ILTA Standards Committee Meeting Gateway Hotel Ames, IA Saturday, September 13, :00 AM

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1 ILTA Standards Committee Meeting Gateway Hotel Ames, IA Saturday, September 13, :00 AM Members Present: Kevin Christie, Mary Dawkins, Geralyn Greer, Daniel Kadrlik, Gregory Lievens, Marcia Olson, Gary Reeder and Lynette Thompson. Also present was James Curry from the Bar Association, Real Estate Section. The minutes of our last meeting were approved as read. Mary welcomed our newest members Geralyn Greer and Craig Willis. She also shared with us the ongoing review of the rewrite of the Blue Book. The Iowa Bar Association, Real Estate Section, is currently working on the review. It is unknown when the final rewrite will be available to the ILTA membership. Attorney Curry shared with the committee the proposed recommendations from his subcommittee of the Real Estate Section of the Bar Association, with regard to the Bankruptcy Section. Copies were provided to the committee. Hopefully, a written report will be received by the Second week of October from the Bar Association, Real Estate Section, showing their recommendations for the entire Blue Book rewrite. If we have any questions/comments/concerns, we can contact Attorney Curry at james@american-abstract.com. Questions: 1. Comment: At our last convention in May, Richard Bordwell requested that the Standards Committee research the case of the DHS vs Ruby Laughead Estate. A brief summation is as follows: Iowa Supreme Court rules that Pre-OBRA Life Estate is subject to Medicaid claim. The Supreme Court of Iowa rules that the state has a claim against a Medicaid recipient's life estate interest in assets that were transferred before the state enacted estate recovery rules or specifically identified life estate interests as reachable. In the Matter of Estate of Laughead (Iowa, No. 40/ , April 15, 2005). In 1990, Ruby Laughead transferred her 338-acre farm to her son, Charles, reserving a life estate. Starting in 1995, the Iowa Department of Human Services provided Medicaid coverage of Mrs. Laughead's nursing home care, amounting $137, Following her death in 2002, the Department filed a claim in Mrs. Laughead's estate. Mrs. Laughead's life estate interest in the farm at the time of her death was $41,451.75, representing slightly more than one-tenth the value of the farm. Mr. Laughead, the administrator of his mother s estate, disallowed the claim. At a hearing, Mr. Laughead argued that at the time the life estate was created, Iowa law did not require Medicaid reimbursement. Alternatively, he contended that even if the estate recovery statute in effect when his mother began receiving assistance applied, it was not until 2002, just prior to Mrs.

2 Laughead's death, that the statute was amended to require that a Medicaid recipient's life estate be included in the recipient's probate estate. Finally, he asserted that applying any version of the estate recovery statute would unconstitutionally impair his rights to the property as the remainder person. The district court determined that the Medicaid agency had a valid claim and ordered the administrator to transfer $41, (plus interest) to the estate, ruling that the recovery statute in effect at the time of Ruby's death governed and that applying the statute was not an unconstitutional retroactive application. The Supreme Court of Iowa affirms. Citing its ruling in In re Barkema Trust, 690 N.W.2d 50, 56 (Iowa 2004), in which the court held that the Iowa legislature intended to define 'estate' broadly, the court rules that Mrs. Laughead's life estate must be included in her probate estate under either recovery statute. The court rules that the restriction in OBRA that its amendments apply only to assets disposed of after the date of enactment do not apply to the amendments relating to Medicaid estate recovery, which are in a different section of the Act. The court also rejects Mr. Laughead's constitutional argument, ruling that his remainder interest is not impaired by subjecting his mother s life estate to the Department's repayment claim. Response/Comments from Committee: If there is a notice of probate of estate filed in the estate to DHS, show said notice. If there is a response from DHS, again show response. For deaths that have occurred after July 1, 2008, notice pursuant to Iowa Code Section A is required to DHS in every estate. As abstracters, we need to show this notice A NOTICE OF PROBATE OF WILL -- MEDICAL ASSISTANCE CLAIMS. 1. On admission of a will to probate, the executor shall, in accordance with section , provide by ordinary mail to the entity designated by the department of human services, a notice of admission of the will to probate and of the appointment of the executor, which shall include a notice to file claims with the clerk within the later to occur of four months from the second publication of the notice to creditors or six months from the date of mailing of this notice, or thereafter be forever barred. 2. The notice shall be in substantially the following form: NOTICE OF PROBATE OF WILL, OF APPOINTMENT OF EXECUTOR, AND NOTICE TO CREDITORS In the District Court of Iowa In and for... County. In the Estate of..., Deceased Probate No.... To the Department of Human Services, Who May Be Interested in the Estate of..., Deceased, who died on or about... (date): You are hereby notified that on the.. day of... (month),.. (year), the last will and testament of..., deceased, bearing date of the.. day of... (month),.. (year), was admitted to probate in the above-named court and that... was appointed executor of the estate. You are further notified that the birthdate of the deceased is

