Thank you for your input Mr. Hanson.  It is much appreciated.

-----Original Message-----
From: realestate-owner@iabar.org [mailto:realestate-owner@iabar.org] On Behalf Of realestate@iabar.org
Sent: Tuesday, October 18, 2016 1:43 PM
To: realestate@iabar.org
Subject: [ISBA RealEstate] Quitclaim Deed in lieu of Forfeiture

Did not see anyone responding to Mr. Noble's post of last week.  May I offer some assistance.

Mr. Noble asks for comment on four questions:

1) First off, assuming “D” has discontinued making payments, I will advise my clients to require Seller to go through the forfeiture procedure pursuant to Iowa Code Chapter 656.

A. Good call.  Safest and quickest way to flush D from the record.

656.1 Conditions prescribed.
A contract which provides for the sale of real estate located in this state, and for 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 canceled except as provided in this chapter.


2) Regarding the three previous installment contracts, would any of you require that any further action be taken given no liens/judgments were discovered?

No. Seller's title is clear of any claim by A, B, or C.
Filing of a deed from contract buyer to seller will release buyer from liability.  See:
*Conrad Bros. v. John Deere Ins. Co., 640 N.W.2d 231 (Iowa 2001): "John Deere correctly notes that the filing of the deed released Schott from further liability."
*Skubal v. Meeker, 279 N.W.2d 23 (Iowa 1979): contract vendees facing forfeiture, who execute a quit claim deed, do " thereby effectively remov[e] themselves from the chain of title."
*Duntz v. Ames Cemetery Ass'n, 192 Iowa 1341, 186 N.W. 443 (1922):
"True, the Duntz contract was not formally assigned to the city, but it did accept a quitclaim deed to the land covered by the contract. The grantee under a quitclaim is conclusively presumed to have knowledge of all prior equities, and takes subject thereto. Steel & Son v. Sioux Valley Bank, 79 Iowa, 339, 44 N. W. 564, 7 L. R. A. 524, 18 Am. St. Rep. 370. The quitclaim deed of the association to the city conveyed such rights as the association had in the land."


3) Would requiring Seller to go through forfeiture proceeding for the three previous installment contracts be ineffective given that “A”, “B”, and “C” have already quitclaimed their interests in the property back to Seller?

A. Yes. Your seller effectively waived resort to forfeiture against A by accepting the deed from A.

Gottschalk v. Simpson, 422 N.W.2d 181 (Iowa 1988):
"That Gottschalks had waived their rights, within the thirty days, to proceed with the forfeiture through these acts is clear from the fact that they eventually accepted the quitclaim deed which provided it was “in lieu of forfeiture.” "

Even though not marked as deeds in lieu of forfeiture (DILOF), I take the deeds from B and C as amounting to DILOFs, because those deeds appear on your record to convey the entire interests of the vendees.

A transaction between debtor and creditor, whereby debtor gives an apparently absolute-on-its-face deed to the creditor, " “[w]ill be closely scrutinized and upheld only where it is perfectly fair, based upon adequate consideration and it clearly and unmistakably appears that an absolute sale and not a transfer for security only was contemplated by the parties. ...The instruments must be read in light of the surrounding circumstances and the practical consideration which the parties themselves placed thereon [citing cases].”
Guttenfelder v. Iebsen, 230 Iowa 1080, 1084, 300 N.W. 299, 301 (1941), quoted in Blum v. Keene, 245 Iowa 867, 63 N.W.2d 197 (1954)(case involved validity of deed-in-lieu from debtor to judgment creditor;  District and Supreme Courts ruled in creditor's favor).

Blum decision is cited by 2 Patton & Palomar on Land Titles 3d section 427, p. 383-84 (2003) (Footnote 5) as supporting this proposition:
A mortgagee/creditor normally bears burden of proof of intent as to the proposition that the deed from debtor "was intended to be an absolute conveyance. 5 Yet, in many states, a title examiner will have no reason to object to a deed on such grounds, unless the examiner has reason to know that the mortgagor remained in possession after delivering the deed to the mortgagee, or the record affirmatively shows that the deed was given merely as additional security for antecedent debt or that the mortgagor commenced an action to set aside the deed. This is because, in many states, there is no longer a presumption that these transactions are other than the absolute conveyances they purport to be, 6 and a purchaser, therefore is not on notice of any undisclosed right of the mortgagor/grantor."
FN6 cites Tansil v. McCumber, 201 Iowa 20, 206 N.W. 680 (1925).

To same effect, of quit claim deed as absolute transfer from debtor vendees to vendor in lieu of forfeiture/foreclosure, see unpublished Court of Appeals ruling in In re Marriage of Umphress, 2001 WL 912764 (Iowa App. 2001)(Hecht, J.).


4. Is there any difference in the effectiveness of the deed that specifically provided it was in lieu of forfeiture and those deeds in which it was not specifically provided?

A. I think not. See above citations.  But to strengthen and clarify status of B's and C's DILOFs, I advise you to draft and file a Section 558.8 Affidavit Explanatory of Title for seller to sign.
The AET can recite the facts of the contracts, vendees' breaches thereof, and intentions/agreements between seller and B and C for seller to accept deeds in lieu of forfeiture.


Here's hoping these answers help you get that property transferred satisfactorily, Mr. Noble.


David Hanson
Hofmeyer & Hanson PC
Fayette, Iowa


----- Original Message -----
From: "Dustin H. Noble" <realestate@iabar.org>
To: realestate@iabar.org
Sent: Monday, October 10, 2016 4:48:53 PM
Subject: [ISBA RealEstate]  Quitclaim Deed in lieu of Forfeiture

Good afternoon,

I have come across the following situation and would appreciate any thoughts/suggestions:

January 2011:  Seller enters into and records installment contract with “A” for residential property.

June 2013:  “A” quitclaims her interest in the real estate to Seller in lieu of forfeiture of the installment contract, as specifically provided in the deed.

July 2013:  Seller enters into and records installment contract with “B” for the same residential property.

September 2014:  “B” quitclaims his interest in the real estate to Seller, but the deed makes no mention of being provided in lieu of forfeiture of the installment contract.

September 2014:  Seller enters into and records installment contract with “C” for the same residential property.

February 2015:  “C” quitclaims  his interest in the real estate to Seller, but the deed makes no mention of being provided in lieu of forfeiture of the installment contract.

February 2015:  Seller enters into and records installment contract with “D” for the same residential property.

All installment contracts  are standard Iowa Bar forms.  The most recent abstract continuation provided lien searches were performed on “A”, “B”, “C”, and “D”, and no liens/judgments were discovered.  “D” is no longer living on the property.

My clients reached an agreement to purchase the property from Seller outright, not via installment contract.  My clients were unaware of Seller’s installment contract with “D” and do not want to purchase the property subject to the contract with “D”.

First off, assuming “D” has discontinued making payments, I will advise my clients to require Seller to go through the forfeiture procedure pursuant to Iowa Code Chapter 656.

Regarding the three previous installment contracts, would any of you require that any further action be taken given no liens/judgments were discovered?

Would requiring Seller to go through forfeiture proceeding for the three previous installment contracts be ineffective given that “A”, “B”, and “C” have already quitclaimed their interests in the property back to Seller?

Is there any difference in the effectiveness of the deed that specifically provided it was in lieu of forfeiture and those deeds in which it was not specifically provided?

Thanks,
Dustin Noble


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