Daily Development for Monday, September 20, 1999

By: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
randolphp@umkc.edu

HOMESTEAD; JUDGMENT LIENS; ATTACHMENT: Second wife's homestead interest in property prevents exwife's subsequently registered judgment lien for unpaid child support from attaching to property sold by husband and second wife to a third party purchaser.

Baratta v. Polk County Health Serv., Inc., 588 N.W.2d 107 (Iowa 1999).

Husband failed to pay child support to exwife and exwife obtained Nebraska judgment against husband. Husband subsequently moved to Iowa, remarried, and purchased a home in 1989 with his second wife. The court described their title as "joint," but the case does not turn on whether the couple's interest was any particular form of cotenancy.

 Exwife registered the Nebraska judgment in Iowa in 1992. Husband and second wife sold the home in 1995 to a third party. Exwife sought to foreclose the judgment lien against third party and third party moved to quiet title. The Iowa Supreme Court held , as a matter of first impression and on a 54 vote, that second wife's homestead interest in the property prevented exwife's judgment lien against husband from attaching to the property, even as against a third party purchaser, and, as a result, third party took property clear of lien.

The court was unanimous on the point that the second wife's homestead interest insulated the property from any action on the lien during the time that second wife occupied the property. Although a prior court appeals court had decried the result, it had established a precedent that the technical language of Iowa's homestead laws prevented the sale of homestead property to settle the debts of one other than the homestead owner. There was no claim that the second wife had any liability on the support judgment, so the entire house, as her homestead, was protected.

But the court split 54 on whether the protection given to the second wife extended to the party that purchased the property from the couple. Of course, the property no longer was subject to the second wife's homestead at this point, and the purchaser, an institution, could not claim homestead for itself.

The majority held that the Iowa statutes necessarily must be read to hold that a judgment lien against one debtor cotenant does not attach at all when a nondebtor cotenant has a homestead interest in the property. If the lien did not "attach," then it could not run with the land to the purchaser.

Comment 1: The majority does not discuss any policy basis for their conclusions, nor any legislative history. It simply is a matter of parsing statutoring language. The dissent argues that there is no reason for the subsequent purchaser to enjoy the protection of the second wife's homestead. That interest is adequately protected, the court argues, by permitting the second wife's one half cotenantcy interest to pass to the purchaser unencumbered. The judgment lien could attach to a one half cotenancy interest in the property, that of the husband.

Comment 2: Isn't there merit in the dissent's position? It is true that the fact that the second wife's own interest will be worth less than it would otherwise be if it is sold in conjunction with an encumbered cotenancy interest of her husband. In fact, there likely will be no sale at all until husband is able to clear the lien. But what the heck she married the deadbeat!!

In this case the lien amounted to $68,000, and may well have exceeded the value husband/debtor's interest. But a lien foreclosure sale would have cleared the lien for the market value of the property.

Comment 3: Note that the purchaser had record notice of the lien, as it was recorded against the husband. The title examiner, however, apparently did not disclose the existence of the lien in his report. (Remember that Iowa is the one state that does not have title insurance in common usage.) Although the purchaser likely has a malpractice claim, wouldn't it have been nice if it could have just tendered the defense of this case to a title insurer?

For another recent case involving title and marital claims, see Erway v. Deck, 588 N.W.2d 862 (N.D. 1999). Exhusband's creditors' receipt of copy of ex-husbandís divorce decree and settlement agreement gave creditors constructive notice of exwife's prior, unrecorded deed.

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