IOWA TAX SALES
DRAKE UNIVERSITY LAW SCHOOL REAL ESTATE TRANSACTIONS SEMINAR
DES MOINES, IOWA APRIL 9, 2021
CHARLES P. AUGUSTINE KLATT, AUGUSTINE & RASTEDE, P.C. 531 Commercial Street, Suite 250 Waterloo, Iowa 50701 Telephone (319) 232-3304 Fax (319) 232-3639 [email protected] IOWA TAX SALES
I. INTRODUCTION
Tax sales provide the primary means by which counties can collect unpaid and delinquent real estate taxes. The body of law that provides for tax sales in Iowa dates back to the 1800s, and in fact much of the case law related to Iowa tax sales is comprised of decisions over a century old. Historically, Iowa courts have construed Iowa’s tax sale statutes strictly, generally requiring precise adherence to the rules; particularly those concerning notice and other components of due process. Because of this, attorneys should exercise particular caution when dealing with tax sales.
II. PRE-SALE PROCEDURES
A. NOTICE OF THE TIME AND PLACE OF SALE. Pursuant to section 446.7 of the Code of Iowa, the annual tax sale in each county is to be held on the third Monday in June.1 Section 446.7 was amended effective February 17, 1999, however, to allow a county treasurer to designate a different date in June, "[i]f for good cause the treasurer cannot hold the annual tax sale on the third Monday of June . . . ."2 Section 446.9 provides that notice of the time and place of the annual tax sale must be given to interested parties by mail and by publication. In addition, notice must be given to those specifically requesting notice.
1. MAILED NOTICE. The county treasurer must serve notice of the time and place of the tax sale on the person in whose name the property is taxed by regular first class mail to the person’s last-known mailing address no later than May 1 of each fiscal year.3
1 Iowa Code § 446.7 (2021).
2 Id.
3 Iowa Code § 446.9 (2021). When May 1 falls on a Saturday or Sunday, the notice shall be served not later than the first business day of May. Id. Service of the mailed notice is deemed complete when the notice is enclosed in a sealed envelope with proper postage thereon, addressed to the person entitled to receive the notice at that person's last known mailing address, and deposited in a mail receptacle provided by the United States postal service. Iowa Code § 446.9(4) (2021). The "[f]ailure to receive a mailed notice is not a defense to the payment of the total amount due." Id. See also Fennelly v. A-1 Machine & Tool Co., 728 N.W.2d 181, 187 (Iowa 2007) (holding that the defendant’s claim that it never received mailed notice of the sale was insufficient to withstand summary judgment where the county treasurer submitted evidence showing that the notices were properly mailed).
2 a. Contents of the Notice. The mailed notice must contain the following:4
(1) The date, time, and place of the annual tax sale;
(2) A clear and concise description of the property to be sold that is sufficient to distinguish the parcel from all other parcels;
(3) The amount of delinquent taxes for which the parcel is liable each year, the amount of interest and fees due, and the amount of the service fee, all to be incorporated as a single sum;5 and
(4) A statement indicating that after the sale, if the property is not redeemed pursuant to Chapter 447 of the Code of Iowa, the right of redemption expires and a tax deed may be issued.
2. PUBLISHED NOTICE. The time and place of the sale must be published once, not less than one week, nor more than three weeks before the day of the sale, in at least one official newspaper selected by the board of supervisors, and designated by the treasurer.6
a. Contents of the Notice. The published notice must contain the following:7
(1) The date, time, and place of the annual tax sale;
(2) A clear and concise description of the property to be sold
4 See Iowa Code § 446.9(1) (2021) (setting forth the requirements of the notice).
5 Id. The “service fee” is provided for by section 446.10 as a fee for sale notice preparation and shall not exceed four dollars. Iowa Code § 446.10(2) (2021). Prior to a 2002 amendment to section 446.9, this provision called for a broader disclosure of “costs” rather than just a “service fee.” In this regard, section 446.9 is now inconsistent with section 446.7, which provides that the sale of a property at tax sale shall be for the total amount of taxes, interest, fees, and costs due. Iowa Code § 446.7 (2021).
6 Iowa Code § 446.9(2) (2021). Prior to July 1, 1986, two publications were required. See Iowa Code § 446.9(2) (amended 1986).
7 Iowa Code § 446.9(2) (2021) (setting forth the requirements of the notice).
3 that is sufficient to distinguish the parcel from all other parcels;
(3) The name of the person in whose name the parcel is taxed;
(4) The amount of delinquent taxes for which the parcel is liable each year, the amount of interest and fees due, and the amount of the service fee,8 all to be incorporated as a single sum; and
(5) A statement indicating that after the sale, if the property is not redeemed pursuant to Chapter 447 of the Code of Iowa, the right of redemption expires and a tax deed may be issued.
b. Certificate of Publication. The county treasurer must file a copy of the notice of tax sale, along with a certificate of its publication in the office of the county treasurer.9
c. Posting In Lieu of Publication. The Code provides for the posting of the tax sale notice in lieu of publication in certain circumstances.
(1) When Publishing Too Costly. Section 446.10 states that the compensation for publication shall not exceed four dollars for each separately described parcel.10 However, if the treasurer cannot procure publication for this sum, notice may be posted in the treasurer's office for two weeks in lieu of publication.11
(2) When Not Published For Good Cause. If, for good cause a parcel is not included in the general publication, “notice shall be given by publication or by posting a description of
8 As was the case with section 446.9(1), section 446.9(2) also called for the broader disclosure of “costs” rather than just a “service fee,” prior to its amendment in 2002. See supra note 5.
9 Iowa Code § 446.12 (2021). Section 446.12 specifically prescribes the form of the certificate of publication.
10 Iowa Code § 446.10 (2021).
11 Iowa Code § 446.11 (2021).
4 the parcel and the date, time, and place of the tax sale in the treasurer’s office for two weeks before the regular or any adjourned tax sale and, at the time of publishing or posting, by mailing the notice required in [section 446.9(1)].”12
3. PERSONS REQUESTING NOTICE. A person having an interest of record in a parcel may request notice of tax sale on a form prescribed by the county treasurer. Where such request is made at least one month prior to the tax sale and is accompanied by $25.00 for each parcel with regard to which the request is made, the treasurer shall send notice of the tax sale at least one week, but not more than three weeks, prior to the date of the tax sale.13
a. Contents of the Notice. The notice mailed in response to a request for notice under section 446.9(3) must contain the same information as the notice mailed to the person(s) in whose name(s) the property is taxed.14
b. Duration of Request. A request for notice under section 446.9(3) is valid for a period of five years from the date of the filing of the request.15
c. When Notice Deemed Complete. A notice mailed in response to a request therefore under section 446.9(3) is deemed complete when the notice is enclosed in a sealed envelope with proper postage, addressed to the person entitled to notice at that person's last known mailing address, and deposited in a mail receptacle provided by the United States postal service.16
4. IRREGULARITIES IN ADVERTISEMENT OF SALE. “An irregularity or informality in the advertisement does not affect the legality of the sale or the title to a parcel conveyed by the county treasurer's deed.”17
12 Iowa Code § 446.9(5) (2021).
13 Iowa Code § 446.9(3) (2021).
14 See Iowa Code § 446.9(3) (2021).
15 Id.
16 Iowa Code § 446.9(4) (2021).
17 Iowa Code § 446.14 (2021). Section 446.14 further provides that chapter 446 of the Code of Iowa, in and of itself, constitutes sufficient notice to the owners of a parcel of the sale of
5 III. THE SALE PROCEDURE.
A. OFFER FOR SALE. As a general rule, on the third Monday of June every year, the county treasurer must offer at public sale all parcels with regard to which taxes are delinquent.18 The treasurer must offer each parcel for sale separately and for the total amount due against each parcel.19
B. TAX SALE PURCHASER. The tax sale purchaser is defined as “[t]he person who offers to pay the total amount due, which is a lien on any parcel, for the smallest percentage of the parcel.”20 Nevertheless, the percentage purchased shall not be less than one percent.21 Following the purchase of a property at tax sale, the successful bidder receives from the county treasurer a certificate of purchase.22 Ultimately, if a tax sale deed is issued as to a parcel, the grantee thereunder will receive an undivided percentage interest in the parcel equal to the percentage in the parcel that was bid at tax sale.23
that parcel at tax sale. In a formal opinion dated November 24, 1925, the Iowa Attorney General declared that the failure to publish notice of a pending tax sale in precise conformity to the provisions of section 446.14 “will, in no way, affect the validity of the tax sale.” Op. Atty Gen. (November 24, 1925). Query as to whether defective or an entire lack of pre-sale notice may be ignored in light of due process requirements. In this regard, see Mennonite Bd. of Missions v. Adams, 462 U.S. 791 (1983), which held that “prior to an action which will affect an interest in . . . property protected by the Due Process Clause of the Fourteenth Amendment, a State must provide ‘notice reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections’.” Id. at 795 (citing Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 314 (1950)).
18 Iowa Code § 446.2 (2021).
19 Iowa Code § 446.15 (2021).
20 Iowa Code § 446.16(1) (2021).
21 In instances where two or more persons have placed equal bids and the bids are the smallest percentage offered, “the county treasurer shall use a random selection process to select the bidder to whom a certificate of purchase will be issued.” Id. Prior to being amended in 2005, section 446.16(1) did not prescribe the lowest possible percentage that could be bid. Prior to that time, in some counties bidders were allowed to bid down virtually to infinity.
22 Iowa Code § 446.29 (2021).
23 Iowa Code § 446.16(1) (2021).
6 1. PURCHASER MUST BE A LEGAL ENTITY. Only a “person”, as defined under section 4.1 of the Code of Iowa, may register to bid or bid at a tax sale.24 Also, in order for a “person” other than an individual to be eligible to register to bid, to bid, or to own a tax sale certificate, that “person” must have a federal tax identification number and either a designation of agent for service of process on file with the secretary of state or a verified statement meeting the requirements of chapter 547 of the Code of Iowa on file with the county recorder.25
2. REGISTRATION FEE. Section 446.16 allows the treasurer to collect a reasonable registration fee from each purchaser at the tax sale. The total of all fees collected, however, shall not exceed the total costs of the tax sale.26
3. TAX LIEN. The tax sale purchaser receives a certificate of purchase and a lien against the property that transfers with the certificate. The certificate of purchase provides to the holder thereof “an inchoate right or lien and not an interest in the property.”27 The lien provided by the certificate expires upon expiration of the certificate of purchase.28
4. TIE-BREAKER. Where there is a tie between bidders, the successful bidder is selected by means of a “random selection process.”29
24 Iowa Code § 446.16(4) (2021). Section 4.1(20) defines a “person” as an “individual, corporation, limited liability company, government or governmental subdivision or agency, business trust, estate, trust, partnership or association, or any other legal entity.” Iowa Code § 4.1(20) (2021). See also Miller v. Chittenden, 2 Iowa 315, (1856) (holding that a deed to a grantee not in existence is void).
25 Iowa Code § 446.16(4) (2021). See chapter 547 of the Code of Iowa for provisions regulating the use of trade names.
26 Iowa Code § 446.16(2) (2021). Today, a typical registration fee is $100.00 per registrant. This, along with the dramatic increase in the number of participating bidders that has occurred since the mid-1990's, has made tax sale investment somewhat less financially attractive; particularly to investors who do not send dozens of bidding registrants to a particular county.
27 Dohrn v. Mooring Tax Asset Group, L.L.C., 743 N.W.2d 857, 860 (Iowa 2008).
28 Iowa Code § 446.16(3) (2021).
29 Iowa Code § 446.16(1) (2021). The “random selection” provision was added to section 446.16(1) in 1995. Prior to that, counties either had encouraged the competing bidders to bid down virtually to infinity or already had developed a selection process for tying bids.
