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February 28, 2024 | Kristine A. Tidgren

As March 1 approaches, we review the estimated tax rules for farmers.

February 22, 2024 | Jennifer Harrington

On January 24, 2024, the Iowa Court of Appeals affirmed a district court’s partition order. The judge ordered a hybrid partition, where a portion of the partitioned property would be sold, and the other portion given in-kind to one owner. The one receiving an in-kind share would also owe owelty payments to the other owners. The land was heirs property under the 2018 Iowa partition law, and the plaintiffs argued a hybrid partition was not allowed for heirs property.

Recently the Court of Appeals released two opinions that discussed adjudication on the merits with agricultural related cases. The first case addressed a dismissal that resulted from failure to mediate prior to filing a foreclosure suit. The second case addressed a plaintiff re-filing a suit once an expert on water drainage was found after summary judgment was granted in a previously filed case. Both cases explain established court doctrine regarding refiling cases that were previously brought before a district court judge.

On January 10, 2024, the Iowa Court of Appeals affirmed the district court’s determination of when to value farmland that was subject to a testamentary purchase option. The doctrine of equitable conversion applies to testamentary purchase options, and equitable title passes when the buyer notifies the sellers they will exercise their option. Further, rent payments made by buyer were credited towards the purchase price when the parties could not agree upon a sales price for over two years.  

On February 2nd, 2024, the Iowa Supreme Court affirmed both the Court of Appeals and district court's finding that the injured plaintiff failed to bring forth evidence that the owner of a cow that caused an accident on Interstate 80 was negligent. The court made clear that an animal on the road is no longer prima facie evidence of owner’s negligence.

On January 10, 2024, the Iowa Court of Appeals held that the district court improperly considered extrinsic evidence when interpreting a will. The decedent’s will directed one farm property to be held in a trust and the other farm property be evenly divided between her three children. Based on the testimony of the scrivener of the will, the district court concluded that the testator intended both parcels to be placed in the trust. Because the will was not ambiguous, extrinsic evidence was inadmissible. Thus, the Court of Appeals reversed the district court’s order.

January 23, 2024 | Kristine A. Tidgren

Update: On January 31, 2024, the House passed this bill with a bipartisan vote of 357 to 70. As of February 12, 2024, the future of the bill remains uncertain. It does not appear to be headed for a Senate floor vote any time soon.

January 19, 2024 | Jennifer Harrington

Many landowners have land that borders a road. Iowa has specific laws about fences located within the right-of-way dating back to 1858.[i] A landowner can be told to remove a fence located within the highway right-of-way even if the right-of-way is established by easement. Unless the fence is an immediate and dangerous hazard, specific procedures need to be followed by the governmental agency before they can remove a fence and charge the owner for the removal costs.

In two separate lawsuits, several advocacy groups challenged Iowa’s Farm Trespass law and Trespass Surveillance statute. In both cases, a judge from the Southern District of Iowa previously held that the law violated the First Amendment and granted summary judgment in favor of the plaintiffs. Animal Legal Defense Fund v. Reynolds, 591 F.Supp.3d 397 (S.D. Iowa 2022); Animal Legal Defense Fund v. Reynolds, 630 F.Supp.3d 1105 (S.D. Iowa 2022).

The Eighth Circuit Court of Appeals released two separate opinions on January 8, 2024, and reversed the district court’s decisions, ruling that both statutes passed intermediate scrutiny and were, thus, constitutional. The cases are Animal Legal Defense Fund v. Reynolds, No. 22-1830, (8th Cir. Jan. 8, 2024) and Animal Legal Defense Fund v. Reynolds, No. 22-3464 (8th Cir. Jan. 8, 2024).

January 11, 2024 | Kristine A. Tidgren

In early 2022, the Iowa Legislature passed HF 2317. This law reduced individual and corporate income tax rates, provided exemptions from Iowa tax for most forms of retirement income--including retired farmer rental income--and scaled back the Iowa capital gain deduction.

On December 21, 2023, IRS announced a Voluntary Disclosure Program (VDP) through which eligible employers may repay 80 percent of the employee retention credit (ERC) to which they were not entitled and avoid civil litigation, penalties, and interest.

In a split decision, the Iowa Court of Appeals affirmed the district court’s determination that a deed executed by a 79-year-old with dementia conveying her half-interest in a hog site to her business partner should be invalidated due to lack of capacity. The district court invalidated the conveyance on two grounds. First, the court found the grantee was in a confidential relationship with the owner, and therefore the conveyance was presumed to be the result of undue influence. Second, the district court found that the owner lacked the mental capacity to execute the deed.

