Thank you very much for sharing this material Mr. Nervig.

David Hanson
Hofmeyer & Hanson PC
Fayette, Iowa


----- Original Message -----
From: "Jim Nervig" <realestate@iabar.org>
To: realestate@iabar.org
Sent: Monday, April 9, 2018 12:10:38 PM
Subject: [ISBA RealEstate]  Updated Tax Sale Manual

There have been three significant recent developments in Iowa tax sale law, and I revised my Iowa Tax Sale Law Manual to discuss each of the developments. A copy of the latest Manual revision is attached for your reference.

Issue 1: Effect of Tax Lien Foreclosure on Appurtenant Easements

The Iowa Supreme Court has not addressed the legal effect of a tax sale on easement rights. However, Iowa District Court for Polk County Judge Jeffrey Farrell addressed the issue in a February 7, 2018 Ruling in Alta Holdings, LLC v. Schoenauer , Case No. CVCV055028. Schoenauer involved a tax parcel that served as an access drive for two parcels adjoining the tax parcel on opposite sides. The prior owner of all three parcels granted and recorded a perpetual non-exclusive ingress and egress easement across the tax parcel. The tax parcel was sold at tax sale. The tax sale certificate holder foreclosed on the tax parcel by serving 90-day redemption notice on the owner of the two parcels that were granted easement rights, under the theory that the owner was a person in possession entitled to notice. Judge Farrell ruled that the recorded access easement established an appurtenant easement that ran with the dominant estate and was not extinguished by the tax lien foreclosure, and that title under the tax sale deed was subject to the easement. In my opinion, Judge Farrell’s opinion does an excellent job of examining applicable authorities, and I would predict that the Iowa Supreme Court would reach the same conclusion. The case is discussed on pages 14 and 15 of the Manual.

Issue 2: Form of Affidavit of Service

Under section 447.12, service of the 90-day notice of expiration of right of redemption is not complete until an affidavit of service has been filed with the county treasurer. The Iowa Supreme Court has stated that the requirements of section 447.12 “must be strictly followed, even in matters which may not seem material or which may be thought to be trivial.” The affidavit must show “under whose direction the service was made.” This is an extremely important showing. In Rehr v. Guardian Tax Partners, Inc ., 900 N.W.2d 618 (Table) (Iowa Ct. App. April 19, 2017) (unpublished opinion), the Court of Appeals held that the statute requires that the affidavit must specifically show the name of an actual individual under whose direction the service was made. In Guardian , the Court ruled that the affidavit was improper and invalid because it contained the statement that service was made under the direction of the Guardian corporation , without naming an actual individual at Guardian, even though the affidavit previously stated that the person signing the affidavit was the attorney for Guardian. The case is discussed on pages 17 and 18 of the Manual.

Issue 3: Special Redemption Rights of Person with Legal Disability

Section 447.7 provides that a parcel owner with a legal disability has the right to redeem a parcel from tax sale at any time prior to one year after the legal disability has been removed. In Firestone v. TF13 , 852 N.W.2d 20 (Table) (Iowa Ct. App. April 30, 2014), the Court of Appeals addressed a case where a taxpayer transferred title to a delinquent tax parcel to his minor son for the purpose of evading the obligation to pay property taxes until one year after the son reached 18 years of age. I spoke at oral argument on behalf of an intervenor and complained that the statute should not be allowed to be used as a shield against the owner’s obligation to pay taxes. At oral argument, Judge Vaitheswaren stated to me that this appears to be an issue to be addressed by corrective legislation. The legislation was recently enacted under House File 2318, Iowa Acts 2018 (87 G.A.), in which section 447.7 was completely rewritten to provide the procedures by which a parcel owner with a legal disability may redeem a parcel after issuance of a tax sale deed. Essentially, the new procedures require that a person with a legal disability desiring the right to redeem a parcel after issuance of a tax sale deed must file an equitable action. In the action, the court is required to determine the amount required to be paid for redemption, and the owner is required to pay that amount within 30 days. If the amount is timely paid, the tax sale deed is invalidated. If the amount is not timely paid within 30 days, the court is required to enter a ruling confirming the validity of the deed. The new legislation also includes an amendment to the 120-day affidavit statute of limitations of section 448.16(3), so as to provide that the running of the 120-day period after filing of the affidavit is a bar to an action under section 447.7. This issue is addressed on pages 25 and 26 of the Manual.

Jim Nervig

Brick Gentry P.C.
6701 Westown Parkway, Suite 100
West Des Moines, Iowa 50266
Phone: 515-274-1450
Fax: 515-274-1488
jim.nervig@brickgentrylaw.com


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