7 5. COLLUSIVE BIDDING. Collusion among bidders to prevent competition renders the tax sale and the tax sale certificate void.30
6. INTERESTED PURCHASERS. A party with an interest in the parcel subject to tax sale (for instance a lessee, life tenant, mortgagor, mortgagee, contract vendor, or contract vendee) cannot strengthen his or her title to the parcel by purchasing the tax sale certificate and later acquiring the tax title. Where an interested party purchases the tax sale certificate, the sale operates only as a payment of the taxes due and title will remain as it was prior to the tax sale, except that the lien for taxes is discharged.31
7. COUNTY AS PURCHASER. When a parcel is offered for sale, and had been offered for sale for one or more previous years but had not been sold, and again is not sold, the county shall bid for the parcel. However, no money shall be paid by the county. Rather, each of the tax-levying and tax- certifying bodies having an interest in the taxes shall be charged with the total amount that is due to that body as its just share of the purchase price.32
a. Purchase For Low or Moderate Income Housing. Section 446.19A provides that under certain circumstances, a county or city may purchase a tax sale certificate for low or moderate income housing.33
8. FAILURE OF CERTIFICATE PURCHASER TO PAY. If the purchaser of the tax sale certificate fails to immediately pay to the treasurer the amount bid, the parcel must be offered again as if no sale to that initial purchaser
30 Singer Mfg. Co. v. Yarger, 12 F. 487, 2 McCrary 583 (1880).
31 In re Hoyt, 67 N.W.2d 528, 531 (Iowa 1954); Koch v. Kiron State Bank of Kiron, 297 N.W. 450, 454-63 (Iowa 1941); Reconstruction Fin. Corp. v. Diehl, 296 N.W. 385, 392 (Iowa 1941) (stating that “it is well recognized that a party having the right to redeem from tax sale . . . can not by taking a tax title eliminate the rights of others who may be jointly interested with him in such property”). The Reconstruction court further declared that “[a tax sale certificate] in the hands of an assignee is chargeable with all the infirmities that would affect it in the possession of the original holder.” Id. (citing Doud v. Blood, 56 N.W. 452, 453 (Iowa 1893), and National Surety Co. v. Walker, 125 N.W. 338, 340 (Iowa 1910)).
32 Iowa Code § 446.19 (2021).
33 Iowa Code § 446.19A (2021). See section 446.19A for particulars.
8 had been made.34
IV. ALTERNATIVE TAX-COLLECTING REMEDIES
A. LAWSUIT TO COLLECT TAXES. “In addition to all other remedies and proceedings . . . for the collection of taxes, the county treasurer may bring or cause an ordinary suit at law to be commenced and prosecuted in the treasurer's name for the use and benefit of the county for the collection of taxes from any person, as shown by the county system in the treasurer's office, and the suit shall be in all respects commenced, tried, and prosecuted to final judgment the same as provided for ordinary actions.”35
B. CONVERSION TO PERSONAL JUDGMENT. Once a tax sale certificate is issued in favor of a county, the county may collect the total amount due by converting the total amount due to a personal judgment as provided for under section 445.3.36 The county may then initiate collection of the judgment as provided for in section 445.4, and the county attorney shall, upon request of the county treasurer, assist in the prosecution of authorized action to collect the judgment.37
1. PURSUING DUAL REMEDIES. Section 446.20 further provides that “[t]he remedies associated with tax sale and personal judgment may be simultaneously pursued until such time as the total amount due has been collected or otherwise discharged.”38 If a tax deed ultimately is issued, any personal judgment shall be released and a satisfaction shall be filed with the clerk of court.39
C. DEMOLITION OR REMOVAL. Section 446.20(2) provides the means by which the costs of removal, dismantling or demolition of any property located on a parcel purchased by the county or city at tax sale may be assessed to the person in whose name the property is taxed.40
34 Iowa Code § 446.23 (2021).
35 Iowa Code § 445.3(1) (2021).
36 Iowa Code § 446.20(1)(a) (2021).
37 Id.
38 Iowa Code § 446.20(1)(b) (2021).
39 Id.
40 See Iowa Code § 446.20(2) (2021).
9 V. REDEMPTION FROM THE TAX SALE
A. REDEMPTION GENERALLY. Following the sale of a property for delinquent taxes at a tax sale, the successful bidder receives from the county treasurer a certificate of purchase.41 A parcel sold at tax sale may be redeemed at any time prior to the expiration of the right of redemption.42 However, if redemption is not timely made following completion of service of notice of expiration of right of redemption, the county treasurer may issue to the tax sale certificate holder a deed for the percentage interest in the property for which the tax sale certificate was purchased.43 On the other hand, if the tax sale certificate holder fails to complete service of notice of expiration of right in a timely manner, no redemption is necessary and the treasurer will cancel the tax sale certificate.44
B. HOW REDEMPTION MADE. A parcel sold at tax sale may be redeemed at any time prior to expiration of the right of redemption by paying to the treasurer the amount for which the parcel was sold, including the certificate fee, and interest of two percent per month from the month of the sale, plus the total amount paid by the purchaser or any assignee of the purchaser for any subsequent year, with interest on any such amount at two percent per month from the month of payment.45
1. COMPUTING INTEREST. With regard to computing the appropriate amount of interest, each fraction of a month is treated as a whole month, the amount of interest must be at least one dollar, and interest shall be rounded to the nearest whole dollar.46
2. ABATEMENT OR COMPROMISE OF COUNTY-HELD CERTIFICATES. If a county holds the tax sale certificate, it may reduce the amount necessary to effectuate a redemption by written compromise agreement or by resolution of abatement.47
41 See Iowa Code § 446.29 (2021).
42 Iowa Code § 447.1 (2021).
43 Iowa Code § 446.16 (2021).
44 Iowa Code § 446.37 (2021).
45 Iowa Code § 447.1 (2021).
46 Id.
47 Iowa Code § 445.16 (2021). Note, however, that once a county has assigned a tax sale certificate, it no longer is authorized to compromise the amount necessary to redeem. Robinson
10 C. NOTICE OF EXPIRATION OF RIGHT OF REDEMPTION. In most instances, after the lapse of one year and nine months from the date of the tax sale, the certificate holder may commence service of notice of expiration of the right of redemption.48
1. CONTENTS OF THE NOTICE. The notice of expiration of the right of redemption must be signed by the certificate holder,49 or the certificate holder's agent or attorney, and must contain the following:50
a. The date of the sale;
b. A description of the parcel sold;
c. The name of the purchaser; and
d. Notice that the right of redemption will expire and a deed will be made unless redemption is made within ninety days from the date of completed service of the notice.51
v. Fremont County, 744 N.W.2d 323, 326 (Iowa 2008).
48 Iowa Code § 447.9 (2021). The certificate holder may commence service of notice of expiration of right of redemption after only nine months from the date of the sale with regard to parcels sold pursuant to section 446.18 (public bidder sale), and after only three months from the date of sale with regard to parcels sold pursuant to sections 446.19A (purchase by county or city for use as housing) and 446.19B (public nuisance tax sale – rehabilitation for use as housing). Iowa Code § 447.9(1) (2021). Although a tax sale purchaser may but need not necessarily commence service of notice of expiration of right of redemption within the time as prescribed under section 447.9, note section 446.37, which provides for the cancellation of a tax sale after three years from the date of sale, or after one year from the date of sale in the case of a tax sale under section 446.19B. See Iowa Code § 446.37 (2021).
49 When the notice is given by a county as certificate holder, the notice shall be signed by the county treasurer or the county attorney. Iowa Code § 447.9(1) (2021). When it is given by a city, it shall be signed by the city officer designated by resolution of the council. Id.
50 Id.
51 See Iowa Code § 447.12 (2021) (“Service is complete only after an affidavit has been filed with the county treasurer, showing the making of service, the manner of service, the time when and place where made, under whose direction the service was made, and costs incurred as provided in section 447.13.”). See also Hushaw v. Wood, 160 N.W. 274 (Iowa 1916) (holding that if the notice does not provide that the owner can redeem from “completed service” the notice
11 2. SERVICE OF THE NOTICE GENERALLY. Section 447.9 prescribes not only the contents of the notice of expiration of right of redemption but also the manner of service and the parties to be served.
a. Manner of Service. Section 447.9 generally requires service of notice of expiration of right of redemption on a party entitled to service by both regular mail and certified mail to the party’s last known address and such service is deemed completed when the notice is deposited in the mail and postmarked for delivery.52
(1) Determining the Last Known Mailing Address. Notice of expiration of right of redemption must be mailed to the last known addresses of those parties entitled to notice. In connection with service of notice on a person in whose name the parcel is taxed, the Iowa Court of Appeals has is defective).
52 See Iowa Code § 447.9 (2021). Iowa’s tax sale statutes have been amended relative to the required manner of service of notice of expiration of right of redemption since the 1990's. Prior to its amendment in 1998, section 447.9, required personal service of notice of expiration of right of redemption on parties in possession and on persons in whose name the parcel was taxed (except as to nonresidents of Iowa who could be served by regular first class mail to their last known mailing addresses). See Iowa Code § 447.9 (1997) (amended 1998). Although the amendment to section 447.9 was enacted July 1, 1998, personal service of notice of expiration of the right of redemption still was required after that time on those tax sales that took place prior to July 1, 1998. See Op. Atty. Gen (October 6, 1998) (stating that section 447.9, as amended in 1998, applies only to those tax sales occurring after July 1, 1998, in light of section 447.14 which provides that the law in effect at the time of tax sale governs redemption). In 1998, section 447.9 was amended to require service by regular mail and certified mail only on persons in possession and on the person in whose name the parcel was taxed. Service by regular mail alone was sufficient in connection with service on all other parties. In 2012, section 447.9 was amended to require service on all parties entitled thereto by both regular and certified mail. There has been some debate as to the constitutionality of service solely by regular and certified mail. In light of the U.S. Supreme Court’s holding in Mennonite Bd. or Missions v. Adams, the question is whether notice by certified and regular mail alone is “reasonably [sufficient] under all circumstances, to apprise [parties in possession and persons in whose name the parcel is taxed] of the pendency of the action and afford them an opportunity to present their objections.” Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 795 (1983) (citing Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306 (1950)). Nevertheless, it appears reasonable for a title examiner or other practitioner to rely on the constitutionality of the statute unless and until it were to be nullified.
12 held that the tax sale certificate holder is required to “engage in a ‘diligent investigation’ to find the ‘last known address’ of the person in whose name the parcel is taxed.”53 and that the failure to do so renders the service of notice improper and a subsequently issued tax deed void.54 As such, it is recommended that diligence be exercised in determining the “last known” mailing addresses of those parties entitled to service of notice of expiration of right of redemption. In situations where a search reveals more than one possible “last known” mailing address, sending the notice to all such addresses would be most prudent.
(2) Service by Publication. If service cannot be completed as prescribed in section 447.9 of the Code, it must be completed by publishing the notice once in an official newspaper in the county.55
53 Dearchs v. Boardwalk Investors, 791 N.W.2d 427 (Table), 2010 WL 3503530, 3 (Iowa Ct. App. 2010) (emphasis original). In St. John’s Full Gospel Baptist Church v. Tax, 207, the Iowa Court of Appeals held that a tax sale certificate holder who mails notice of expiration of right of redemption to an address provided to the office of the county assessor by the party served satisfies the “last known address” requirement for mailing notices under Section 447.9. St. St. John’s Full Gospel Baptist Church v. Tax, 207, 819 N.W.2d 426 (Table), 2012 WL 1860667 (Iowa Ct. App. 2012).
54 Dearchs, 791 N.W.2d at 4. Dearchs is an unpublished decision of the Iowa Court of Appeals that involved a property in Algona, Iowa. Charles Dearchs, the person in whose name the property was taxed, moved to California in 1991, and allowed family members to reside in his house. The property was sold at tax sale on June 20, 2005. On March 25, 2008, the county treasurer issued a tax deed to the tax sale certificate holder, Boardwalk Investors. Dearchs filed suit to set aside the tax deed on the ground that service of notice of expiration of right of redemption was not property served. Boardwalk Investors mailed the notice by regular and certified mail to Dearchs at three Iowa addresses that it had found after searching two different websites. Boardwalk Investors also caused notice to be published as provided for under section 447.10. Ultimately, Dearchs did not receive any of the mailed notices. The Iowa Court of Appeals found that Boardwalk Investors failed to engage in a diligent investigation to ascertain Dearchs’ last known address and ruled that the tax deed was therefore void. Notably, the court pointed out that the offices of the county assessor and county treasurer would have been “reasonable place[s] to inquire about a tax payer’s last known address.” Id. at 3.
55 Iowa Code § 447.10 (2021). Note that if service is made by publication, the affidavit of completed service must state the reason personal or mailed service pursuant to section 447.9 could not be made. Id. Service shall be deemed complete on the day of publication. Id. For purposes of drafting the notice to be published, reference should be made to Iowa
13 b. Parties That Must be Served.
(1) Persons in Possession and Persons Taxed. Section 447.9 requires service of notice of expiration of right of redemption upon the person in possession of the parcel and upon the person in whose name the parcel is taxed.56
(a) Particular Difficulties With Parties in Possession. Iowa courts clearly have placed the burden of determining the existence and identity of parties in possession for purposes of service of notice of expiration of right of redemption on the tax sale certificate holder.57
(i) Defining Parties in Possession. The “possession” that entitles one to service of notice of expiration of right of redemption has been described by Iowa courts as conduct that gives notice to the holder of the certificate of purchase of the person’s identity and existence as a party in possession.58
(ii) Determining the Existence and Identity of Parties in Possession. Although personal service on parties in possession is no longer required, the tax sale certificate holder nevertheless should consider taking a trip to
Code § 617.7 (2017) (indicating that where necessary to make an unknown person a defendant, the petition shall be sworn to and shall state the claim of the plaintiff with reference to the property involved in the action, that the name and residence of such person is unknown, and that the plaintiff has sought diligently to learn the same); and Iowa R. Civ. P. 1.312 (“The original notice against unknown defendants shall be directed to the unknown claimants of the property involved, describing it. . . .”).