3 ... and the deceased's social security number is The name of the spouse is... The birthdate of the spouse is... and the spouse's social security number is , and that the spouse of the deceased is alive as of the date of this notice, or deceased as of... (date). You are further notified that the deceased was/was not a disabled or a blind child of the medical assistance recipient by the name of..., who had a birthdate of... and a social security number of , and the medical assistance debt of that medical assistance recipient was waived pursuant to section 249A.5, subsection 2, paragraph "a", subparagraph (1), and is now collectible from this estate pursuant to section 249A.5, subsection 2, paragraph "b". Notice is hereby given that if the department of human services has a claim against the estate for the deceased person or persons named in this notice, the claim shall be filed with the clerk of the above-named district court, as provided by law, duly authenticated, for allowance, and unless so filed by the later to occur of four months from the second publication of the notice to creditors or six months from the date of mailing of this notice, unless otherwise allowed or paid, the claim is thereafter forever barred. Dated this.. day of... (month),.. (year)... Executor of estate... Address... Attorney for executor... Address Date of second publication.. day of... (month),.. (year) Section History: Recent Form 2001 Acts, ch 109, 2; 2002 Acts, ch 1119, 99; 2007 Acts, ch 134, 13 Referred to in , Question: Hi, I need an opinion on an Abstract I am updating. The owner of the lot died intestate owning 1/2 interest. The estate thought they had the real estate sold so I updated the Abstract and showed the following in his estate: 1. Petition for Administration 2. Order Granting Administration

4 3. Letters 4. Affidavit of Mailing Notice 5. Inventory 6. Proof of Publication Certified it on June 27, Hence, the sale fell through. Now the lot is sold again and is being sold out of the estate. The first time the sale proceedings were not shown because they were not filed. Now I get the Abstract back and included the following from the first sale: 1. Combined Petition and Report 2. Contract attached to Petition and Report 3. Waiver of Notice 4. Order approving sale 5. New Petition and Report 6. New contract to new buyer 7. Order approving sale My question is--the first buyers were husband and wife in In 2007 they divorced. No mention is made of the real estate in the divorce proceedings and never in the probate is the sale nullified other than in the new Petition and Report. There are no judgments arising out of the divorce. Do I show the divorce? I think I should because technically there is no notification that the couple no longer are the buyers other than a year later in the new Petition and Contract. Would like to know what you would show? Answer: Lots of discussion on this one. Some felt that no search was necessary with regard to the first buyers because a recorded contract never happened. The only mention of the first buyers was in the probate file. Others felt that they would make a Stop Search Buyers Note. Others felt that they would show the dissolution for the first buyers as there was knowledge that the first buyers had some interest in this title at one time. Here is a situation where local custom would be appropriate. 3. Question: Here is a mortgage entry set up by our competitor, is it in proper form according to the suggestions made in the Blue Book?

