Iowa Tax Liens
| Sale Type: | Tax Lien Certificates |
| Interest Rate: | 24% per annual |
| Bid Method: | Rotational |
| Redemption Period: | 1.75 years |
| Sale Date(s): | 3rd Monday in June |
| State Statute(s): | Title X , CH 446 – 448 |
| Over-the-Counter: | No |
| State Website | iowa.gov |
Iowa State Overview
Iowa is classified as a tax lien state. On the third Monday in June of each year, the county treasurer will conduct a public sale of all the parcels that are delinquent on their property taxes. The tax sales are conducted as an oral public auction, although bids may also be mailed. Tax liens are purchased with a two year right of redemption. The rate of return is 24% annually, or 2% per month. Technically, liens are awarded based on the bidder willing to accept the lowest percentage of ownership of the property. However, most county treasurers don’t utilize this system due to its complicated nature. Most counties use either a random selection process, or a rotational bidding system. If the property owner does not pay all delinquent taxes, interest, penalties, and fees by one year and nine months into the redemption period, the investor may begin the process of terminating the right to redeem. The lien holder must file a “90 day notice of right of redemption affidavit.”
Iowa uses a few types of bidding methods. The “bid down ownership” method where investors compete by bidding down how much of the property will be security for the lien. Using this system, in order for a lien holder to prosecute the foreclosure, they would have to file a court action to sell the property,and then divide the process based on the percentage of ownership they hold. Because of this system’s obvious flaws, counties utilize a “Rotational Bidding System” or a “Random Selection” method. In rotational bidding the county treasurer offers tax liens to investors based on a list of all investors present. When an investor comes next on the list, they are given the opportunity to purchase the lien being offered. If they choose to decline, the lien is then offered to the next investor listed. In the process of random selection investors are randomly drawn and given the choice to purchase the line being offered.
Iowa has a two year right of redemption. If the property owner does not pay all delinquent taxes, interest, penalties, and fees by one year and nine months into the redemption period, the investor may begin the process of terminating the right to redeem. The lien holder must file a “90 day notice of right of redemption affidavit”. If a lien holder fails to file a 90 day notice on a certificate after a period of 3 years from the date of sale, the county treasurer may cancel the lien.
- Tax Sale Type: Tax Lien Certificate (Sec. 446.1).
- Contact: The county treasurer or tax collector (Sec. 446.7).
- Interest Rate and/or Penalty Rate: 24% per annum (Sec. 447.1)
- Bid Procedure: Bid down ownership interest (Sec. 446.16).
- Redemption Period: 2 years (See “Notes”). (Sec. 447.9).
- Law: Code of Iowa, Title X, Subtitle 2, Chapter 446, “Tax Sales,” Chapter 447, “Tax Redemption,” and Chapter 448, “Tax Deeds.”
- In the statutes, Iowa law states that the bid method used it suppose to be bid down the ownership of a property (although almost every county does random selection and rotational bidding). What that means is that you are bidding down the amount that backs a lien. So, if the property owner does not redeem in the said time, the investor is able to foreclose and own only the percentage of the property that they won the bid on.
- The redemption period in this state does not automatically terminate, the lien holder is able to file after 1 year, 9 months, and can become the owner at 2 years if not redeemed. If the lien holder does nothing after three years they can lose their claim to the property.