56 Iowa Code § 447.9(1) (2021).
57 Dohrn v. Mooring Tax Asset Group, L.L.C., 743 N.W.2d 857, 861 (Iowa 2008) (holding that “our case law makes clear the onus is on the tax sale certificate holder to identify who is in possession of the property”); Pendergast v. Davenport, 375 N.W.2d 684, 690 (Iowa 1985).
58 Pendergast, 375 N.W.2d at 690.
14 the parcel to conduct an on-site inspection in order to determine the existence and identity of parties in possession. Mere reliance on the public record is not sufficient since the “possession contemplated by [section 447.9] is actual, as distinguished from that which the record might show.”59 Perhaps most troubling is that even an on-site inspection may be insufficient, since, according to the Iowa Supreme Court, “[a]ctual possession evidently results even if one cannot tell who is in possession from an observation of the premises.”60
(2) City in Which the Parcel is Situated. Notice of expiration of the right of redemption shall be served on any city where the parcel is situated.61 The return of service on the city should show service on the mayor or city clerk.62 Although section 447.9 is not entirely clear as to the type of service required on the city, it is certainly reasonable to assume that the city should be served in the same manner as other parties, namely by both regular and certified mail.
59 Dohrn, 743 N.W.2d at 861.
60 Burks v. Hedinger, 167 N.W.2d 650, 655 (Iowa 1969). In Burks, the court ruled that the presence of a pile of used lumber and furniture on the property was sufficient to impart notice on a tax sale purchaser that possession was exercised by someone who was therefore entitled to notice of expiration of right of redemption. Id. In Dohrn v. Mooring Tax Asset Group, L.L.C., the tax sale certificate holder failed to serve notice of expiration of right of redemption on a tenant that was leasing farm land subject to the tax sale certificate pursuant to the terms of an unrecorded lease. The court ruled that the certificate holder “was required to conduct a diligent investigation, which may have required an on-site inspection and even contacting neighbors or others in the community.” Dohrn, 743 N.W.2d at 862. The court further determined that it was no excuse that service occurred during the winter when the land was bare and in fact reaffirmed prior case law “which makes clear neither the time of year nor the use of the property is an excuse for failing to identify who was in possession of the land.” Id.
61 Iowa Code § 447.9(2) (2021).
62 Iowa R. Civ. P. 1.305(8).
15 (3) County in Which the Parcel is Situated. Section 447.9(2) provides that service shall be made on any person who has an interest of record. Section 447.9(3) then provides that the county in which a parcel is located “has the right of redemption for owner-occupied residential parcels . . . .”63 It is therefore a good idea to serve the county as a potential party with an interest of record.64
(4) Other Parties With an Interest of Record. Section 447.9 further requires service of notice of expiration of right of redemption on “any mortgagee having a lien upon the parcel, a vendor of the parcel under a recorded contract of sale, a lessor who has a recorded lease or recorded memorandum of a lease, and any other person who has an interest of record, at the person's last known address.”65
3. SPECIAL SERVICE CONSIDERATIONS. Although section 447.9 is clear that service of notice of expiration of right of redemption should be made by both regular and certified mail, special consideration should be given as to whom the notice should be sent in connection with particular parties.
a. Service on the United States. As a preliminary matter, in light of the requirement on section 447.9 for service of notice of expiration of right of redemption by both regular and certified mail, when service is not be made on the United States, all persons entitled to received notice should be served by both regular and certified mail even in instances where the Federal Rules of Civil Procedure may require only certified or registered mail.
(1) Generally. According to the Federal Rules of Civil Procedure, service upon the United States is completed by mailing a copy of the notice by either registered or certified mail to the following parties:
(a) The United States Attorney for the district or to an assistant United States attorney or clerical employee
63 Iowa Code § 447.9(3) (2021).
64 See Iowa R. Civ. P. 1.305(9) (providing that the county is served by serving its auditor or the chair of its board of supervisors).
65 Iowa Code § 447.9(2) (2021).
16 designated by the United States attorney in writing filed with the clerk of court, or to the civil process clerk at the office of the United States attorney;66 and
(b) The Attorney General of the United States at Washington, D.C.67
(2) Serving an Agency of the United States. Service on an agency or corporation of the United States is effected by serving the United States as set forth above, and by also sending a copy of the notice by registered or certified mail to the agency or corporation.68
(3) Federal Tax Liens. If there is notice of a federal tax lien appearing in the chain of title, notice of expiration of right of redemption should be given to the United States as provided above. Also, a notice containing the information set forth in Internal Revenue Service Publication 786 (Rev. 5-2016) should be sent by regular mail and certified mail to the Collection Group Advisory Manager for the area in which the notice of federal tax lien was filed.69 In
66 See Fed. R. Civ. P. 4(i)(1)(A). Therefore, service should be made on the United States Attorney in the applicable district by both regular and certified or registered mail.
67 See Fed. R. Civ. P. 4(i)(1)(B). Therefore, service should be made on the United States Attorney General by both regular and certified or registered mail.
68 See Fed. R. Civ. P. 4(i)(2). Again, service should be mailed by both regular and certified or registered mail on the agency or corporation.
69 See I.R.C. § 7425(c)(1) (providing that notice shall be provided to, and in accordance with regulations prescribed by the Treasury Secretary). See also I.R.S. Pub. 786 (Rev. 5-2016), which contains instructions for preparing a notice of non-judicial sale of property and application for consent to sale, and which provides in part as follows:
A notice of sale will be considered adequate if it contains the following information:
(1) The name and address, telephone number and fax number of the person submitting the notice;
(2) A copy of each Form 668(Y)(c), Notice of Federal Tax Lien, affecting the property to be sold, or from the recorded federal tax lien, you may provide
17 connection witht eh provision of notice of expiration of right of redemption, I.R.S. From 14497 could be used provided it is completed in a manner to contain all of the information required to be contained in a notice of expiration of right of redemption under section 447.9 of the Code of Iowa.
the following information:
(a) The name of the IRS Area (District) office or the place where the notice was prepared and signed;
(b) The name and address of the taxpayer; and
(c) The date and place where the notice of lien was filed.
(3) A detailed description, including the location of the property affected by the tax lien. For real property, give the complete physical address, the legal description contained in the title or deed of the property, and, if available, a copy of the abstract of title;
(4) If applicable, the reasons the property is liable to perish, or become greatly reduced in value if kept a minimum of 25 days, or reasons it cannot be kept for that period of time without incurring great expense;
(5) The date, time, place and terms of the sale of the property or the date the taxpayer’s interest in the property is terminated; and
(6) The approximate amount of principal obligation, including interest, due the person selling the property and a complete description of any expenses. This may include legal expenses, selling costs, maintenance fees and expenses, which will be charged against the sale proceeds. NOTE: not all expenses will be reimbursable if there is an IRS redemption of the property.
Only the original of a Notice of Sale is required. If a duplicate and a written request for acknowledgment are submitted with the original application, the Collection Advisory Group Manager will indicate the date and time received on the duplicate and return it to the originator.
I.R.S. Pub. 786 (Rev. 5-2016) (emphasis omitted). See also I.R.S. Pub. 4235 (Rev. 07-2020) which provides the address to which the notice as provided for under I.R.S. Publ 786 should be sent.
18 (a) Special Redemption Rights. In the case of a tax sale property on which the United States has, or claims to have a lien, the United States has 120 days from the date of sale (as defined by Internal Revenue Regulations) within which to redeem the property.70 According to the Internal Revenue Regulations, "the date of sale, for purposes of computing a period of time determined with reference to the date of sale, is the date on which the holder of the tax certificate obtains absolute title."71 The holder of the tax sale certificate obtains absolute title upon receipt of a tax deed to the property.72 Therefore, the United States has 120 days from the date of issuance of the tax deed within which to redeem the property.
(b) Redemption Amount. Section 7425(d)(2) of the Internal Revenue Code provides that in any case in which the United States redeems real property under section 7425(d)(1), the amount to be paid for the property shall be the amount prescribed by section 2410(d) of Title 28 to the United States Code.73
70 I.R.C. § 7425(d)(1).
71 Treas. Regs. § 301.7425-2, Ex. 6.
72 Iowa Code § 448.3 (2021).
73 Section 2410(d) provides as follows:
(d) in any case in which the United States redeems real property under this Section or Section 7425 of the Internal Revenue Code of 1986, the amount to be paid for such property shall be the sum of --
(1) the actual amount paid by the purchaser at such sale (which, in the case of a purchaser who is the holder of the lien being foreclosed, shall include the amount of the obligation secured by such lien to the extent satisfied by reason of such sale),
(2) interest on the amount paid (as determined under paragraph (1)) at 6 percent per annum from the date of such sale, and
(3) the amount (if any) equal to the excess of (A) the expenses necessarily incurred in connection with such property, over (B) the
19 b. Service on the State of Iowa. Service on the State of Iowa should be made by serving the county attorney for the county, or counties, in which the real estate is located, and by sending notice by regular and certified mail to the Iowa Attorney General.74
(1) Additional Precaution. In addition to serving the attorney general and the county attorney, it is a good idea to serve the presiding officer, clerk, or secretary of a governmental board, commission, or agency, if applicable.75
c. Service in Connection with Deceased Persons. If the party in whose name the property is taxed is deceased, it is recommended that service be made by regular and certified mail on the successors in interest of the decedent if the record reveals the identity of any such successors in interest.76 Where the record does not reveal the existence or identity of any successors in interest, it is recommended that notice addressed to all unknown successors in interest to the decedent and all parties interested in the estate of decedent be published.77 In addition, service should be made on
income from such property plus (to the extent such property is used by the purchaser) a reasonable rental value of such property.
28 U.S.C. 2410(d). See also Treas. Reg. § 301.7425-4(b)(providing further explanation concerning the calculation of the amount necessary for the United States to redeem real property under section 7425 of the Internal Revenue Code).
74 Iowa Code § 613.9 (2021) (providing for service on the state of Iowa by sending a copy of an original notice and petition to the Iowa Attorney General by certified mail (in addition to personal service on the applicable county attorney)). See Iowa Code § 613.8 (2021) (providing that the state has given consent to being made a party in any suit involving the title to real estate). See also Iowa Code § 421.19 (2021) (providing that the attorney general and the county attorney for each county are to act as attorneys for the director of the department of revenue).
75 See Iowa R. Civ. P. 1.305(13).
76 See Iowa Code § 447.9(2) (2021) (providing that service of expiration of right of redemption shall be made by mail on any person with an interest of record at the person’s last known address).
77 See Burks v. Hedinger, 167 N.W.2d 650, 654 (Iowa 1969) (“Of course where . . . the one in whose name the property is taxed is dead, it is impossible to serve him and no notice upon such person is necessary”); Thompson v. Chambers, 296 N.W. 380, 383 (Iowa 1941) (“Where the one in whose name the property is taxed is dead, it is of course impossible to serve him and
20 the personal representative for the decedent’s estate if the same is being administered.78
(1) Service on the State of Iowa and the United States. Where the record reflects that the titleholder is deceased, service also should be made on the State of Iowa and/or the United States in the manner as previously discussed, unless the record also reflects the payment of, or non-liability for federal estate and Iowa inheritance taxes in connection with the decedent.79
d. Service on Military Personnel. The Servicemembers Civil Relief Act affords certain protections to persons engaged in active military service. More particularly, if a person entitled to redeem from a tax sale is in the military service, the period of that person’s military service may not be included in computing the redemption period.80
(1) Affidavit of Military Status. If no person entitled to service of notice of expiration of right of redemption is in the military service, the tax sale certificate holder should file an affidavit of non-military service, or include in the affidavit of completed service a statement that no parties entitled to service were engaged in active military service under the Servicemembers Civil Relief Act.
e. Service on Corporations. The service of process, notice or demand required or permitted by law on a corporation is
no notice upon such person is necessary”); Op. Atty Gen. (February 6, 1996). See Op. Atty Gen. (March 12, 1979) (stating that when there is no one upon whom notice of expiration of right of redemption can be served, an affidavit of service setting forth the facts and filed with the county treasurer negates the necessity for such notice).
78 See Crawford v. Liddle, 70 N.W. 97, 99 (Iowa 1897) (holding that where property was taxed to “O. N. Hull Estate,” the executors, who were vested with full power to sell and convey the real estate, and to make title thereto, were entitled to notice).
