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Interests in Iowa Real Estate May Expire in 10 Years Unless Extended

Real Estate Law, Shuttleworth & Ingersoll, P.L.C.

The Iowa Court of Appeals in its West Lakes Properties, L.C. v. Greenspon Property Management, Inc. decision entered on September 27, 2017, held that a right of first refusal was subject to the statute of limitations of Iowa Code Section 614.17A, which states:

614.17A  Claims to real estate after 1992.

  1. After July 1, 1992, an action shall not be maintained in a court, either at law or in equity, in order to recover or establish an interest in or claim to real estate if all the following conditions are satisfied:
    1. The action is based upon a claim arising more than ten years earlier or existing for more than ten years.
    2. The action is against the holder of the record title to the real estate in possession.
    3. The holder of the record title to the real estate in possession and the holder’s immediate or remote grantors are shown by the record to have held chain of title to the real estate for more than ten years.
    1. The claimant within ten years of the date on which the claim arose or first existed must file with the county recorder in the county where the real estate is located a written statement which is duly acknowledged and definitely describes the real estate involved, the nature and extent of the right of interest claimed, and the facts upon which the claim is based. The claimant must file the statement in person or by the claimant’s attorney or agent. If the claimant is a minor or under a legal disability, the statement must be filed by the claimant’s guardian, trustee, or by either parent.
    2. The filing of a claim shall extend for a further period of ten years the time within which such action may be brought by any person entitled to bring the claim. The person may file extensions for successive claims.
  2. Nothing in this section shall be construed to revive any cause of action barred by section 614.17.

91 Acts, ch 183, §37; 2013 Acts, ch 30, §261
Referred to in §614.17, 614.18, 614.19, 614.20

Because the Court held that a right of first refusal is an interest in real estate and therefore must be extended or will expire, the decision potentially subjects other interests in real estate, such as options to purchase, easements, leases and any other agreement that creates an “interest in real estate”, to a ten-year statute of limitations. The decision has not been revised or limited by later decisions, and the Iowa legislature has not passed legislation to address the decision. A curative statute was proposed in the legislature this session but did not pass out of committee.

Section 614.17A allows for the “extension” of a “claim” by filing a written statement within the ten year period of the “date on which the claim arose or existed”, which is the date that the document creating the claim was recorded.

For agreements that have not been timely extended, the agreement would need to be re-executed and recorded.

For agreements that have not yet expired, we have developed a “statement” to use to extend existing agreements. You may want to review your files to determine if there are “interests in real estate” that should be extended or replaced with new agreements.

If you have any questions regarding the above or if you have interests in real estate to extend or replace, do not hesitate to contact us.

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