On November 21, 2023, the Iowa Court of Appeals affirmed the district court’s decision to value farmland on the date of distribution, rather than date of death, when determining a residuary beneficiary’s inheritance.  Since the residuary clause required equal distribution among five beneficiaries, the value of the farmland given to one beneficiary from the residuary needed to be determined according to the distribution date.

On November 21, 2023, the Iowa Court of Appeals affirmed that Iowa’s partition law did not apply to farmland owned by a trust. Iowa Code chapter 651 contains special provisions for the partition of “heirs property.” Because the farmland was not held in tenancy in common, the farmland did not qualify as “heirs property.” See Iowa Code § 651.1. 

On November 8, 2023, the Iowa Court of Appeals reversed the district court’s directed verdict in a surviving spouse’s case against her husband’s estate. The surviving spouse alleged she was entitled to one-half of the price her husband paid to purchase CDs with funds from joint accounts. The court found that the district court improperly applied a tort standard instead of a contract standard to the claim. The court ruled that, on remand, the district court is to consider the intent of the parties when the joint accounts were created.

On October 25, 2023, the Iowa Court of Appeals affirmed the district court’s ruling that a 96-year-old woman had testamentary capacity when she rewrote her will to disown her family and to give all farmland to charity. Although she may have believed she had a life estate in some of the farm ground instead of the fee simple interest she held, the testatrix did not “need to have a perfect understanding of [her] ownership interest” to know the nature and extent of her property. The rewritten will was upheld, and the charity received all farmland.

On November 21, 2023, the Court of Appeals affirmed the district court’s ruling that farmland sold by a life estate holder was proper. The life estate holder was granted a power of sale for the purpose of funding her “health, support, and maintenance.” A remainderman challenged the sale, arguing there was no proof the sale was done in order to fund the life tenant’s welfare. The court of appeals found that the remainderman, not the life tenant, had the burden to prove why the sale was done.

Update: FinCEN opened the online portal for filing Beneficial Ownership Information reports on January 1, 2024. You can access it here: https://boiefiling.fincen.gov/fileboir.

November 21, 2023 | Jennifer Harrington

On October 25, 2023, the Iowa Court of Appeals upheld the district court’s summary judgment ruling in a family transaction involving a long-term farm lease and purchase option. Thomas, the son, sued his parents arguing that they breached the purchase option when they entered into a twenty-year lease after executing the purchase option but before the purchase option was exercised. The court found there was no breach. The purchase option merged with the deed upon acceptance of the deed which expressly noted the existence of the lease.

On October 11, 2023, the Iowa Court of Appeals found that one brother failed to properly account to his brothers for the farming proceeds received while marketing organic crops. The two brothers lost their organic certification in 2015 and for the next two seasons enlisted their brother, Dietrich, to obtain the required certifications and market the crops. Eventually the two brothers sued Dietrich for an accounting and payment due, claiming their brother had a fiduciary duty to them.

On October 11, 2023, the Iowa Court of Appeals affirmed the district court when it ruled that one owner of tenancy-in-common could not terminate a farm lease entered into by a life estate holder without the permission of the other co-owners. The court also affirmed that a co-executor could not terminate a farm lease during probate administration without the unanimous consent of the other co-executors.

October 9, 2023 | Jennifer Harrington

The Free Application for Federal Student Aid (FAFSA) will undergo major changes for the 2024-2025 school year. One major change is that the adjusted value of a family farm or small business will be used when calculating expected financial contribution from parents. Prior to this year, the net value of a family farm or small business was not included.

On September 8, 2023, the Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (Army Corps) published a revised definition of “waters of the United States” or WOTUS. 88 FR 61964. To conform with the U.S. Supreme Court’s recent Sackett v. EPA, 143 S. Ct. 1322 (2023) ruling, the agencies made various changes including the removal of the “significant nexus” standard and amending the definition of “adjacent.” The new rule went into effect September 8, 2023. Because the revision was required to make the Rule comply with the Sackett decision, no notice and opportunity for public comment was necessary.

After disagreements over the boundary line between two neighbors occurred, the plaintiffs brought this lawsuit alleging boundary by acquiescence and adverse possession. The trial court found that the plaintiffs had maintained the 8.5-foot strip of land and ruled in favor of the plaintiffs. On appeal, the court found that the plaintiffs only began maintaining the disputed area six years earlier when the defendants purchased the adjoining parcel. Because the plaintiffs did not meet the statutory ten-year requirement for either claim, the Court of Appeals reversed the district court’s ruling.

On August 9, 2023, the Iowa Court of Appeals affirmed that a boundary by acquiescence was established between a farm and neighboring homeowner. The parties treated a fence as the boundary line for over ten years. Even though a homeowner later tore the fence down, the boundary line was still clearly marked from farming activities. Therefore, the Court of Appeals affirmed the district court’s finding in favor of the plaintiffs.