79 See Iowa Land Title Standards, ch. 9 (8th ed. 2006, as updated) (providing some guidance on determining the existence of liability for death taxes).
80 50 U.S.C. § 526(b). See 50 U.S.C. § 511(2) for the definition of “military service” as it applies to the Servicemembers Civil Relief Act.
21 accomplished by serving the registered agent of that corporation.81 Service on a corporation also may be accomplished “by serving any present or acting or last known officer thereof, or any general or managing agent, or any agent or person now authorized by appointment or by law to receive service of original notice.”82
(1) Where Corporation Administratively Dissolved. Where a corporation has been administratively dissolved pursuant to section 490.1421 of the Code of Iowa, the secretary of state becomes the corporation's agent for service of process “in any proceeding based on a cause of action which arose during the time the corporation was authorized to transact business in this state.”83
(2) Reinstatement Following Administrative Dissolution. Where a corporation is reinstated following administrative dissolution, said reinstatement relates back to the date of the administrative dissolution, as if said administrative dissolution had never occurred.84
f. Child Support. Where there is a child support judgment involved, and there has been an assignment of support in favor of the Iowa Department of Human Services pursuant to the provisions of section 252C.2 of the Code of Iowa, service should be made on all of the following: (1) the Iowa Department of Human Services, Child Support Recovery Unit; (2) the Iowa Department of Revenue; (3) the Iowa Attorney General; and (4) the County
81 Iowa Code § 490.504(1) (2021). “If a corporation has no registered agent, or the agent cannot with reasonable diligence be served, the corporation may be served by registered or certified mail, return receipt requested, addressed to the secretary of the corporation at its principal office.” Iowa Code § 490.504(2) (2021). Note, however that according to section 490.504(2), service in this manner is perfected only at the earliest of the date the corporation receives the mail, the date shown on the signed return receipt, or five days after the notice is deposited in the mail if mailed postpaid and correctly addressed. Id.
82 Iowa R. Civ. P. 1.305(6).
83 Iowa Code § 490.1421(5) (2021). Pursuant to section 490.1421(5), “[s]ervice of process on the secretary of state . . . is service on the corporation.” Id. Section 490.1421(5), however, "does not preclude service on the corporation's registered agent, if any." Id.
84 Iowa Code § 490.1422(3) (2021).
22 Attorney.85
D. IMPACT OF BANKRUTPCY ON RIGHT OF REDEMPTION.
1. BANKRUPTCY FILED PRIOR TO THE TAX SALE. If the County Treasurer is aware that a person in whose name the property is taxed or a person who is entitled to redeem the property from a tax sale has filed for bankruptcy relief, the County Treasurer should not offer the property for sale and the certificate holder should not serve the notice of expiration of right of redemption on said person in light of the automatic stay. If such property is inadvertently sold at the tax sale, the sale is void and the property must be sold again after termination of the automatic stay.86
2. BANKRUPTCY FILED AFTER THE TAX SALE. If the bankruptcy petition was filed after the property was sold at tax sale, the appropriate course of action to be taken by the tax sale certificate holder depends in part upon whether the affidavit of completed service of notice of right of expiration of right of redemption has been filed.
a. Bankruptcy Filed Prior to Filing of Affidavit. If the bankruptcy petition was filed after the property was sold at tax sale but before the certificate holder has served notice of expiration of right of redemption, the certificate holder has two options:
(1) File a motion in bankruptcy court for relief from the automatic stay; or
(2) Wait until the bankruptcy case has been dismissed and then proceed with service of notice of expiration of the right of redemption.87 Section 446.37 provides that “if the filing of affidavit of service is stayed by operation of law, the time period for the filing of the affidavit shall not expire until the later of six months after the stay has been lifted or three
85 See Iowa Code § 613.9 (2021) and Rule 1.305(11) of the Iowa Rules of Civil Procedure concerning service on the state.
86 In re American Cent. Airlines, Inc., 52 B.R. 567 (Bankr. N.D. Iowa 1985).
87 Section 446.37 of the Code of Iowa provides that the county treasurer shall cancel a tax sale certificate if the affidavit of completed service of notice of expiration of the right of redemption has not been filed after three years have elapsed from the date of the tax sale (or after one year from the date of the tax sale in the case of a public nuisance tax sale under section 446.19B). Iowa Code § 446.37 (2021).
23 years from the time of the tax sale.”88
b. Bankruptcy Filed After Filing of Affidavit. If the bankruptcy petition was filed after the certificate holder has filed an affidavit of completed service of notice of expiration of right of redemption, the certificate holder need take no further action other than merely to wait for the expiration of the redemption period, including any suspension of such period occurring on or after commencement of the bankruptcy case, or sixty days from the order for relief, whichever occurs later.89
E. AFFIDAVIT OF COMPLETED SERVICE. Service of notice of expiration of right of redemption is deemed complete only after the certificate holder causes an affidavit of completed service to be filed with the county treasurer.90 The affidavit must be filed by the county treasurer and “entered in the county system and is presumptive evidence of the completed service of the notice.”91 The right of redemption shall not expire until ninety days after the affidavit is filed.92 Pursuant to section 447.12, the affidavit of completed service of notice of expiration of the right of redemption is presumptive evidence of the completed service of the notice.93 Iowa law has strict requirements as to the contents of the affidavit and as to whom may execute the affidavit.
1. CONTENTS OF AFFIDAVIT. The affidavit of completed service must show “the making of service, the manner of service, the time when and place where made, under whose direction the service was made, and the costs incurred” in making such service.94
a. Strict Compliance with Statutory Requirements. Iowa cases consistently have required strict compliance with section 447.12
88 Id.
89 11 U.S.C § 108(b).
90 Iowa Code § 447.12 (2021).
91 Iowa Code § 447.12 (2021).
92 Id.
93 Iowa Code § 447.12 (2021). See Laurie Kratky Doré, Iowa Practice, Volume 7, Evidence §§ 5.301:1, et seq. (2016-17 ed.), for a discussion of presumptions in civil actions and proceedings.
94 Id.
24 relative to the contents of the affidavit of completed service of notice of expiration of the right of redemption. Pursuant to the express language of section 447.12, the affidavit must be clear and must show unequivocally: (i) that service was made, (ii) the manner in which service was made, (iii) the time when and place where service was made, (iv) under whose direction the service was made,95 and (v) the costs incurred in making the service. The affidavit also must show the person who completed service.96
b. Affidavit of Completed Service Must Stand on its Own. Iowa courts have held that the affidavit of completed service of notice of expiration of right of redemption must stand on its own in reflecting proper service and a deficient affidavit cannot be saved by intrinsic evidence.97
95 The affidavit must be clear under whose direction service was made as to each instance of service. See Geil v. Babb, 242 N.W. 34, 36 (Iowa 1932) (declaring affidavit insufficient in failing to state at whose direction notice was published in connection with service on non- residents). In the case of a certificate holder that is an entity, the Iowa Supreme Court has held that it is sufficient to show that service was made at the direction of the entity, without particularly identifying the individual person associated with that entity who directed the service. Fleck v. Duro, 288 N.W. 426, 428 (Iowa 1939).
96 Although section 447.12 does not explicitly require such showing, Iowa cases have required such showing. In Rehr v. Guardian Tax Partners, Inc., the certificate holder, Guardian Tax Partners, Inc., was a corporation. The affidavit of completed service stated that Guardian mailed the notice and that Guardian published the notice. The Iowa Court of Appeals held that this rendered the affidavit deficient in that it failed to identify the specific individual who mailed and published the notice, and that said individual did so at Guardian’s direction. The Court held that section 447.12 requires that an affidavit of completed service of notice of expiration of right of redemption (i) identify the individual making the service, and (ii) make clear that such service was made at the direction of the certificate holder. In Rehr v. Guaradian Tax Partners, Inc., 900 N.W.2d 618, 2017 WL 1401569 (Iowa Ct. App. April 19, 2017).
97 See Modern Heat & Power Co. v. Bishop Steamotor Corp., 34 N.W.2d 581, 587 (Iowa 1948) (holding that a return of service of notice of expiration of right of redemption produced at trial that was not incorporated in an affidavit of completed service would not serve to remedy a defect in the affidavit); Geil v. Babb, 242 N.W. 34, 36 (Iowa 1932) (holding that an affidavit of completed service of notice of expiration of right of redemption must be explicit and cannot be aided by parol evidence, and no presumptions not based upon a definite and explicit recitation of facts may be indulged in its construction); Grimes v. Ellyson, 105 N.W. 418, 420 (Iowa 1905) (“[t]he record as made up by the filing of the affidavit of service cannot be aided by evidence aliunde”).
25 2. WHO REQUIRED TO MAKE AFFIDAVIT. The affidavit must be made by the certificate holder or the certificate holder's attorney or agent.98 If it is made by the certificate holder’s attorney or agent, the affidavit must state the affiant is the agent or attorney of the holder of the certificate.99
F. PERSON(S) COMPLETING THE SERVICE. Section 447.9 of the Code of Iowa requires that the holder of the certificate of purchase cause the notice to be served.100 In numerous decisions, the Iowa Supreme Court has held that the notice must be served by the holder of the certificate and/or the certificate holder's agent or attorney.101 If the certificate holder is not serving the notice of expiration of right of redemption, the affidavit of completed service must reflect that the person performing the service was the certificate holder's attorney or agent for the purpose of serving said notice.102
1. ESTABLISHING AGENCY BY AFFIDAVIT. There is no requirement that the person performing service execute the affidavit of completed service or a separate affidavit. It merely is necessary that he or she be the agent of the certificate holder. It is important, therefore that the agency relationship of any persons completing service be clearly spelled out in the affidavit. It also may be worthwhile if there is any concern as to a future dispute or litigation relative to the relationship between the certificate holder and the person completing service to have such person execute an affidavit setting forth that he or she is the agent of the certificate holder and that all matters related to service were done under the direction and at the request of the certificate holder. Any such affidavit could then be appended to the final affidavit of completed service or simply kept by the
98 Iowa Code § 447.12 (2021).
99 Id.
100 Iowa Code § 447.9 (2021).
101 See Modern Heat and Power Co. v. Bishop Steamotor Corp., 34 N.W.2d 581, 586 (1948) ("We have many times construed section 447.12 to require the affidavit of service to state that service of the notice was made by either the certificate holder or his agent or attorney. (Citations omitted). This rule is applied where service of the notice is made by the sheriff. (Citations omitted)."). See also Funson v. Bradt, 75 N.W. 337, 338 (Iowa 1898) (holding that one cannot assume that the sheriff was the certificate holder's agent). According to Funson, an affidavit of service of notice of expiration of the right of redemption signed by the sheriff is insufficient where it does not show that the sheriff was the agent or the attorney of the purchaser. Id.
102 Iowa Code § 447.12 (2021).
26 certificate holder or his or her attorney in case it is needed at some later date to establish the facts contained therein.
G. ON-SITE INSPECTION. Prior to filing the affidavit of completed service of notice of expiration of right of redemption, a certificate holder should consider performing an "on-site" inspection of the property. This will allow the certificate holder to determine the presence or absence of persons in possession and also the likelihood of on-site contamination. Such an inspection should be made as near in time as possible to the service of notice and should include a search for potential environmental contamination. In addition, it may be wise to photograph the parcel, concentrating on houses, garages and other structures, together with any property that might be stored on the parcel. In the case of a vacant lot, it is advisable to obtain photographs showing that there is nothing on the parcel. Any such photographs could prove useful in the case of a later contest against the certificate holder’s tax title based upon an alleged failure to properly serve one or more parties in possession.
H. COSTS OF SERVICE OF NOTICE. The costs of serving the notice, including the cost of sending notice by certified mail, the cost of publishing notice when required, and the cost of a record search shall be added to the amount necessary to redeem.103 Note, however, that if the certificate holder is other than a county, in order to be added to the amount necessary for redemption, the record search must be performed by a Title Guaranty participating abstractor or by a licensed attorney, and the cost of the search may not exceed three hundred dollars.104
I. TERMINATION OF THE REDEMPTION PERIOD. Pursuant to section 447.12, “[t]he right of redemption shall not expire until ninety days after service is complete.”105 A tax sale certificate holder may cause to be served notice of expiration of right of redemption at any time after one year and nine months from the date of a tax sale, after nine months from the date of a “public bidder” sale under section 446.18, or after three months from the date of a “public nuisance” tax sale made under section 446.19B.106 However, unless the certificate holder is a county, the certificate holder must file the affidavit of completed service before three years have elapsed from the date of the tax sale (or before one year has elapsed from the date of a “public nuisance” tax sale under section 446.19B), or
103 Iowa Code § 447.13 (2021).
104 Id.
105 Iowa Code § 447.12 (2021).
106 Iowa Code § 447.9 (2021).
27 lose his or her certificate (and his tax lien) entirely.107 If no timely redemption is made following completion of service of notice of expiration of right of redemption, the county treasurer shall issue a tax deed to the certificate holder upon return of the certificate of purchase and payment of the appropriate deed and recording fees by the certificate holder.108
1. AFFIDAVIT DEEMED FILED UPON MAILING. In Wright v. Maloney,109 The tax sale certificate holder mailed the affidavit of completed service of notice of expiration of right of redemption to the county treasurer on the deadline for the filing of the affidavit, three years to the day after the tax sale. The treasurer ultimately treated the affidavit as being timely filed. On appeal by the prior titleholder, the Iowa Court of Appeals ruled that the “treasurer properly accepted the affidavit as timely filed when a metered postmark provided competent evidence that the affidavit was deposited in the mail on the filing deadline.”
