoted-printable X-Originating-IP: [173.31.179.63] X-Mailer: Zimbra 8.0.9_GA_6191 (ZimbraWebClient - IE7 (Win)/8.0.7_GA_6021) Thread-Topic: Forfeiture Available Thread-Index: AwLOe5sO5oV6B5XrhowG0uT4gDxhbg= X-CTCH-RefID: str01.0A020203.561FBC22.002E,ss=re=000,recu=000,reip=000,cl=cld=fgs= Precedence: bulk Sender: realestate-owner@iabar.org Reply-To: realestate@iabar.org X-RCPT-TO: Status: X-UIDL: 741125515 X-IMail-ThreadID: bc25000009c07fdb Ah, the pungent reek of home-brewed land contracts. Yes, I think, this contract's mention of forfeiture does take the contract within the legislatively intended ambit of section 656.1. It doesn't "satisfy" that section, in the sense of conforming to Chapter 656's limits. But actual verbal conformity is not necessary. All that's necessary to trigger 656 provisions is contractual authority for some kind of forfeiture in vendor's favor. No matter what provisions the contract itself makes for the forfeiture it mentions, forfeiture "shall...not be forfeited or cancelled except as provided" in Chapter 656. (To same effect see residential landlord-tenant relations; no matter what provisions exist in home brewed leases all leases must be interpreted in light of Chapter 562A's minimum standards, as if 562A were 'part of the lease'.) 656.1 Conditions prescribed. A contract which ****provides for**** the sale of real estate located in this state, and for ****the forfeiture of the vendee's rights in such contract in case the vendee fails, in specified ways, to comply**** with said contract, shall, nevertheless, not be forfeited or cancelled except as provided in this chapter. This statute first appears in the 1897 Code. Back then a lot of vendors drafted their own contracts. I suspect the Chapter entered the Code in order to "supplement" all contracts, so as to provide allegedly defaulting vendees a uniform minimal amount of notice and opportunity to be heard before losing rights. Equity abhors a forfeiture, and all that. Sole discussion of the legislative history and intent of Chapter 656 appears to lie in Jensen v. Schreck, 275 N.W.2d 374 (Iowa 1979): "The facts and circumstances to be considered here, in applying this test would include these: (1) The statute protects the buyer. When it was enacted in 1897 it had the effect of limiting an otherwise valid contractual right; it did not create or expand the rights of forfeiture. See Hampton Farmers Co-op. Co. v. Fehd, 257 Iowa 555, 560, 133 N.W.2d 872, 875 (1965). (2) The chapter is “construed strictly as against the forfeiture, and with liberality towards those opposing it. One seeking (a forfeiture as to land contracts must) fully and strictly follow the procedure required therein.” Kilpatrick v. Smith, 236 Iowa 584, 593, 19 N.W.2d 699, 703 (1945). (3) It might be argued that failure to outlaw forfeiture provisions would supply state action. However, a land sale contract with a forfeiture provision is a viable alternative to a mortgage. As stated in the Hampton Farmers Co-op. case, 257 Iowa at 560, 133 N.W.2d at 874-5: From the vendors' standpoint forfeiture presents a swift and inexpensive remedy in the event of a default. A vendee can live with such remedy to obtain the advantages of an installment contract and the usual low down payments when other financing could not be obtained. "Therefore, it is reasonable for the legislature to retain the use of a forfeiture clause, and by placing some limits upon a vendor's use of it, as had been done in chapter 656, The Code, the vendee is given reasonable protection." "The state, in this balancing process has not affirmatively caused or even encouraged forfeitures. It has merely said that certain protections must be provided a vendee if forfeiture is sought. It has neither mandated nor prohibited forfeitures, but has assumed a “neutral” role. As stated in Howe “(n)eutrality is permissible.” 379 F.Supp. at 672. Other than these paragraphs no support exists for my supposition. So take it for what you think it's worth. For sample case with facts akin to yours see: Schwab v. Roberts, 220 Iowa 958, 263 N.W. 19 (1935)(section 12389, predecessor to 656.1, found to govern a contract which, for buyer's noncompliance, imposed automatic forfeiture without any further action of the parties). As for alternative courses of action see listings in: *Gordon v. Pfab, 246 N.W.2d 283 (Iowa 1976): "When a purchaser breaches a land contract, the vendor has three alternative remedies. He may rescind, or he may tender compliance with the contract and bring an action for specific performance, or he may retain the land and bring an action for damages for loss of the bargain. Prichard v. Mulhall, 127 Iowa 545, 103 N.W. 774 (1905); 8A Thompson on Real Property s 4476 at 435-436 (1963). Here, the trial court found Gordons elected to keep the land and bring an action against Pfabs for loss of their bargain. Their rental of the land to another was entirely consistent with that course of action." and *High Development Corp. v. Star of the West, 772 N.W.2d 15 (Iowa App. 2009)(Table): "A seller has several remedies when a purchaser defaults on a real estate contract. Pierce v. Farm Bureau Mut. Ins. Co., 548 N.W.2d 551, 556 (Iowa 1996). The seller has a right to elect whether (1) to keep good their tender of performance, demand the balance of the purchase price, and sue for specific performance; (2) to terminate the contract because of the vendee's breach, keep their land and sue for damages for the breach; (3) to rescind the contract in toto; or (4) to enforce a forfeiture under the statute. Id.; Abodeely v. Cavras, 221 N.W.2d 494, 497–98 (Iowa 1974). Here, Star of the West terminated the contract and kept the land. It did not sue for breach of contract, but instead went about mitigating its damages." Best wishes Mr. Daggett. David Hanson Hofmeyer & Hanson PC Fayette, Iowa ----- Original Message ----- From: "Douglas Daggett" To: "realestate" Sent: Thursday, October 15, 2015 8:50:40 AM Subject: [ISBA RealEstate] Forfeiture Available? A contract seller (and potential new client) wrote his own Contract for Deed. The only language concerning remedies: "Any violation of said conditions and terms will forfeit all agreements of purchase. Buyer will be given 15 days to vacate house and property." The terms and conditions are monthly installments of $600 per month, pay all property taxes, and keep the house insured. Buyer has not paid the last four monthly installments. Seller asks for contract forfeiture. Does this language satisfy Iowa Code sec. 656.1? If not, how does one terminate the contract for default of payment? Douglas D Daggett Creston, IA 50801-0404 641-782-3170 This E-mail (including attachments) is covered by the Electronic Communications Privacy Act, 18 USC Sections 2510-2521, is confidential and may be legally privileged.