A commercial fishing business harvested shrimp by dragging nets along the ocean floor. The nets would trap other marine animals in addition to the shrimp. The fishermen would throw this “bycatch” back into the ocean. A conservation group brought a citizen-suit under the Clean Water Act (CWA) claiming that the company violated the CWA by 1) disturbing the sediment when it dragged nets along the ocean floor and 2) throwing the bycatch back into state waters bordering the Atlantic Ocean. The district court granted the fishing company’s motion to dismiss. On appeal to the Fourth Circuit Court of Appeals, the court affirmed.

On June 16, 2023, the Federal Circuit for the Court of Appeals affirmed that the U.S. Army Corps of Engineers’ work to restore the Missouri River to its natural condition caused intermittent flooding and constituted a per se taking of farmland. The court determined that because the intermittent flooding would continue into the future, it was a permanent flowage easement and therefore a taking. The court also reversed the trial court’s denial of damages for destroyed crops. It held that lost crops were not a consequential damage of the taking, but a separate compensable property interest. 

Beginning July 1, 2023, Iowa producers can sell raw milk within the state under certain conditions. SF 315 provides requirements for the production, sale, and testing of raw milk, raw milk dairy products, and raw milk products. Previously, only Grade “A” pasteurized milk and milk products could be sold. Iowa Code § 192.103 (2022). Before selling raw milk, producers should carefully consider the specific restrictions under the law and potential liabilities.

July 14, 2023 | Jennifer Harrington

On July 13, 2023, the Iowa Court of Appeals held that a soybean buyer repudiated the contract when it repeatedly delayed and prevented delivery of soybeans from the farmer. The contract did not specify a time of delivery, but customary practice created an implied term within the contract that prevented the buyer from delaying the delivery for more than five months. The farmer was allowed to sell to another buyer and no damages were owed to the original buyer.

A semi-truck collided with a cow standing on the interstate. The driver brought a negligence lawsuit against the livestock owner claiming that he suffered personal injuries and property damage. The district court determined that the driver failed to prove that the livestock owner breached a duty of care. On appeal, the court affirmed that there was insufficient evidence that the owner failed to use ordinary care to constrain the animal.

In a June 21 ruling, the Iowa Court of Appeals held that helping a neighbor get a downed heifer back on its feet is not a “domesticated animal activity” under Iowa Code § 673.1(3) and therefore Iowa Code § 673.2 does not provides liability immunity for the owner of the heifer. The court overturned the district court’s summary judgment dismissal and remanded the case back to district court.

The potential carbon dioxide pipeline projects in Iowa have created some controversy. One issue that has concerned some landowners is the statute granting companies proposing pipelines the right to access their land for a survey. Several recent cases addressing this issue have come before Iowa district courts.

Producers have until July 14, 2023, to apply for disaster relief under Phase 2 of the Emergency Relief Program (ERP Phase 2) or the Pandemic Assistance Revenue Program (PARP). The USDA recently extended the application deadline from June 2, 2023, to July 14, 2023.

To collect $106,898 of unpaid income taxes from the estate of Francis Glaser, the Iowa Department of Revenue (IDOR) sought to set aside Glaser’s predeath transfers of real estate to his friend. The Iowa Supreme Court held that fraudulent conveyances may only be voided to the extent necessary to pay the debts and charges of the estate. Iowa Code § 633.368. On remand, the friend argued that income taxes are not a debt of the estate. The Court of Appeals disagreed and found that the properties could be sold to satisfy the estate’s debts including IDOR’s claim. However, any remaining funds or unsold properties must be returned to the decedent’s friend.

A fence ran slightly north of the boundary line between two parcels of land. After the landowner of the northern parcel filed a petition for quiet title, the neighbor counterclaimed, alleging that a new boundary line was established through boundary by acquiescence. The district court agreed with the neighbor and ruled that a boundary by acquiescence had been established. In making its ruling, the court held that the simultaneous ownership of both parcels for three years by the person who sold the property to the landowner did not extinguish the pre-existing boundary by acquiescence.

The Iowa Court of Appeals affirmed the probate court’s decision to enforce a will as written even though this resulted in materially unequal distribution among the beneficiaries. With five land parcels and seven children, the decedent created a distribution scheme where five children received land and the other two children would receive a set payment amount. The set payment amounts were low compared to the financial value of the land given to the other five children.

June 15, 2023 | Jennifer Harrington

During Iowa’s 2023 Legislative Session that ended Thursday, May 4, legislators passed a number of bills impacting agricultural producers and rural landowners. Read more for a review of the highlights.

On May 25, 2023, the U.S. Supreme Court significantly narrowed the definition of “waters of the United States.” Sackett v. EPA, No. 21-454 (2023). This case marks a decided victory for the Sacketts, an Idaho couple who wished to build a house on property the EPA found to contain federal wetlands.