J. LAW GOVERNING REDEMPTION. “The law in effect at the time of the tax sale governs redemption.”110 This provision may be of importance in determining whether notice of expiration of right of redemption was completed properly in light of amendments to section 447.9 that have changed the required manner of service of said notice.
K. EFFECT OF DEFECTIVE SERVICE OF NOTICE. The Iowa legislature amended section 448.3 of the Code of Iowa effective April 8, 2008, by adding subsection 2 thereto, which for the first time addressed, statutorily, the impact of defective service of notice of expiration of right of redemption on a tax sale deed. Prior to this amendment, this determination was left to the courts.
1. DEFECTIVE SERVICE ON OWNER OR PERSON TAXED. “In the event that an owner of record or a person in whose name the parcel is taxed establishes that such person was not served with notice of expiration of right of redemption in accordance with section 447.9, then the county treasurer's deed is void, subject to the provisions of sections 448.15 and
107 Iowa Code § 446.37 (2021). The three year cancellation rule for tax sale certificates does not apply to certificates held by a county. Id.
108 Iowa Code § 448.1 (2021). Section 448.1 provides that the treasurer shall record the tax deed with the county recorder prior to delivering the deed to the certificate holder. Id.
109 Wright v. Maloney, No. 06-1143, 2007 WL 4191949 (Iowa Ct. App. Nov. 29, 2007) (citing section 622.105 of the Code of Iowa as authority for its holding).
110 Iowa Code § 447.14 (2021).
28 448.16.”111
2. DEFECTIVE SERVICE ON ANY OTHER PARTY. “If a person entitled to service of notice under section 447.9, other than an owner of record or a person in whose name the parcel is taxed, establishes that such person was not served with notice in accordance with section 447.9, the deed is not thereby rendered invalid. However, the deed is subject to all of the right and interest of such person not served with notice, as provided in sections 448.15 and 448.16.”112
L. FAILURE TO SERVE NOTICE OF EXPIRATION OF RIGHT OF REDEMPTION. The tax sale certificate holder has three years following a tax sale, and one year following a public nuisance tax sale under section 446.19B, to file an affidavit of completed service of notice of expiration of right of redemption. If the affidavit is not filed timely, “the county treasurer shall cancel the sale from the county system.”113
1. EXTENSION WHEN SERVICE STAYED BY LAW. If the filing of an affidavit of completed service is stayed by operation of law, the time period for filing the affidavit shall not expire until the later of six months after the stay has been lifted or three years from the time of the tax sale.114 With regard to public nuisance tax sales, the time period shall not expire until the later of six months after the stay has been lifted or one year from the time of the tax sale.115
2. COUNTY EXEMPT FROM CANCELLATION PERIOD. The cancellation rules of section 446.37 do not apply to tax sale certificates held by the county.116
111 Iowa Code § 448.3(2) (2021). See infra Section VII.C.1 of this outline for a discussion of the limitations provisions of sections 448.15 and 448.16 of the Code of Iowa.
112 Id.
113 Iowa Code § 446.37 (2021).
114 Id.
115 Id.
116 Id. Also, according to a formal opinion of the attorney general, the three-year cancellation rule contained in section 446.37 does not apply to tax sale certificates originally purchased by a county that later are assigned by the county to another person. Op. Atty. Gen. (Aug 31, 1997).
29 M. CANCELLATION OF SALE FOR UNTIMELY RETURN OF CERTIFICATE. If a certificate holder, other than a county, fails to return the certificate of purchase and remit the appropriate deed issuance fee to the county treasurer within 90 calendar days after the expiration of the period of redemption, the treasurer shall cancel the certificate.117
VI. TAX SALE DEEDS
A. ISSUANCE OF THE TAX SALE DEED. Immediately after the expiration of ninety days following the filing of the affidavit of completed service, the county treasurer shall issue a tax sale deed to the certificate holder, upon return of the certificate of purchase and payment of the appropriate deed and recording fees by the certificate holder. In addition, the treasurer shall receive twenty-five dollars for each deed made by the treasurer.118
B. FORM OF THE TAX SALE DEED. The form of the deed is prescribed by section 448.2 of the Code of Iowa.119
C. EFFECT OF THE TAX SALE DEED. A properly executed and recorded tax sale deed vests in the purchaser all the right, title, interest and claim of the state and county, and all the right, title, interest and estate of the former owner.120 A tax sale deed is original and not derivative and totally destroys the antecedent estate.121 A tax sale deed vests in the tax titleholder all the right, title and interest of the owner of any estate in and to the real estate.122 A tax sale deed creates a new and independent title in the purchaser and extinguishes all rights under other
117 Iowa Code § 448.1 (2021).
118 Iowa Code § 448.1 (2021).
119 Iowa Code § 448.2 (2021).
120 Iowa Code § 448.3(1) (2021).
121 Patterson v. May, 29 N.W.2d 547, 552 (Iowa 1947); Teget v. Lambach, 286 N.W. 522, 526 (Iowa 1939).
122 Polk County v. Basham, 12 N.W.2d 157, 160 (Iowa 1943); Nedderman v. City of Des Moines, 268 N.W. 36, 38 (Iowa 1936). After holding that a valid tax deed conveys all of the right and interest of the holder of any estate in the real estate, the Polk court continued by stating that unless the separate mineral rights relative to a parcel are separately assessed from the fee title to the parcel, such mineral rights are extinguished upon the issuance of a valid tax deed to the parcel. Polk County, 12 N.W.2d at 160.
30 liens that were not of equal or greater priority with the lien of the taxes for which the parcel was sold.123
1. EXCEPTIONS. Despite the original and non-derivative nature of a tax deed, however, the title established by virtue of a tax deed is subject to the following:124
a. Certain Restrictive Covenants. All restrictive covenants resulting from prior conveyances in the chain of title to the former owner.
b. Subsequent Tax Sale Certificate Holders. All the right and interest of a tax sale certificate holder who had purchased at a tax sale subsequent to the tax sale for which the deed was issued.125
2. CANCELLATION OF SUSPENDED TAXES. The issuance of a tax deed also operates to cancel all suspended taxes.126
D. TAX SALE DEED PRESUMPTIVE EVIDENCE OF CERTAIN MATTERS. A tax sale deed is presumptive evidence of the following facts pertaining to the tax sale proceedings:127
1. That the parcel was subject to taxes for year(s) stated in deed.
2. That the taxes were not paid at any time prior to the sale.
123 Fergason v. Aitken, 263 N.W. 850 (Iowa 1935).
124 Iowa Code § 448.3(1) (2017). In Nedderman v. City of Des Moines, the Iowa Supreme Court ruled that a valid tax deed extinguishes all restrictive covenants in the chain of title of the previous owners. Nedderman, 268 N.W. at 38. Following that decision, however, the Iowa legislature amended what is now section 448.3 to provide that tax titles are subject to all restrictive covenants, resulting from prior conveyances in the chain of title to the former owner. See Polk County, 12 N.W.2d at 160 (discussing this sequence of events).
125 Iowa Code § 448.3(1) (2021).
126 Id.
127 Iowa Code § 448.4 (2021). But see Bennett v. Greenwalt, 286 N.W. 722, 728 (Iowa 1939) (holding that the presumptions under section 448.4 are available only provided the tax deed has been introduced into evidence). See Laurie Kratky Doré, Iowa Practice, Volume 7, Evidence §§ 5.301:1, et seq. (2016-17 ed.), for a discussion of presumptions in civil actions and proceedings.
31 3. That the parcel had not been redeemed.
4. That the parcel had been listed and assessed.
5. That the taxes were levied or set according to law.
6. That the parcel was duly advertised for sale.
7. That the parcel was sold as stated in the deed.
E. TAX SALE DEED CONCLUSIVE EVIDENCE OF CERTAIN MATTERS. A tax sale deed is conclusive evidence of the following facts pertaining to the tax sale proceedings:128
1. That the manner of listing, assessment, levy, notice, and sale was all as directed by the law.129
2. That the grantee named in the deed was the purchaser.
3. That the officers involved in the sale complied with all prerequisites of the law (except with regard to the points delineated in section 448.4, for which the deed provides presumptive evidence only).
F. ANCIENT TAX SALES LEGALIZED. “An action shall not be commenced
128 Iowa Code § 448.5 (2021). In McCready v. Sexton & Son, the Iowa Supreme Court held section 448.5 unconstitutional in so far as it renders a tax deed conclusive evidence as to matters that are jurisdictional and essential to the taxing power. McCready v. Sexton & Son, 29 Iowa 356 (1870). The McCready court concluded that the legislature was powerless to declare a tax deed conclusive evidence of compliance with those matters which are essential to the exercise of the taxing power. Id. On the other hand, however, the legislature does have the power to declare that a tax deed is conclusive evidence of the performance of matters that are “non-essentials or matters merely directory.” Id. In Martin v. Cole, the Iowa Supreme Court again held section 448.4 to be unconstitutional to the extent that it purports to render a tax deed conclusive evidence of matters jurisdictional and essential to the exercise of taxing power, such as the assessment, levy and sale. Martin v. Cole, 38 Iowa 141 (1874). According to the Martin court, however, the statute is valid and constitutional in so far as it makes a tax deed conclusive evidence of the manner of the exercise of jurisdictional matters. Id.
129 In Reed v. Thompson, the Iowa Supreme Court held a tax deed is conclusive evidence as to the propriety of the pre-sale notice only, and that section 448.5 does apply to the notice of expiration of the right of redemption. Reed v. Thompson, 9 N.W. 331, 332-33 (Iowa 1881). See also Wilson v. Crafts, 9 N.W. 333, 333 (Iowa 1881) (same).
32 after July 1, 1987, which asserts a claim against any real estate sold at a tax sale, based upon any defect in the tax sale proceeding, including the inadequacy of the notice of tax sale or the inadequacy of the notice of the expiration of the redemption period, where the tax sale was made prior to July 1, 1986.”130
VII. ACTIONS TO CHALLENGE A TAX SALE DEED
A. INTRODUCTION. Iowa’s tax sale statutes provide for three types of actions to challenge a tax sale deed. The first two types of actions do not seek to challenge the tax sale, but rather to allow redemption despite that issuance of the tax sale deed. The actions are codified at sections 447.7 and 447.8 of the Code of Iowa and are the only means to redeem a parcel sold for delinquent taxes after the execution and deliver of a tax sale deed.131 An action under section 447.7 seeks redemption based upon the legal disability of the person bringing the action. An action under section 447.8 is based upon the assertion of improper or lack of service of notice of expiration of right of redemption. . “After the execution and delivery of the [tax sale deed], a person may only redeem a parcel sold for delinquent taxes under [section 447.8] or section 447.7.”132 The third type of action is based upon an improper sale or the issuance of a tax sale deed despite prior redemption. This type of action is provided for under section 448.6 of the Code of Iowa. The result of a successful action under section 448.6 is a cancellation of both the tax sale and the subsequent tax sale deed.
B. ACTION FOR REDEMPTION BASED UPON IMPROPER NOTICE. Section 447.8 provides for an action to challenge a tax sale deed after it has been issued based upon improper notice of expiration of right of redemption. A person who asserts the continuing right to redeem under section 447.8 may do so only by equitable action in the district court where the parcel is located as provided.133
1. WHO MAY BRING ACTION. Only a person who was entitled to redeem during the ninety-day redemption period provided for under section 447.12 may maintain an action under section 447.8 to redeem from
130 Iowa Code § 589.16A (2021).
131 Iowa Code § 447.8(1)(b) (2021). Specifically, section 447.8(1)(b) provides that “[a]fter the execution and delivery of the [tax sale deed], a person may only redeem a parcel sold for delinquent taxes under [section 447.8] or section 447.7.” Id.
