Iowa Court Says Foreclosure Can Proceed without Opening Estate

On June 5, 2019, the Iowa Court of Appeals ruled that Wells Fargo Bank gave proper notice to any unknown heirs of a decedent when foreclosing on real estate that had been mortgaged by the decedent during his lifetime. Nearly 10 years after a man took out a mortgage for a piece of real estate, he passed away without finishing paying off the loan. After the loan went into default, Wells Fargo initiated the foreclosure proceeding and sought to quiet title to the real estate. The petition named the son, several known parties, and also all unknown claimants of the estate. Wells Fargo moved for an appointment of a guardian ad litem, which the court granted. Wells Fargo then published notice of the foreclosure in a local newspaper every week for three consecutive weeks. The district court refused to quiet title as to any unknown heirs of the decedent, finding that Wells Fargo’s notice by publication was insufficient to put any unknown heirs on notice of the foreclosure action.

On appeal, the Court of Appeals reversed, finding that Iowa Code § 633.230(1) only requires unknown heirs to be notified once a week for two consecutive weeks. Wells Fargo went beyond this requirement by giving an extra week of notice. It also served notice on the GAL appointed to represent the unknown heirs. The court ruled that opening an estate, as the district court had suggested, would have provided no greater notice than what Wells Fargo provided. Additionally, the court found a foreclosure proceeding may be initiated before an estate is opened. Iowa Land Title Standards 7.8(1). Opening an estate is not a prerequisite for a foreclosure action.