UPDATES & ANALYSIS

11.21

Mortgage Takes Priority Over Dower, Dower Takes Priority Over All Others

by Ryan Koopmans | November 21, 2011

By Ryan Koopmans

In a case that is fitting for a law school exam, the Iowa Supreme Court on Friday decided the priority of the following legal interests in real estate: (1) a widow’s dower interest; (2) the bank’s purchase-money mortgage; and (3) liens against the deceased spouse’s estate.  According to the Court, a purchase-money mortgage comes first, followed by the dower interest. The creditors come last, and get nothing. 

 The case, Freedom Financial Bank v. Estate of Edward J. Boesen and Maureen Boesen, arose out of the following facts.   In 2007, Edward Boesen purchased commercial real estate with a loan and mortgage from Freedom Financial Bank.  Both Edward and his wife, Maureen Boesen, had purportedly signed the mortgage documents.  But after Edward’s death in 2008, Maureen alleged that her signature was forged.  And as a result, she claimed that the mortgage was subject to her dower interest.

Reaffirming precedent from 1875, the Iowa Supreme Court disagreed.  Under Iowa law, a widow’s dower interest is only a good as the best interest held by her deceased husband.  Because Edward Boesen bought the real estate with proceeds from a purchase-money mortgage, he never held full title to the property.  Edward’s interest was, from the beginning, subject to the bank’s mortgage.  And so was Maureen’s.  Writing for all six of the participating Justices (Justice Mansfield took no part), Justice Waterman explained that “this result is not unfair to Maureen” because “without the bank’s six-figure loan, Edward never would have acquired the Ankeny land.” 

 But in a reversal of the district court’s ruling, the Supreme Court did conclude that  Maureen’s dower interest is superior to the estate’s creditors, and thus she is entitled to all sale proceeds that exceed the amount of the bank’s mortgage.  To get to that answer, the Court had to sort through a statutory thicket that does not lend itself to summary.  The Court’s opinion, with all the details, is here.

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