132 Iowa Code § 447.8(1)(b) (2021).
133 Iowa Code § 447.8(1)(a) (2021).
33 a tax sale following delivery of the tax deed.134 However, a person entitled to redeem may assign to another person his or her right of redemption or right to maintain the action.135
2. WHAT MUST BE SHOWN FOR SUCCESSFUL ACTION. In order to establish the right to redeem following delivery of the tax deed, the petitioner must prove that he or she or a predecessor in interest was not properly served with notice in accordance with the requirements of sections 447.9 through 447.12, or that he or she or a predecessor in interest acquired an interest in or possession of the parcel during the ninety-day redemption period provided for under section 447.12.136
a. “Coattail” Attacks Not Allowed. In 2005, section 447.8 was amended to provide that a person shall not be entitled to maintain an action for redemption following delivery of the tax sale deed “by claiming that a different person was not properly served with notice of expiration of right of redemption, if the person seeking to maintain the action, or the person’s predecessor in interest, if applicable, was properly served with the notice.”137
b. Necessary Defendants to Such Action. A person maintaining an
134 Id.
135 Id.
136 Iowa Code § 447.8(1)(b) (2021).
137 Id. Prior to its amendment in 2005, section 447.8 did not expressly prohibit one party from bringing an action to redeem following delivery of the tax deed based upon improper service on another, and the Iowa Supreme Court had ruled that such an action was proper. Dohrn v. Mooring Tax Asset Group, L.L.C., 743 N.W.2d 857, 862-63 (Iowa 2008); Burks v. Hedinger, 167 N.W.2d 650, 654 (Iowa 1969); Thompson v. Chambers, 296 N.W. 380, 384 (Iowa 1941). In Dohrn v. Mooring Tax Asset Group, L.L.C., the prior title holder to a 40-acre parcel of farm land brought an action to redeem following the issuance and recording of the tax deed on the basis that service was not completed on other parties who were in possession of the real estate. The court held that it was in fact proper for the prior owner to proceed in this manner, and thereby “take advantage of the [tax sale certificate holder’s] failure to notify a person in possession.” Dohrn, 743 N.W.2d at 862. Although the court acknowledged the 2005 amendment to section 447.8 that now prevents the bringing of an action to redeem by one party based upon defective service on another, it declared the amendment inapplicable to the matter under consideration since the tax sale in the Dohrn case took place prior to the amendment and “[t]he law in effect at the time of tax sale governs redemption.” Id. at 863 (quoting section 447.14 of the Code of Iowa).
34 action under section 447.8 shall name as defendants all persons claiming an interest in the parcel derived from the tax sale, as reflected by the record.138
3. RESULT OF AN UNSUCCESSFUL ACTION UNDER SECTION 447.8. “If the court determines that notice was properly served, the court shall enter judgment holding that all rights of redemption are terminated and that the validity of the tax title or purported tax title is conclusively established as a matter of law.”139
4. RESULT OF A SUCCESSFUL ACTION UNDER SECTION 447.8. “If the court determines that the notice was not properly served and that the person maintaining the action is entitled to redeem, the court shall so order.”140
a. Contents of an Order Allowing Redemption. The order shall determine the respective rights, claims and interests of all parties, including liens for taxes and claims for improvements made on or to the parcel by the person claiming under the tax title, and the order shall establish the amount necessary for redemption.141 The order also shall direct that the total redemption amount be paid to the clerk of court within thirty days after the date of the order.142
b. Redemption Amount. The redemption amount shall include:
(1) The amount necessary for redemption calculated pursuant to section 447.1, including interest computed up to and including the date of payment of the total redemption amount to the clerk of court;143
(2) The amount of all costs added to the redemption amount as
138 Iowa Code § 447.8(2) (2021).
139 Iowa Code § 447.8(3) (2021).
140 Iowa Code § 447.8(4) (2021).
141 Id.
142 Id.
143 Id.
35 provided for under section 447.13;144 and
(3) An amount equal to the value of any and all improvements made on or to the parcel by the person claiming under the tax title following delivery of the tax deed.145
c. Redemption By Successful Claimant. Upon payment of the redemption amount by the successful claimant within thirty days following the date of the court’s order allowing redemption, the court shall enter judgment declaring the tax sale deed invalid and determining the resulting rights, claims and interests of all parties to the action.146 The judgment also shall direct the clerk to deliver the entire redemption amount to the person who previously had claimed title under the tax deed.147
(1) When Redemption Not Timely Made. If the claimant fails to timely deliver payment of the total redemption amount, “the court shall enter judgment holding that all rights of redemption are terminated and that the validity of the tax title or purported tax title is conclusively established as a matter of law.”148 Thereafter, no subsequent action shall be brought to challenge the tax sale deed or to recover the parcel.149
5. ACTION UNDER SECTION 447.8 BARRED BY SECTION 448.16. “If an affidavit is filed pursuant to section 448.16 and if the time period for filing a claim under section 448.16 expires with no claims having been
144 Id. Section 447.13 provides that the costs of serving the notice, including the cost of sending notice by certified mail, the cost of publishing notice where the same is required, and the cost of a record search shall be added to the amount necessary to redeem. Iowa Code § 448.13 (2021). Concerning the cost of a record search, however, if the certificate holder is other than a county, in order to be added to the amount necessary for redemption, the record search must be performed by a Title Guaranty participating abstractor or by a licensed attorney, and the cost of the search may not exceed three hundred dollars. Id.
145 Iowa Code § 447.8(4) (2021).
146 Iowa Code § 447.8(5)(a) (2021).
147 Id.
148 Iowa Code § 447.8(5)(b) (2021).
149 Id.
36 filed, all persons are thereafter barred and estopped from commencing an action under [section 447.8].”150
C. ACTION FOR REDEMPTION BASED UPON LEGAL DISABILITY. Section 447.7 provides another avenue for redemption following the deliver of a tax sale deed solely available to persons with a legal disability. If a parcel owned by a person with a legal disability is sold at tax sale and the county treasurer has delivered the tax sale deed, the person with the legal disability or the person’s legal representative may file an action for redemption of the parcel pursuant to the provisions of said section.151
1. MUST ESTABLISH A LEGAL DISABILITY. To establish the right to redeem, the person maintaining the action must prove to the court that the owner of the parcel is a person with a legal disability that was entitled to redeem prior to the delivery of the tax sale deed.152
a. Definition of “ Person With a Legal Disability”. A “‘[p]erson with a legal disability” means a minor or a person of unsound mind.”153
3. NECESSARY DEFENDANTS TO SUCH ACTION. A person maintaining an action under section 447.7 shall name as defendants all
150 Iowa Code § 447.8(6) (2021).
151 Iowa Code § 447.7(2)(a) (2021).
152 Iowa Code § 447.7(2)(b) (2021).
153 Iowa Code § 445.1(b) (2021). In Garretson v. Hubbard, the Iowa Supreme Court described a person of unsound mind as someone who is “not . . . capable of exercising the judgment necessarily required in the management of his ordinary affairs. Garretson v. Hubbard, 81 N.W. 174, 174 (Iowa 1899). “A person of unsound mind is one who is incapable of transacting the particular business in hand. He need not necessarily be an insane or distracted person, and may be capable of transacting some kinds of business, and yet be of unsound mind, and incapable of transacting business of magnitude, or of at least some degree of intricacy. He may be capable of understanding his rights as to some transactions and not others.” Surley v. Sater, 27 N.W. 262, 263 (Iowa 1886). “‘Unsoundness of mind is where there is an essential privation of the reasoning faculties, or where a person is incapable of understanding and acting with discretion in the ordinary affairs of life.’” A court of equity will not ordinarily set aside a transaction on the ground of mere weakness of understanding, or liability to be sometimes deceived and duped, on the part of one of the parties to it. Such party must be, in a legal sense, of unsound mind.” Emerick v. Emerick, 49 N.W. 1017 (Iowa 1891) (citing Daren v. White, 42 N.J. Eq. 569, and Henderson v. McGregor, 30 Wis. 80)..
37 persons claiming an interest in the parcel derived from the tax sale, as reflected by the record.154
4. TIME FOR BRINGING ACTION UNDER 447.7. A person entitled to redeem under section 447.7 may do so “at any time prior to one year after the legal disability is removed by bringing an equitable action [under said section].”155 However, said one year limitation period is reduced in either of the following situations:
a. Person with Disability in Possession After Issuance of Tax Sale Deed. If a person with a legal disability remains in possession of the parcel after the recording of the tax sale deed, and if the tax title holder properly commences an action to remove the person from possession, the person with a legal disability shall forfeit any rights of redemption that the person may have under section 447.7, unless either of the following actions is timely filed by or on behalf of the person:
(1) A counterclaim in the removal action asserting the redemption rights under subsection 2 of the person with a legal disability.156
(2) A separate equitable action for redemption under section 447.7(2) within thirty days after the person with a legal disability and the person’s legal representative were served with original notice in the removal action.157
b. Person with Disability Not in Possession After Issuance of Tax Sale Deed. If a person with a legal disability is not in possession of the parcel at the time of the recording of the tax sale deed, the person or the person’s legal representative is forever barred and estopped from commencing an action under section 447.7 if either of the following occurs:
154 Iowa Code § 447.7(2)(c) (2021).
155 Iowa Code § 447.7(2)(a) (2021).
156 Iowa Code § 447.7(3)(a) (2021).
157 Iowa Code § 447.7(3)(b) (2021).
38 (1) An affidavit is filed pursuant to section 448.15 and claims adverse to the tax title are barred by section 448.16.158
(2) An action for redemption under section 447.7 is not brought within three years after the recording of the treasurer’s deed.159
4. RESULT OF A SUCCESSFUL ACTION UNDER 447.7. “If the court determines that the person maintaining the action or the person’s legal representative is entitled to redeem by virtue of legal disability or prior legal disability, the court shall so order.”160
a. Contents of an Order Allowing Redemption. The order shall determine the respective rights, claims and interests of all parties, including liens for taxes and claims for improvements made on or to the parcel by the person claiming under the tax title, and the order shall establish the amount necessary for redemption.161 The order also shall direct that the total redemption amount be paid to the clerk of court within thirty days after the date of the order.162
b. Redemption Amount. The redemption amount shall include:
(1) The amount necessary for redemption calculated pursuant to section 447.1 or 447.3, whichever is applicable, including interest computed up to and including the date of payment of the total redemption amount to the clerk of court;163 and
(2) The amount of all costs added to the redemption amount as provided for under section 447.13;164 and
158 Iowa Code § 447.7(4)(a) (2021).
159 Iowa Code § 447.7(4)(b) (2021).
160 Iowa Code § 447.7(2)(d) (2021).
161 Id.
162 Id.
163 Id.
164 Id. Section 447.13 provides that the costs of serving the notice, including the cost of sending notice by certified mail, the cost of publishing notice where the same is required, and the
39 c. Judgment for Improvements. If the court determines that the tax title holder has made improvements on or to the parcel after issuance of the tax sale deed, the court shall enter judgment in favor of the tax title holder for an amount equal to the value of all such improvements, and such judgment shall be a lien on the parcel until paid.165
d. Redemption By Successful Claimant. Upon payment of the redemption amount by the successful claimant within thirty days following the date of the court’s order allowing redemption, the court shall enter judgment declaring the tax sale deed void and determining the resulting rights, claims and interests of all parties to the action.166 The judgment also shall direct the clerk to deliver the entire redemption amount to the person who previously had claimed title under the tax sale deed.167
(1) When Redemption Not Timely Made. If the claimant fails to timely deliver payment of the total redemption amount, the court shall enter judgment holding that all rights of redemption are terminated and that the validity of the tax title or purported tax title is conclusively established as a matter of law.168
D. ALL OTHER ACTIONS ADVERSE TO THE TAX SALE DEED. Any action to challenge a tax sale deed that is not brought under sections 447.7 or 447.8 must be brought under section 448.6 of the Code of Iowa.169 Whereas actions brought under sections 447.7 and 447.8 are based upon improper service of notice of expiration of the right of redemption and request that the court extend the right of cost of a record search shall be added to the amount necessary to redeem. Iowa Code § 448.13 (2021). Concerning the cost of a record search, however, if the certificate holder is other than a county, in order to be added to the amount necessary for redemption, the record search must be performed by a Title Guaranty participating abstractor or by a licensed attorney, and the cost of the search may not exceed three hundred dollars. Id.
165 Iowa Code § 447.7(2)(d) (2021).
166 Iowa Code § 447.7(2)(e) (2021).
167 Id.
168 Iowa Code § 447.7(2)(f) (2021).
169 Iowa Code § 448.6(1) (2021) (“If the action is not brought under section 447.7 or 447.8, the action shall be controlled by the provisions of [section 448.6]”). Id.