After the probate court set aside a 2016 will for lack of testamentary capacity and undue influence, the same executor submitted the decedent’s 2012 will to probate. A beneficiary under both wills claimed that the executor violated the 2012 will’s no-contest clause by submitting the 2016 will and also argued that the executor should be removed. The Iowa Court of Appeals affirmed that the executor did not challenge the 2012 will directly or indirectly. It also held that the beneficiary failed to show that the executor was unsuitable and should be removed from her role.

California’s Proposition 12 is here to stay...unless Congress decides to weigh in. On May 11, 2023, the United States Supreme Court ruled that the 2018 law forbidding the sale of whole pork meat that comes from breeding pigs “confined in a cruel manner” did not violate the dormant Commerce Clause of the U.S. Constitution.

An energy company began replacing a substantial portion of components in wind plants it owned and operated. However, the county assessor continued to value the property the same for property tax purposes. The energy company appealed the assessment and claimed that this “repowering” restarted the graduated tax valuation schedule under Iowa Code § 427B.26. Because the entire wind plant was not replaced, the Iowa Supreme Court affirmed that the repowering project did not alter the property tax valuation.

The Iowa Court of Appeals found that the defendants, a father and son, violated their fiduciary duty to a family farm corporation. Father was president and a board member of the corporation. He by engaged in self-dealing by paying personal expenses using the business’s accounts, and he allowed his son, who was the operational manager, to misappropriate corn. The son, as an agent of the corporation also breached his duty of loyalty by misappropriating corn. The court did not find that the conduct of the defendants rose to the level of fraud.  

A landowner brought a lawsuit against his neighbor claiming that his property experienced manure runoff after the neighbor applied manure on a nearby field. Because all the landowner’s claims stemmed from a nuisance allegation, the Court of Appeals determined that Iowa Code § 654B.3(1) applied. As such, the landowner was required to request farm mediation before filing the lawsuit. On March 8, 2023, the court affirmed the dismissal of the lawsuit for lack of subject matter jurisdiction.

On March 8, 2023, the Iowa Court of Appeals affirmed the division of a farm partnership’s alleged assets and liabilities after the death of one of the business partners. With “scant” evidence, the Court of Appeals affirmed that the deceased partner took out a loan as an individual, not as a business partner. Additionally, the deceased partner’s estate was not entitled to the proceeds from the sale of the partnership’s farm equipment because it was sold at a loss.

With unclear terms and intentions, two parties attempted to negotiate the sale of a farm property. After both vacillated between moving forward and rescinding the agreement, the seller and the buyer petitioned the court for specific performance of the sale. On March 8, 2023, the Iowa Court of Appeals affirmed the district court’s order of specific performance finding that the seller did not abandon his specific-performance claim.

April 28, 2023 | Jennifer Harrington

The Iowa Supreme Court affirmed that a lessee could exercise their renewal option under the rental contract by only giving written notice even though a later paragraph stated that the rental payment would be due when the renewal option was exercised. The court found that the structure of the agreement and renewal option paragraph made the rental payment a term of performance, not a condition precedent to exercising the renewal option.

The Iowa Court of Appeals affirmed the probate court’s allocation of attorney fees and court costs arising from litigation under which the trust received a $159,250 settlement. Pointing to a clause in the trust document stating that “administrative costs” were to be paid from the income generated by the trust, the trust’s remainder beneficiaries argued that the expenses should be paid solely from the trust income.

The Iowa Court of Appeals examined the distribution of property during a divorce where one spouse had used inherited and gifted property to fund the purchase and repay debts associated with the marital home and farmland. The Court of Appeals determined that the funds used on the farmland were exempted from the property division, and ordered the contributed amounts returned to the spouse. The funds used to purchase the marital home were not exempted from the marital property division.  

The Iowa Court of Appeals examined the distribution of farmland property during a divorce when a premarital agreement waived “any right or interest in the real property of the other,” and the wife argued that marital assets were used to pay down debt on the property.  The court held that the premarital agreement precluded the spouse from receiving credit for any debt payments. The spouse’s request for credit amounted to a claim of interest in the property and she had waived her right to bring this claim in the premarital agreement.

April 11, 2023 | Jennifer Harrington

The Iowa Court of Appeals affirmed the dismissal of two neighboring landowners’ claims against each other in a water drainage dispute. For many years, the neighbors had argued about the proper flow of water, eventually using self-help techniques to control the water. The court found that the water flow prior to the self-help techniques determined the appropriate burdens between the parcels. However, it could not order injunctive relief for the dominant parcel because the trial court did not rule on that neighbor’s claim for injunctive relief.

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