Iowa Counties

Auction Process in Iowa

Iowa is a tax lien state. This means that if a property owner fails to pay their property taxes, the county treasurer may file a lien against the property. The lien will give the county treasurer the right to collect the delinquent taxes from the property owner.

The tax lien process in Iowa is governed by Chapter 446 of the Iowa Code. The process begins when the county treasurer determines that a property owner has not paid their property taxes. The treasurer will then file a notice of tax lien with the county recorder. This notice will give the property owner a certain amount of time (usually 60 days) to pay the delinquent taxes and remove the lien.

If the property owner does not pay the delinquent taxes within the specified time period, the county treasurer may sell the lien at a public auction. Auctions happen online at www.iowataxauction.com. The highest bidder at the auction will become the holder of the tax lien. The holder of the tax lien has the right to collect the delinquent taxes from the property owner, and they may also foreclose on the property if the taxes are not paid.

The property owner has a redemption period of two years after the date of the tax sale to redeem their property. During this time, the property owner can pay the delinquent taxes, plus interest and fees, to clear the tax lien and regain ownership of their property.

If the property is not redeemed after one year and nine months, the investor can begin the process of terminating the rights of redemption. This involves filing a 90-day right of redemption affidavit and applying for a tax deed. If the property owner does not redeem their property within the redemption period, the holder of the tax lien may be able to obtain a tax deed to the property. This means that the holder of the tax lien will become the legal owner of the property.

Here are a few things to remember about the state auction process in Iowa-

Iowa Tax Sale Dates: Iowa tax sales are typically held on the third Monday of each June and are usually conducted in person. However, authorized representatives can bid on your behalf if you are unable to attend.
Registration and Fees: Registration is required before the auction date, and non-refundable registration fees may apply in some counties. Additionally, there may be fees associated with having an authorized agent bid for you.
How to Bid: The auction site can be accessed by going to www.iowataxauction.com. All parcels will be listed in the order they were published. The delinquent taxes on each parcel will be offered for sale to all bidders, beginning with a 100% undivided interest. “Bid downs” will range in whole percentage points from 99% to 1%.
Bid-Down Ownership Interest: In Iowa, the person willing to accept the lowest amount of ownership in a property, in the event of lien foreclosure, becomes the auction winner. This means that you could potentially own as little as 1% interest in a property if the bidding reaches that point.
What Happens After the Auction: When the sale closes at 10:30 a.m., a tax sale certificate for each parcel will be awarded to the bidder that designates the smallest percentage for the total amount due. If two or more bidders have placed an equal bid and the bids are the smallest percentage offered, the successful bidder will be selected by using a random selection process. All bids must be in good faith. All bids placed, whether intentional or not, are the responsibility of the bidder and may not be withdrawn.
Payment: Successful bidders will receive an invoice when the sale has closed. An ACH debit for the total amount due will automatically initiate from the account designated for the payment of registration fees. The total amount due will include all delinquent taxes, special assessments, interest, special assessment collection fees, publishing costs, and a certificate fee in the amount of $20.00 for each certificate purchased.
What Happens If You Don’t Pay: If a tax sale bidder’s payment is not honored, the bidder will have three business days following notification from the Treasurer to repay with guaranteed funds, or the tax sale certificate(s) purchased will be cancelled. A $30.00 service fee will be assessed on any payments returned due to insufficient funds. The County Treasurer reserves the right to require guaranteed funds for any future payments from the tax sale bidder.

Foreclosures in Iowa

In Iowa, lenders may foreclose on a mortgage in default using either the judicial or the alternative non-judicial foreclosure process.

Judicial Foreclosure

The judicial foreclosure process is one in which the lender must file a complaint against the borrower and obtain a decree of sale from a court having jurisdiction in the county where the property is located before foreclosure proceedings can begin. Generally, if the court finds the borrower in default, they will give them a set period of time to pay the delinquent amount, plus costs. If the borrower does not pay within the set period of time, the court will then order the property to be sold.

Notice of the sale must be posted in at least three public places of the county, one of which is the county courthouse. In addition, there shall be two weekly publications of such notice in some newspaper printed in the county, with the first publication being at least four weeks before the date of sale, and the second at a later time before the date of sale. If the borrower is in actual occupation and possession of the property, the notice must be served on them at least twenty days prior to the date of the sale.

The sale must be at a public auction, between 9:00 am and 4:00 pm and the time must be stated clearly in the notice of sale. The sheriff shall receive and give a receipt for a sealed written bid submitted prior to the public auction. The sheriff may require all sealed written bids to be accompanied by payment of any fees required to be paid at the public auction by the purchaser, to be returned if the person submitting the sealed written bid is not the purchaser. The sheriff must keep all written bids sealed until the commencement of the public auction, at which time the sheriff will open and announce the written bids as though made in person.

The sale may be postponed, but if it is postponed for more than three days, a notice of the new sale must be publicly announced at the time the sale was to have been made.

The alternative non-judicial foreclosure procedure

Borrowers in Iowa have the option of avoiding a foreclosure suit by voluntarily conveying all of their rights in the property secured by the mortgage to the lender. If the lender accepts the conveyance from the borrower, they are given immediate access to the property. However, they must waive any rights to file for a deficiency judgment against the borrower.

Additionally, the borrower is required to sign a “disclosure of notice and cancellation”, which states, among other things, that they are voluntarily giving up their rights to reclaim or occupy the property. The borrower and lender must also file a jointly executed document with the county recorder’s office stating that they have chosen to proceed with the foreclosure using the voluntary foreclosure procedures.

Quick Facts