40 redemption due to such improper notice, actions brought under 448.6 are based upon an improper sale or upon redemption prior to sale, and request that the court simply set aside the sale and invalidate the tax deed issued in connection therewith.170
1. WHO MAY BRING ACTION. In order to bring an action under section 448.6, a claimant must establish that he or she or the person under whom he or she claims title had title to the parcel at the time of the sale or that the title was obtained from the United States or the state of Iowa following the sale, and that all amounts due upon the parcel for the applicable tax years have been paid by such claimant or by the person under whom the claimant claims title.171
2. NECESSARY DEFENDANTS. The holder of the tax title and the treasurer of the county in which the parcel is located shall be named as defendants to an action brought under section 448.6.172
3. WHAT MUST BE SHOWN FOR SUCCESSFUL ACTION. In order to successfully challenge a tax deed under section 448.6, the claimant must prove any one of the following:173
a. That the parcel was not subject to taxes for the year or years named in the deed.
b. That the taxes had been paid before the sale.
c. That the parcel had been redeemed from the sale and that the redemption was made for the use and benefit of persons having the right of redemption.
d. That there had been an entire omission to list or assess the parcel, or to levy the taxes, or to give notice of the sale, or to sell the parcel.
4. WHERE ACTION RULED SUDDESSFUL. If a person bringing an action under section 448.6 is successful, the court shall do all of the
170 See Iowa Code § 448.6 (2021).
171 Iowa Code § 448.6(2) (2021).
172 Iowa Code § 448.6(3) (2021).
173 Iowa Code § 448.6(4) (2021).
41 following:174
a. Enter judgment declaring the tax deed to be invalid.
b. Order the treasurer to refund to the tax title holder all sums paid to the treasurer for the purchase of the tax sale certificate and for any subsequent taxes paid by the certificate holder.
c. Enter judgment in favor of the tax title holder for an amount equal to the value of any improvements made to the parcel after the tax sale deed was issued, and such judgment shall constitute a lien on the parcel until paid.
VIII. STATUTES OF LIMITATION RELATIVE TO TAX SALES
A. INTRODUCTION. In the context of tax sales, the Iowa Supreme Court has declared that statutes of limitation “will bar any right, however high the source from which it is deduced, provided that a reasonable time is given a party to enforce his right.”175 This broad declaration, however, is not entirely consistent with many other Iowa court decisions. Although sections 448.15-.16 and 448.12 have been characterized as valid statutes of limitation,176 they have not always been interpreted as a bar to “any right.” Fortunately, several statutory amendments to Iowa’s tax sale statutes enacted throughout the last two decades appear to have provided much clearer guidance as to Iowa’s tax sale limitations of actions provisions and the marketability of tax titles altogether.
B. THE 120-DAY AFFIDAVIT STATUTE OF LIMITATION. Sections 448.15 and 448.16 of the Code of Iowa provide a 120-day limitations period on actions adverse to a tax title.177 If a 120-day affidavit has been filed pursuant to section 448.15, and if no claims adverse to the tax title have been filed within the 120-day period prescribed under section 448.16, all persons are thereafter barred and estopped from commencing an action under either section 447.8 or section
174 Iowa Code § 448.6(5) (2021).
175 Swanson v. Pontralo, 27 N.W.2d 21, 25 (Iowa 1947).
176 See Torey v. Bigelow, 9 N.W. 313, 313 (Iowa 1881) (treating section 448.12 as a valid statute of limitation); and Patterson v. May, 29 N.W. 2d 547, 613 (Iowa 1947) (characterizing sections 448.15 and 448.16 as valid statutes of limitation). See also Rufford G. Patton & Carroll G. Patton, Patton On Land Titles § 84 (2d ed. 1957) (discussing statutes of limitations).
177 Iowa Code §§ 448.15-.16 (2021).
42 448.6.178
1. REQUISITE ELEMENTS FOR RELIANCE ON THE 120-DAY AFFIDAVIT. Several requirements must be met before one may rely upon the 120-day limitations provisions of sections 448.15 and 448.16.
(a) Tax Title Holder Must Take Possession of the Parcel. Following the issuance and recording of a tax deed, the tax title holder must first take possession of the parcel.179
(b) 120-Day Affidavit Must Be Recorded. After the tax title holder has taken possession of the parcel, he or she must file with the county recorder of the county in which the parcel is located an affidavit substantially in the form as set forth in section 448.15.180
(c) Service of 120-Day Affidavit on Other Parties in Possession. If the tax deed conveys an undivided interest in the parcel of less than one hundred percent, the tax title holder shall be deemed to be in possession and entitled to file the 120-day affidavit. “However, before filing the affidavit, the [tax title holder] shall serve a copy of the affidavit on any other person in possession of the parcel by sending a copy of the affidavit by both regular and certified mail to the person at the address of the parcel or at the person's last known address if different from the address of the parcel. Such service is deemed completed when the affidavit mailed by certified mail is postmarked for delivery. An affidavit of service shall be attached to, and filed with, the [120-day affidavit]. The affidavit of service shall include the names and addresses of all persons served and the time of mailing.”181
2. CONSEQUENCES OF RECORDING THE 120-DAY AFFIDAVIT.
(a) Adverse Claims Must Be Filed Within 120 Days. Any person claiming any right, title, or interest in or to the parcel that is adverse to the tax title must file a claim with the county recorder within one hundred twenty days after the filing of the 120-day
178 Iowa Code §§ 447.8(6), 448.6(6) (2021).
179 Iowa Code § 448.15 (2021).
180 Id.
181 Iowa Code § 448.15(3) (2021).
43 affidavit, “which claim shall set forth the nature of the interest, the time when and the manner in which the interest was acquired.”182
(b) If No Claim Filed. If no claims are filed within one hundred twenty days, “the validity of the tax title or purported tax title shall be conclusively established as a matter of law, and all persons shall thereafter be forever barred and estopped from having or claiming any right, title, or interest in the parcel adverse to the tax title or purported tax title, including but not limited to any claim alleging improper service of notice of expiration of right of redemption. An action shall not thereafter be brought to challenge the tax sale deed or tax title.”183
(c) If Claim is Filed. If a claim is filed within the 120-day period provided for under sections 448.15 and 448.15, an action to enforce the claim must be commenced within sixty days after the date the claim is filed.184 Any such action “may be commenced by the claimant, or a person under whom the claimant claims title, under either section 447.8 or 448.6.”185 If any such action “is not filed within sixty days after the filing of the claim, the claim thereafter shall be forfeited and canceled without any further notice or action, and the claimant, or the person under whom the claimant claims title, thereafter shall be forever barred and estopped from having or claiming any right, title, or interest in the parcel adverse to the tax title or purported tax title.”186
3. SIGNIFICANT HISTORICAL CONSIDERATIONS. The statutes providing for Iowa’s 120-day tax title affidavit have been the subject of frequent and significant amendments throughout their history. Certain elements of sections 448.15 and 448.16 had historically served to temper the harsh consequences that could result from a limitations period of merely 120 days. First, Iowa law previously had provided for a waiting period following the issuance and recording of a tax deed before a tax title holder could file a 120-day affidavit. This waiting period initially was five
182 Iowa Code § 448.16(1) (2021).
183 Iowa Code § 448.16(2) (2021).
184 Iowa Code § 448.16(3) (2021).
185 Id.
186 Id.
44 years, but was later shortened to two years. In 1992, the waiting period was entirely eliminated.187 Second, section 448.15 previously had required that the tax title holder be in possession of the parcel prior to invocation of the limitations period provided for under sections 448.15 and 448.16.188 Such requirement seemed to provide further justification for the brief limitations provisions of these sections under the theory that the act of possession by the tax title holder would alert any other possessors or claimants of the possible existence of a claim to the real estate by the tax title holder. However, in 1995, the requirement that the tax title holder first attain possession of the parcel prior to filing a 120-day affidavit was eliminated.
(a) 2005 Amendment. Sections 448.15 and 448.16 were significantly amended in 2005, and, as amended, apply to parcels sold at tax sales held after June 1, 2005. Although Iowa courts previously had construed these sections prior to their 2005 amendment as valid statutes of limitation,189 that barred claims based on jurisdictional defects,190 they had riddled this interpretation with numerous exceptions, making the statutes unreliable as a tool for ensuring the marketability of tax titles.191 The amendments to these sections
187 1991 Iowa Acts ch. 191 § 113 (eliminating the two-year waiting period before a 120- day affidavit could be recorded, effective April 1, 1992).
188 See 1995 Iowa Acts ch. 57 § 23.
189 Nelson v. Forbes, 545 N.W.2d 576, 580 (Iowa 1996); Patterson v. May, 29 N.W.2d 547, 553 (Iowa 1947); Swanson v. Pontralo, 27 N.W.2d 21, 23 (Iowa 1947). But see Dohrn v. Mooring Tax Asset Group, L.L.C., 743 N.W.2d 857, 864 (Iowa 2008) (stating that the prior characterization of section 448.16 as a statute of limitation “is inaccurate in light of the fact chapter 448 contains a three year statute of limitations”).
190 Simeon v. City of Sioux City, 108 N.W.2d 506, 509-10 (Iowa 1961).
191 For example, sections 448.15 and 448.16 had been held to bar only the claims of parties not in possession. Nelson, 545 N.W.2d at 580-81. See Modern Heat and Power Co. v. Bishop Steamroller Corp., 34 N.W.2d 581, 587 (Iowa 1948) (holding 448.5 and 448.16 bar claims of those not in possession); Patterson, 29 N.W.2d at 553 (same); Swanson, 27 N.W.2d at 25-26 (same). Although section 448.16 has never made any distinction between the claims of those in possession and the claims of those not in possession, the above cited cases had referred to sections 448.15 and 448.16 as baring only those claims asserted by parties out of possession. In Nelson, the Iowa Court of Appeals found that the certificate holder had failed to serve a party in possession with notice of expiration of the right of redemption. Nelson, 545 N.W.2d at 581. The court stated that this rendered service incomplete, and where such service is incomplete, the right of redemption is not cut off and no valid tax deed can issue. Id. at 582 (citing Modern Heat,
45 adopted in 2005, were intended to make clear the legislature’s intent that sections 448.15 and 448.16 bar any claim adverse to the tax title, regardless of the nature of the claim. Although the 2005 amendments did not revive the required waiting period prior to the recording of the 120-day affidavit, they did bring back the requirement of possession by the tax title holder which is a factor the Iowa Supreme Court has opined may have significance in whether sections 448.15 and 448.16 ultimately constitute valid statutes of limitation.192
4. UNCERTAIN RELIABILITY OF SECTIONS 448.15-.16. With the amendments to sections 448.15 and 448.16, in 2005, and the amendment of section 448.3 in 2008,193 the Iowa legislature has made clear its intent that the 120-day affidavit statutes be construed by the courts as valid statutes of limitation, barring any claims or attacks on the validity of a tax deed. However, Iowa courts have yet to weigh in on the full validity or breadth of the limitations provisions of these statutes following these amendments.194 Although the requirement of possession by the tax title holder has been added to dampen the harsh and summary nature of sections 448.15 and 448.16, the historic reluctance of Iowa courts to consider these sections collectively as an air-tight statute of limitation is reason for continued caution when relying on the limitations provisions of
34 N.W.2d at 586). In other words, the Nelson court found that incomplete service of notice of expiration of the right of redemption on a party in possession renders a subsequently issued tax deed void. Many other claims have been held by Iowa courts to survive the limitations provisions of sections 448.15 and 448.16. See Adams v. Snow, 21 N.W. 765 (holding tax deed void where redemption notice not served on person in whose name property taxed); Butler v. Hoover Nature Trail, Inc., 530 N.W.2d 85, 89 (Iowa Ct. App. 1994) (holding tax deed void where redemption notice not given to owners of property adjacent to abandoned railroad right-of way); Larsen v. Cady, 274 N.W.2d 907, 909 (Iowa 1979) (holding that sections 448.15 and 448.16 do not bar claims based on an incorrect legal description contained in the tax deed where the legal description in the 120-day affidavit was correct);
192 See Dohrn v. Mooring Tax Asset Group, L.L.C., 743 N.W.2d 857, 864 (Iowa 2008).
193 See supra section V.K. of this outline (discussing the 2008 amendment to section 448.3, wherein the legislature for the first time statutorily defined the impact of improper service of notice of expiration of right of redemption on the tax deed).
194 But see Adair Holdings L.L.C. v. Matthew Thomas Trucking, L.L.C., 874 NW2d 669, 673 (Iowa Ct. App. 2015) (stating that an affidavit successfully filed pursuant to section 448.15 would have shortened the three-year limitations provision of section 448.16 to 120 days).
