Reopening An Estate

Iowa law provides for the reopening of an estate in circumstances.  For example, Section 633.489 of the Iowa Code provides:

Upon the petition of any interested person, the court may, with such notice as it may prescribe, order an estate reopened if other property be discovered, if any necessary act remains unperformed, or for any other proper cause appearing to the court.  It may reappoint the personal representative, or appoint another personal representative, to administer any additional property or to perform other such acts as may be deemed necessary.  The provisions of law as to original administration shall apply, insofar as applicable, to accomplish the purpose for which the estate is reopened, but a claim which is already barred can, in no event, be asserted in the reopened administration.

In this case, the plaintiffs asked the court to reopen an estate to allow them to exercise a newly-discovered “first right to purchase” 80 acres of Iowa farmland. The plaintiffs were never notified by the executor of the estate, during administration, that the will contained a first right of refusal in their favor. 

From 1987-1994, the plaintiffs were tenants on the 80-acre parcel and rented other land from the landlords, a married couple.  The 80-acre tract was owned solely by the husband.  The two families became quite close, and in 1994, the landlords executed wills giving the plaintiffs the first right to purchase the 80-acre parcel.  The husband’s will, in particular, gave his wife a life estate in all of his real estate, and the tenants the first right to buy the 80-acre tract to be exercised within four months from the date of the husband’s death.  The will also specified that notice of the right to purchase was to be filed in the husband’s estate.  

In 1994, the plaintiffs purchased 10 acres of their own and stopped farming the decedent’s land. As a result, the landlords leased the tract to another tenant, and the families grew apart. The former landlord-husband died in 1999. The plaintiffs were never notified that the husband’s will was being probated or that they were specifically named.  Under the husband’s will, as noted above, the wife was given a life estate in all of the husband’s real estate. The wife died in 2008. Once again, no notice was given to the plaintiffs of their right to purchase the 80 acres and the executor contracted with the current tenants to sell the parcel for its appraised value. 

The estate eventually was closed.  But, before the estate was closed, the buyers’ attorney conducted a title opinion on the parcel and discovered that there was no notice showing the plaintiffs waived their option to purchase the property under the will. Thus, the buyers’ attorney sent the plaintiffs a letter asking them to waive their interest. This was the first time the plaintiffs had been notified of the provisions contained in their former landlords’ wills. The plaintiffs filed a petition to reopen the husband’s estate. 

The trial court held a hearing on whether the estate could be reopened and concluded that the husband clearly intended to give the plaintiffs an option to purchase the property.  Thus, the estate was to be reopened because a “necessary act remained unperformed.”  The Iowa Court of Appeals reversed the trial court’s decision, holding that the plaintiffs’ claims were time-barred under Iowa Code §633.488- a claim which has already been barred, cannot be raised when an estate is reopened.  That provision allows “adversely affected, interested persons who did not receive notice of the estate’s final report and accounting,” a five-year window of opportunity to address their claims. 

The plaintiffs appealed and the Iowa Supreme Court first addressed whether the district court abused its discretion when they reopened the estate. The Court began by reconciling the differences between the two code sections at issue - §633.488 and §633.489. According to the Court, the provisions address two different scenarios.  Iowa Code §633.488 applies to situations where the matter has previously been considered in the final accounting, distribution, and settlement.  On the other hand, Iowa Code §633.489 was enacted by the legislature to allow for the reopening of an estate when property is omitted from the inventory or other necessary acts need to be taken care of that were not performed in the original administration. The Court noted that Iowa Code §633.489 is more indefinite in its application and “simply applies if some future happenstance or finding, unattended to during probate, requires the estate to be reopened.”  Therefore, the trial court’s application of Iowa Code§633.489 was not unreasonable.  

The Iowa Supreme Court next looked into whether the trial court erred in construing the husband’s will to give the plaintiffs an unqualified first right to purchase the property. The beneficiaries argued that the provision only allowed the plaintiffs the first right to purchase if the surviving spouse elected to sell the 80 acres within four months after the husband’s death. Here, the court held that the wife was only entitled to a life estate in the 80 acres and the plaintiffs had an “unqualified” right to purchase the property. The language in the instrument itself was not conditional and it was not subject to any contingencies. 

Equity, in this case, entitled the plaintiffs the first right to purchase the 80 acres at appraised value from the estate and the trial court did not abuse its discretion by reopening the estate to determine whether the plaintiffs had a valid claim.   The Court of Appeals opinion (which the Supreme Court reversed), was authored by Eisenhauer, with Sackett and Mansfield also on the panel.  In re Estate of Roethler, No. 09-1105, 2011 Iowa Sup. LEXIS 59 (Iowa Sup. Ct. Aug. 19, 2011).