The Iowa Court of Appeals in JP Morgan Chase v Hawkins recently ruled that a purchase money mortgage does not fall under the statutory joint spousal signature requirement necessary for conveying or encumbering a homestead. Iowa Code Section 561.13 provides in relevant part:
“A conveyance or encumbrance of, or contract to convey or encumber the homestead, if the owner is married, is not valid, unless and until the spouse of the owner executes the same or a like instrument, or a power of attorney for the execution of the same or a like instrument…”
Accordingly, up to this point in time and through a number of unpublished opinions, the Court of Appeals has stated that a mortgage, not signed by the spouse of the owner is void, as to both the owner and the spouse. However, in JP Morgan Chase v Hawkins, the Court of Appeals ruled that if said mortgage is a purchase money mortgage (a mortgage that secures the unpaid purchase price of the mortgaged property) it arises prior to the acquisition of the homestead and thus does not fall under the prospective reach of the above homestead statute. (The Court of Appeals in Freedom Financial Bank v Estate of Boesen and Boesen ruled the same in a similar factual situation). Thus a purchase money mortgage signed by only one half of married couple will still be deemed valid……. for now. I would imagine this will be a matter the Iowa Supreme Court sees on appeal so stay tuned.