46 sections 448.15 and 448.16.195
C. THREE-YEAR LIMITATIONS PERIOD UNDER SECTION 448.12. Section 448.12 provides that “[a]n action under section 447.8 or 448.6 or for the recovery of a parcel sold for the nonpayment of taxes shall not be brought after three years from the execution and recording of the county treasurer's deed.”196 Prior to its amendment in 2005, this section provided a limitations period only for an action for the recovery of a parcel sold at tax sale.197 Now, section 448.12 provides a three limitation period not only on actions to recover a parcel sold at tax sale, but
195 In Dohrn, the Iowa Supreme Court characterized sections 448.15 and 448.16 as providing a “quick and low-cost alternative to bringing an action to quiet title.” Dohrn, 743 N.W.2d at 864. The Dohrn court made clear its reluctance to construe sections 448.15 and 448.16 as a valid bar to any action attacking an invalid tax deed. According to the Dohrn court, since the 120-day affidavit serves to quickly and cheaply shorten the three-year statute of limitation provided by section 448.12, to a mere 120 days, “it is only fair to require the tax deed holder to have a valid deed before he may use sections 448.15 and 448.16 to cut off another’s right in the property.” Id. The Dohrn court went on to state as follows in a foot note:
We need not decide for purposes of this appeal whether the mechanism provided by sections 448.15 and 448.16 conforms to due process if the tax deed is valid. However, we do note these sections do not provide the same protections as an action to quiet title. For example, the tax deed holder is not required to serve notice of the 120-day affidavit upon those persons who were entitled to the notice of redemption. Instead, the only notice provided is constructive notice via the filing of the affidavit with the county recorder. Moreover, the tax deed holder is not required to take possession of the property before the filing of the 120-day affidavit.
Id. Of particular note in light of the court’s footnote in Dohrn is the amendment to sections 448.15 and 448.16 requiring that the tax title holder first take possession of the property before being allowed to rely on the limitations afforded by said sections.
196 Iowa Code § 448.12 (2021).
197 Prior to its amendment in 2005, section 448.12 read in part, as follows:
An action for the recovery of a parcel sold for the nonpayment of taxes shall not be brought after three years from the execution and recording of the county treasurer's deed, unless the owner is, at the time of the sale, a minor, a person with mental illness, or an inmate in an adult correctional institution, in which case the action must be brought within three years after the disability is removed.
Iowa Code § 448.12 (amended 2005).
47 on any action to challenge the validity of a tax sale deed.
1. THREE-YEAR RIGHT TO RECOVERY RECIPROCAL. Not only does the three-year limitation on an action to recover a parcel sold at tax sale apply to opponents of the tax title, it also has been construed to bar an action for recovery brought by the holder of the tax title.198 Thus, the holder of the tax sale deed historically has had to take affirmative steps to assert possession and control over the parcel, or risk losing the utility of his or her tax title. However, in 2015, the Iowa Court of Appeals ruled that a tax deed holder our of possession was entitled to a determination that it has a valid tax sale deed where no action adverse to its tax title had been brought within three years following the execution and recording of the tax sale deed.199
2. BAT ONLY TO ACTIONS BETWEEN PRIOR OWNER AND TAX TITLE CLAIMANT. Section 448.12 bars only those actions for recovery between the holder of the tax title and the owner at the time of the sale or those claiming through such owner. The section does not bar actions between the tax title holder and other claimants.200
3. UNCERTAIN RELIABILITY OF SECTION 448.12. As with sections
198 In re Hoyt's Estate, 67 N.W.2d 528, 532 (Iowa 1954); Smith v. Huber, 277 N.W. 557, 559 (Iowa 1938); Wallis v. Clinkenbeard, 242 N.W. 86, 88 (Iowa 1932); King v. Bolt, 130 N.W. 818, 820 (Iowa 1911); In Barrett v. Love, the Iowa Supreme Court stated that "[i]f . . . either the purchaser or the owner is compelled to resort to an action for the purpose of vindicating his title or possession, the bar of [section 448.12] operates on and is decisive that the action cannot be maintained. No distinction is made between the purchaser and owner; both are alike subject to the provisions of the statute." Barrett v. Love, 48 Iowa 103, 106 (1878). In Clark v. Sexton, the Iowa Supreme Court held that a tax title holder was barred under section 448.12 from maintaining an action for recovery of an unfenced parcel sold at tax sale from another whose use of the parcel was limited to cutting and using wood from the parcel. Clark v. Sexton, 98 N.W. 127, 128 (Iowa 1904).
199 Adair Holdings L.L.C. v. Matthew Thomas Trucking, L.L.C., 874 NW2d 669, 673 (Iowa Ct. App. 2015). Determine for yourself what effect the ruling in Adair would have on a tax deed holder lying in wait for three years following the recording of the tax deed only to thereafter spring into action so as to obtain possession of the property without risk of a proceeding adverse to its tax title (due to the expiration of the time for bringing any such action under section 448.12).
200 Lockridge v. Daggert, 2 N.W. 1023, 1024 (Iowa 1879). According to Lockridge, the tax title holder may recover possession against a stranger to title despite the limitations of 448.12. Id.
48 448.15 and 448.16, the language of section 448.12 expressly prohibits tax title challenges following expiration of its three-year limitation period. However, cases that had interpreted section 448.12 prior to its amendment in 2005, and prior to the amendment of section 448.3 in 2008201 had riddled the applicability of its limitations provisions with numerous exceptions. On the one hand, Iowa courts had construed section 448.12 as a bar to actions challenging a voidable tax deed,202 and actions based upon mere irregularities in the sale or redemption proceedings.203 On the other hand, however, the section had been interpreted as being ineffective in barring actions challenging void tax deeds,204 and actions based on various
201 See supra section V.K. of this outline (discussing the 2008 amendment to section 448.3, wherein the legislature for the first time statutorily defined the impact of improper service of notice of expiration of right of redemption on the tax deed).
202 Id. In Waggoner v. Mann, the Supreme Court of Iowa discussed the distinction between void and voidable tax deeds, and the relationship the two types of deeds have with section 448.12:
If there is no sale, no notice of the expiration of the right to redeem . . . , no assessment or levy of the tax, or the tax has been paid, or for any other reason there existed no power or jurisdiction to sell the land for taxes, the sale is absolutely void, and a tax-deed may be assailed on these grounds after the period of limitations prescribed by [section 448.12] . . . . But if the tax proceedings, assessment, levy and sale are irregular, - voidable only, - as in the case of sales of two or more tracts together for a gross sum, the failure to make entry of the delinquency of prior years and the like, or in any case there existed the jurisdiction or power to sell, which was irregularly or defectively exercised, the limitations of [section 448.12] can be pleaded. . . .
Waggoner v. Mann, 48 N.W. 1065, 1066-67 (Iowa 1891) (citations omitted)
203 Pierce v. Weare, 41 Iowa 378 (1875); Jeffrey v. Brokaw, 35 Iowa 505 (1872).
204 Smith v. Huber, 277 N.W.2d 557, 559 (Iowa 1938). According to the Smith court, in order to cut off the right of redemption, the requirements of the tax sale statute must be fully met, and, “if there be any substantial omission therefrom, said right is not cut off, and . . . the court will indulge no presumption with regard thereto. The [statutory tax sale] provisions are mandatory and absolute, and any failure as to the statutory requirements relative to the affidavit of service will avoid the tax deed subsequently executed.” Id. at 561. One can decide for himself/herself what defects constitute “substantial omission[s]” from the statutory tax sale requirements, thereby rendering a subsequent tax deed void.
49 other defects.205 Nevertheless, Iowa courts have yet to weigh in on the validity or breadth of section 448.12 in light of the requirements of due process since its amendment and since the amendment of 448.3 in 2008. As such, caution is advised when relying on the limitations provisions of section 448.12.
D. OTHER LIMITATIONS PROVISIONS.
1. LIMITATION CONCERNING DEFECTIVE PROCEEDINGS (589.16A). Section 589.16A bars any action after July 1, 1987. "which asserts a claim against any real estate sold at tax sale, based upon any defect in the tax sale proceeding, including the inadequacy of the notice of tax sale or the inadequacy of the notice of expiration of the redemption period, where the tax sale was made prior to July 1, 1986.”206
2. TEN-YEAR LIMITATION ON ACTIONS AGAINST TAX SALE DEEDS. Section 614.22 of the Code of Iowa essentially bars actions affecting ancient deeds, including tax deeds. More particularly, the section bars any action to set aside, cancel, annul, void, or redeem from a deed that has been recorded for more than ten years.207 It further provides that any such deed and all the proceedings upon which the deed is based, against which action is not taken within ten years of the recording of said deed, are valid, “without exception for infancy, mental illness, absence from the state, or other disability or cause.”208 Note, however, this limitations provisions
205 See id. at 560 (holding that section does not bar an action based upon the failure to give notice of expiration of right of redemption or the failure to file an affidavit evidencing the completion of such service); Rath v. Martin, 61 N.W. 941, 942 (Iowa 1895) (section 448.12 no bar where taxes had in fact been paid prior to the tax sale); Patton v. Luther, 47 Iowa 236 (Iowa 1877) (same); Inter-Ocean Reinsurance Co. v. Bartleson, 11 N.W.2d 688, 689 (Iowa 1943) (section 448.12 no bar where notice of expiration of the right of redemption is not given in the manner prescribed by section 447.9); Phillips v. Wilmarth, 66 N.W. 1053, 1054 (Iowa 1896) (section 448.12 no bar where a party entitled to redeem acquires the tax title,or where a party not entitled to purchase at the tax sale acquired the tax title); Sorenson v. Davis, 49 N.W. 1004, 1006 (Iowa 1891) (same); Burke v. Cutler, 43 Iowa 204 (Iowa 1889) (section 448.12 no bar where the tax deed given after redemption); Nichols v. McGlathery, 43 Iowa 189 (Iowa 1876) (section 448.12 no bar where the prior owner did not have actual or constructive notice of the tax for which the parcel was offered at tax sale).
206 Iowa Code § 589.16A (2021).
207 Iowa Code § 614.22(2) (2021).
208 Id.
50 does not apply to real property described in any deed which is not in the possession of those claiming title under the deed.209
3. LEGALIZING DEFECTIVE TAX SALE PROCEEDINGS AND DEEDS.
a. Legalizing Tax Deeds Despite Defects in Sale or Deeding. “A tax deed executed more than ten years earlier which purports to sustain the record title, is not ineffectual because of the failure of the record to show that any of the steps in the sale and deeding of the property were complied with and these proceedings are legalized and valid as if the record showed that the law had been complied with.”210
b. Legalizing Defectively Executed Tax Sale Deeds. Pursuant to section 589.24, a tax sale deed is legalized, valid, and binding, notwithstanding defects in the execution thereof, where the deed was executed and recorded more than ten years earlier, and the grantee named in the deed (or the grantee's heirs or devisees, by direct line of title or conveyance) have been in actual, open, adverse possession of the premises since the date of recording and execution.211
4. THE AFFIDAVIT OF POSSESSION.212 The title examiner also should consider whether the limitation provisions of sections 614.17 and 614.17A are available, and if so, whether the filing of an affidavit of possession would remedy the perceived tax sale deed defect. I would recommend the filing of an affidavit establishing possession where there appear any defects concerning a tax sale deed of record for more than ten years. It appears that the only limitation to the application of the ten year tax sale deed statutes of limitation has to do with the claims of those who are in possession of the real estate.
209 Id. Section 614.23 provides that “[t]he possession of the persons claiming title as provided for in section 614.22 may be established by affidavit recorded in the office of the recorder of the county or counties . . . in which the deed to the land referred to in said affidavit is recorded." Iowa Code § 614.23 (2021).
210 Iowa Code § 589.14 (2021).
211 Iowa Code § 589.24 (2021). Note that the requirement of actual, open, adverse possession could be established by affidavit.
212 Iowa Code §§ 614.17-.17A (2021).
51 5. TITLE STANDARD 1.1. In many cases, if a title examiner finds that neither sections 448.15-.16 nor 448.12 operate to “cure” a defect on a tax title, Title Standard 1.1 may provide a remedy. Pursuant to Title Standard 1.1, “[o]bjections and requirements should be made only when the irregularities or defects can reasonably be expected to expose the purchaser or lender to the hazard of adverse claims or litigation.”213 Generally speaking, if a claimant is successful in setting aside a tax deed, that claimant must nevertheless pay to the holder of the tax deed the statutory redemption amount.214 Therefore, in cases where the redemption amount exceeds the value of the property, litigation would seem unlikely.
213 Iowa Land Title Standards, Standard 1.1 (8th ed. 2006, as updated).
214 Iowa Code §§ 447.7-.8 (2021).
52