Case Reviews

Freedom Financial Bank v. Estate of Boesen

Iowa Supreme Court

Case Citation: 805 N.W.2d 802 (Iowa 2011)

Background: On May 25, 2007, Edward Boesen purchased commercial real estate in Ankeny. The deed conveyed the land “to Edward J. Boesen, a married person” and was recorded in the Polk County Recorder’s Office the same day. To finance the purchase, Edward obtained a $232,000 loan from Freedom Financial and executed a promissory note for $232,000 and a mortgage securing $290,000 in loans and advances on the Ankeny real estate. The mortgage was recorded within a minute of the deed. The loan documents Edward signed contained a purchase-money mortgage recital and expressly waived all dower interests. Edward’s signature and Maureen’s purported signature on the mortgage were acknowledged by a notary public. Maureen claims her signature was forged. The record contains no details as to the forgery. Edward died intestate on July 15, 2008, leaving Maureen as his surviving spouse.  After Edward’s death, Freedom Financial attempted to foreclose its mortgage, but Maureen and the Boesen Estate asserted Maureen’s fraudulent signature voided the mortgage.  The District Court granted Freedom Financial summary judgment, concluding its purchase-money mortgage was superior to Maureen’s statutory dower interest.  The Court of Appeals affirmed the summary judgment. 

Issue: Whether a surviving spouse’s dower interest, codified in Iowa Code section 633.211 (2009) as to non-homestead real property, is subject to a lender’s purchase-money mortgage?

Analysis:  While it is generally true that a decedent cannot unilaterally divest a surviving spouse of their vested statutory dower interest, none of the cases cited by Maureen or the estate for this proposition involved a purchase-money mortgage. As with so many things in life, timing matters. A spouse’s statutory dower interest attaches to real property “the instant there is a concurrence of seisin in the husband and marriage relation between the parties.” Lucas v. White, 120 Iowa 735, 741, 95 N.W. 209, 211 (1903). In Warner v. Trustees of Norwegian Cemetery Ass’n, the husband had title to the properties before unilaterally conveying real estate interests; the surviving spouse’s statutory dower share had already attached to real estate before the conveyances. 139 Iowa 115, 117 N.W. 39, 42 (1908). A purchase-money mortgage, however, is a unique real estate instrument with a priority timing rule that dictates a different result.

A purchase-money mortgage “is predicated on the theory that upon the simultaneous execution of the deed and mortgage the title to the land does not for a single moment rest in the purchaser.” Keefe v. Cropper, 196 Iowa 1179, 1181, 194 N.W. 305, 306 (1923). Through a legal fiction, the title “merely passes through [the purchaser’s] hands and, without stopping, vests in the mortgagee.” Id. Accordingly, “no lien of any character” can attach prior to the purchase-money mortgage, and the mortgage “has preference over previous judgments against the purchaser-mortgagor.” Id. Based upon these principles, in 1876, this court found a spouse’s dower interest was subject to a purchase-money mortgage because “no time, in contemplation of law, intervened between the execution of the deed from plaintiff and the mortgage; therefore, the surviving spouse’s inchoate right of dower attached subject to the mortgage.” Thomas v. Hanson, 44 Iowa 651, 653 (1876).

This long-standing priority rule is well accepted:  "As a general rule, where a husband purchases land and at the same time executes to the grantor a mortgage for the unpaid purchase-money, such mortgage is superior to the wife’s right of dower…and this is so even though the wife did not join in the execution of the mortgage."  28 C.J.S. Dower & Curtesy § 48, at 139 (2008). 

Judgment: Affirmed. Following Thomas and the plain meaning of section 654.12B, the Iowa Supreme Court held that Maureen’s statutory dower interest under Iowa Code section 633.211 is subject to Freedom Financial’s purchase-money mortgage.

To see the Court's complete opinion, click here.