The decedent, in this case, purchased a home in 1990 which he occupied as his homestead. He requested refinancing in 2003, but his application left many areas blank, including the marital status portion. However, the decedent executed a promissory note with the bank, including a handwritten designation indicating that he was “single.” A few months later, the decedent married a woman who moved into the homestead. The next year, the decedent obtained another new loan from the same bank. This loan application was not in writing. The information was keyed into the computer and sent to the bank’s underwriting department for approval. The underwriting staff requested the prior year’s tax return (in which the decedent filed married filing jointly), and the property valuation.
This is where the problems started. Since the bank did not have a written application for this loan, the mortgage was prepared for the decedent indicating that he was “unmarried.” The wife was never a party to this transaction. The decedent died in 2006. During the probate process, the estate filed a petition to quiet title to the homestead and argued that the 2004 mortgage was void without the signature of both spouses.
At trial, the court ruled that the 2004 mortgage was void under Iowa Code §561.13. The 2003 mortgage executed prior to the marriage, however, was reinstated under principles of equity and fairness. The wife appealed this reinstatement and the Iowa Court of Appeals, while recognizing that it may not be the fairest outcome, comported with the statute and found several errors with the way the bank had conducted their business in issuing the 2003 and 2004 mortgages. The court went on to opine that “homestead rights are jealously guarded by the law” and that “reinstating the 2003 mortgage would render the Iowa Code meaningless. Thus, even though the 2003 mortgage was executed prior to the marriage, the 2004 refinancing of the 2003 mortgage required the spouse’s signature. In re Estate of Battle, No. 9-607/09-0170, 2009 Iowa App. LEXIS 1637 (Iowa Ct. App., Dec. 17, 2009).