5 No. 8 Arvin B and Rochelle L. B , MORTGAGE $136, husband and wife; Dated May 29, 2008 to Filed June 4, 2008 American Bank, (Anytown), Iowa; 2008 File Card No Encumbers: Lot 18, Block 3, (Any) Addition, in the Incorporated City of (Anytown), Iowa, according to the recorded Plat thereof. Due: June 1, Answer: According to the Blue Book, this should also show the due on sale clause and the homestead waiver if signed. 4. Informational purposes: No [8-165] ROBINSON v. FIRST AMERICAN TITLE Appeal from the Iowa District Court for Polk County, Michael D. Huppert, Judge. REVERSED AND REMANDED. Heard by Miller, P.J., and Vaitheswaran and Eisenhauer, JJ. Opinion by Miller, P.J. The Cadle Company II (Cadle) appeals from a district court ruling granting summary judgment in favor of Clean Title & Escrow, L.L.C. (Clean Title) in a declaratory judgment action. Cadle is a mortgagee with a lien on a property sold in a tax sale to Real Tax Developers, Ltd. (Real Tax) in Real Tax did not serve Cadle with notice of its right to redeem the property before it obtained a tax deed to the real estate. In executing a real estate closing for a subsequent purchaser, Clean Title did not discover Cadle's interest in the property and assured the purchaser of clear title. That purchaser filed suit against Clean Title after she learned of Cadle's unsatisfied mortgage on the property. Clean Title filed a cross-petition against Cadle, seeking a declaratory judgment that Cadle's interest in the property was extinguished with the filing of the 120-day affidavit under Iowa Code sections and (1999), notwithstanding Real Tax's initial failure to serve Cadle with notice of its right to redeem. The district court granted summary judgment in favor of Clean Title. Cadle appeals. OPINION HOLDS: The district court erred in concluding that Cadle was barred by sections and from challenging the validity of Real Tax's tax deed where Cadle was not properly served with notice of redemption prior to issuance of the deed. We believe this case is controlled by our supreme court's recent decision in Dohrn v. Mooring Tax Asset Group, L.L.C., which held that a tax deed issued without providing proper notice to necessary parties is void. 743 N.W.2d 857, 863 (Iowa 2008). Under Dohrn, sections and do not bar claims adverse to the tax deed where the deed is void for failure to properly serve a party with notice of the right to redeem. Id. at 864. We therefore reverse the district court's ruling granting summary judgment in favor of Clean Title and remand for further proceedings.

6 Comment: Just a reminder to the membership be very careful in abstracting tax sale proceedings. The 120 day affidavit does not cure the absence of proper notice to any type of lienholder, if the tax sale dates prior to June 1, Question: Recently, our local banker has been filing mortgages that show the borrower as John Smith, a married person. The wife does not sign anywhere on the mortgage. After reading the recent "Frequently Asked Questions" in the Title Guaranty mailing, what am I missing? (Excerpt from Title Guaranty Fall Issue Vol. 4 #1) Why is it necessary to show marital status on the mortgage and title opinion? Iowa Code Section states that "[a] conveyance or encumbrance of...the homestead, if the owner is married, is not valid, unless and until the spouse of the owner executes the same or a like instrument..." See also Martin v. Martin 720 N.W.2d 732 (Iowa 2006) where the Supreme Court held an instrument of conveyance or encumbrance of the homestead is void without the signatures of both spouses. If marital status is not properly reflected on the mortgage and title opinion it is often impossible to confirm that all of the appropriate parties have signed. Correct: John Jones and Mary Jones, husband and wife John Jones, a single person, and Mary Smith, a single person John Jones and Mary Jones, husband and wife, and David Jones, a single person Incorrect: John Jones, married, and Mary Jones, married (cannot assume they are married to each other) John Jones and Mary Jones John Jones and Mary Smith (cannot assume they are single) In those situations where only one of the spouses holds title, the non-titleholder spouse must still execute any conveyance or encumbrance, including the mortgage. This includes those situations where only one spouse is in title and is co-signing the mortgage as a parent for the benefit of a son or daughter. Here, too, the non-titleholder spouse must execute the mortgage to convey marital rights. Answer: You are not missing anything. Show all signatures in the recorded document. The Banker needs to have the spouse of any borrower sign the mortgage. 6. Question: How long do we search Trustor/Settlor after deeding to Trust; and what to show from Trustor/Settlor s estate? Answer: Search Trustee(s) and title of trust (if any) from date of creation of trust to date of filing conveyance. Search Trustor to date of filing conveyance from Trustee. (See Matter of Nagel, 580 N.W.2d 810 (Iowa 1998). Also, search the Trustor for a death record/estate until such time as the Trustee deeds out since there may be inheritance tax due. See Title Standard 4.7. No search is necessary against beneficiaries of trust if provisions of trust agreement show they have no real

