The sixth protection for agricultural borrowers during foreclosure

Mollie Pawlosky, Iowa Banking Law, Iowa Commercial Litigation Law, Iowa Real Estate & Land Use, Des Moines Iowa, Dickinson Law Firm, Iowa Bankruptcy law

Posted on 03/08/2017 at 08:00 AM by Mollie Pawlosky

The sixth protection:  The borrower receives a right of first refusal, following the recording of the Sheriff's deed.
When the Sheriff’s deed to “agricultural land used for farming” is recorded (which must be done within one year and sixty days from the date of the Sheriff’s sale), the grantee recording the Sheriff's deed is required to notify the mortgagor of the mortgagor's right of first refusal.  Notice is usually given by providing a copy of the Iowa Code which explains the right of first refusal.

If, after a Sheriff's deed is recorded, the grantee proposes to sell or otherwise dispose of the agricultural land, in a transaction OTHER THAN a public auction, the grantee shall first offer the mortgagor the opportunity to repurchase the agricultural land on the same terms and at the same price that the grantee proposes to sell the agricultural land.

If the grantee seeks to sell the agricultural land by public auction, the mortgagor must be given 60 days' notice of: the date, time, place, and procedures of the auction sale; AND any minimum terms or limitations imposed upon the auction.

The mortgagor has 10 business days after being given notice of the proposed sale, other than a public auction, in which to exercise the right to repurchase the agricultural land by submitting a binding offer to the grantee on the same terms as the proposed sale, with closing to occur within 30 days after the offer, unless otherwise agreed by the grantee. 

After the expiration of either the period for offer or the period for closing, without submission of an offer or a closing occurring, the grantee may sell or otherwise dispose of the agricultural land to any other person on the terms upon which it was offered to the mortgagor.

Notice of the mortgagor's right of first refusal, a proposed sale, auction, or other disposition, or the submission of a binding offer by the mortgagor, is considered given on the date that notice or offer is personally served on the other party or on the date that notice or offer is mailed to the other party's last known address by registered or certified mail, return receipt requested.

The right of first refusal is not assignable, but may be exercised by the mortgagor's successor in interest, receiver, personal representative, executor, or heir only in case of bankruptcy, receivership, or death of the mortgagor.

For specific questions on issues that lenders face in agricultural foreclosures, contact Mollie directly at

This blog is derived from a presentation given by Mollie Pawlosky during the Dickinson Law Firm’s Webinar Series, “Avoiding Aggravation in Ag Lending.” The webinars advised financial institutions regarding aspects of agricultural lending. Mollie’s presentation advised clients of special protections for agricultural borrowers during foreclosure. This blog is the first in a series of five blogs based on Mollie’s presentation.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.

- Mollie Pawlosky


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