Below is the latest information regarding the effect that the COVID-19 pandemic is having on real estate transactions in Iowa.
Foreclosures: All residential, commercial, and agricultural foreclosure and forfeiture proceedings have been suspended
Pursuant to Governor Reynolds’s March 22, 2020 Proclamation, a statewide suspension has been imposed on the commencement of, or prosecution of ongoing, foreclosure and forfeiture proceedings on residential, commercial, and agricultural real estate located in Iowa. This foreclosure suspension shall apply during the duration of Iowa’s State Public Health Emergency, as well as any future extensions. The proclamation expressly states that it does not relieve any individual of their obligation to make mortgage payments, or to comply with any other obligation that may arise under the mortgage. Thus, upon expiration of the Proclamation, foreclosure and forfeiture proceedings may commence or proceed as usual, including foreclosure or forfeiture proceedings for which events of default occurred during the COVID-19 pandemic.
GAP Coverage/Title Exceptions: Iowa Title Guaranty issues new directives and guidance
Iowa Title Guaranty (“ITG”) has imposed the following new directives:
Recorder’s Office Closure
In the event of a complete recorder’s office closure, that is, a closure in which the recorder’s office is closed entirely and not processing any filings (including e-filings, mail, and drop boxes), ITG has imposed the following directives:
(1) CPL or GAP: If a closing protection letter (“CPL”) or GAP Coverage Endorsement (“GAP”) has been or will be issued, the closer may not close unless and until the recorder’s office has reopened for business and is accepting timely filed documents.
(2) No CPL or GAP: If no CPL or GAP has or will be issued, ITG will permit closing. However, the final certificate shall not be issued unless and until the abstractor has performed the proper final searches good through the date of the mortgage filing and the examining attorney has confirmed proper title, vesting, clear title, and desired lien priority in a final title opinion. In this instance, THE CLOSER WILL ASSUME ANY AND ALL LIABILITY FOR MATTERS REVEALED IN THE GAP.
New ITG Exception
Additionally, effective immediately, the following requirement will appear as a record requirement in Section 4 of Schedule B, Part I on all ITG Commitments:
“COVID-19 REQUIREMENT: Confirmation that the county recorder and courthouse are processing filings and permitting abstractor access to perform necessary final title searches through the date of the vesting deed and/or guaranteed mortgage filing. If the county recorder or courthouse are not processing filings or permitting abstractor access to public records, Iowa Title Guaranty reserves the right to raise exceptions or requirements or determine that a certificate may not be issued due to any changes, disruptions or delays in recording and abstractor title search capabilities resulting from COVID-19 outbreak and global pandemic and/or the implementation of Iowa’s State Disaster Emergency Plan in response thereof.”
Electronic Documents and Payments
All applications for division-issued commitments and certificates must now be issued electronically. Finally, all ITG premiums must be paid via e-payment.
Local Abstractors and County Office Operations
On March 21, 2020, Governor Reynolds sent a letter to all Iowa county auditors, recorders and treasurers encouraging them to keep their offices open, reasoning that failure to have their offices open in some manner would significantly impact ITG’s ability to provide title insurance coverage to consumers and lenders.
We have been advised by some abstractors that as of last week they had been unable to perform complete searches of county records due to restrictions on access that have been instigated in some counties. Whether county offices that had previously restricted access will change those restrictions following the Governor’s letter is unknown.
Conversely, many other county offices, while closed to the public, have implemented various operational changes in an effort to maintain as close to normal operations as possiblein regard to real estate sales/purchases, construction permits, construction inspections, and the like. Check with your local county office or your attorney for specifics.
As the Governor indicated, amidst the COVID-19 pandemic, closed county offices would substantially affect any real estate closing, resulting in potential delays until the end of the pandemic. Accordingly, we highly recommend including language in real estate purchase agreements regarding the COVID-19 pandemic and any related delays and otherwise speaking to your real estate attorney about all transactions.
We will continue to monitor the situation and provide updates for lenders and other real estate professionals. You can access additional Coronavirus/COVID-19 Legal Resources on our website.
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