When buying property in Iowa at a Sheriff's Sale, make sure you can get a deed!

This is the third in a series exploring the ins and outs of purchasing properties at a Sheriff's Sale or as they are sometimes called Forfeiture Auctions. Here are the first two:

Central Iowa Sheriff Sale or Forfeiture Auction procedures and locations

Should I buy a property at the County Sheriff sale or wait until it becomes an REO?

Many would assume that if they purchase a property at a Sheriff Sale paying cash by 3pm on the day of the sale, as required, that they would then get a deed to the property, in this case a Sheriff's Deed. However, that may not be the case. According to Iowa foreclosure law, a person who owns a homestead, a property they occupy as a primary residence, they have from 6 months to a year to redeem the property by paying all back payments, penalties and interest in full. This is called a right of redemption.

If you purchase a property at Sheriff Sale that has a right of redemption, you will not get a deed. You will instead be issued a Certificate of Purchase. You will need to retain the original Certificate which you can exchange for a Sheriff's Deed when the owners right of redemption has expired. If you lose the Certificate you will need to get a court order directing the Sheriff's office to issue you a duplicate which you can exchange.

If there is no redemption period or the defendant has elected foreclosure without redemption then the Sheriff's Deed will be issued to the highest bidder upon receipt of the funds by the Sheriff.

Once you have the Sheriff's Deed you can record your ownership at the county courthouse, but not until. This special circumstance with right of redemption in Iowa is yet another reason a buyer should seek professional legal advice before considering purchasing a property at a Forfeiture Auction.