7 property interest, their interest being in the proceeds only, or if the Trustee s deed was filed more than ten years earlier. Secs and Code. If there is an estate filed for the Trustor/Settlor, show the date of death, will, inventory and any tax clearances that may be of record. Comment: There is a new statute stating that deeds to trusts are legalized. The problem with it is that it is not prospective. The cite is in Senate File 2350 and it is an amendment to as follows: NEW SUBSECTION: 7. An interest in real estate currently or previously held of record by a trust shall be deemed to be held of record by the trustee of such trust. We believe this is effective July 1, 2008 and there is some talk about having the legislature do an amendment to make it prospective as well. 7. Question: Regarding acknowledgments, should we still make a note on the abstract when there is only an individual acknowledgement for a corporate seller. Answer: Yes. 8. Question: If releases in judgments have no acknowledgment at all, what do we show? Answer: If ICIS shows the judgment as satisfied, do not need to show the judgment. Remember, to perfect a lien, it must be shown on the lien index. When the clerk removes it from the lien index, the lien is removed. 9. Question: Do we still need to show the mortgage in force note? (This is a note that some counties show under the caption listing outstanding mortgages from previous continuations.) Answer: Do not show. 10. Question: On new 40 year root abstracts, do you show the easements, (even utility easements) prior to the root even if they are shown clearly on the plat? Also, what about if the easement is not directly affecting the lot we are abstracting? Answer: See excerpt from the proposed Blue Book rewrite: MARKETABLE TITLE ACT OPENING ENTRY: Notice is hereby given that this abstract is prepared pursuant to Section through of the Code of Iowa, Chapter 11 of the Iowa Land Title Standards of the Iowa State Bar Association and the Abstracting Standards of the Iowa Land Title Association. All matters of record prior to the date of the recording of the root of title are omitted herefrom except: 1. Plats and Surveys. 2. Easements. 3. Party wall and other boundary line agreements. 4. Unexpired recorded leases.

8 MARKETABLE TITLE ACT GENERAL COMMENTS: A. Abstracts prepared under this Act should be certified from the date of recording the root of title instrument. B. Abstracts prepared under this Act should commence with the opening statement recommended by the Association. If local practice requires that U.S. Patents be shown, an additional exception should be added to this opening statement. C. The instruments which we recommend showing from the record prior to the root of title are those specifically exempted by the Act or indicating rights that may be preserved by the Act, or which may be of assistance to the examiner. D. Instruments shown from the record prior to the root of title should be shown in chronological order immediately following the opening statement, except when a difference arrangement will assist the examiner. E. Caution: Some easements may be created by a recitation in other instruments rather than by separate instruments, so the record should be checked carefully. F. A great deal of time will be spent examining the early years of your tract records in order to show very few instruments. It will also be your responsibility to determine what instruments or decree is the root of title. These matters should be considered in arriving at your charge for abstracts prepared under this Act. 11. Question: How much of the Dedication and Covenants do you show and what time frame do you go by? Answer: If the plat is over 21 years old, show the dedication briefly and do not show restrictive covenants. 12. Question: We recently had a Home Retention Letter filed in a foreclosure action. Is this something that we should be showing in the abstract? Answer: No. Our next meeting will be scheduled to coincide with the Blue Book rewrite. Respectfully submitted, Lynette Thompson, Secretary