Opinion ID: 2114550
Heading Depth: 1
Heading Rank: 2

Heading: Credit for the $320,000 Purchase Price.

Text: As mentioned, on May 12, 1988, the bank bid $320,000 for the mortgaged property at a sheriff's sale and received a sheriff's certificate to the property. On July 12, 1989, the bank received a sheriff's deed to the property and on that date applied the $320,000 as a credit to the defendants on the Iowa judgment. The defendants contend that they should have received credit for the sale on May 12, 1988, the date of the purchase. If the defendants are correct, the bank should recompute the interest during the fourteen-month period between the purchase date and the date of the sheriff's deed and give the defendants credit for the reduction in interest. For reasons that follow, we agree with the defendants' contention. A purchaser at a foreclosure sale receives a sheriff's deed if the property sold is not subject to redemption. Iowa Code § 626.95 (1987). If such property is subject to redemption, the sheriff must execute a certificate, containing a description of the property and the amount of money paid by such purchaser, and stating that, unless redemption is made within one year thereafter, or such other time as may be specifically provided for particular actions according to law, the purchaser or the purchaser's heirs or assigns will be entitled to a deed for the same. Id. Ordinarily, when the sheriff sells property to satisfy a judgment, the buyer must pay the purchase price in cash to the sheriff. The sheriff, in turn, transfers the money to the clerk of court. The clerk applies the money to the satisfaction of the judgment and forwards the money to the judgment creditor. When the sale is completed the judgment is thereby reduced by the amount of money realized in the sale. The purchaser's payment, the clerk's satisfaction of the judgment for the amount of payment, and the clerk's transfer of the payment to the creditor occur contemporaneously with the sale. Thus, the judgment debtor is entitled to a satisfaction of the judgment for the amount of the payment as of the date of the sheriff's sale. If the buyer of the property is the judgment creditor, the same process applies. But, in the interest of practicality, the judgment creditor does not pay the sheriff cash. (If the creditor did pay cash, the clerk would return the cash to the creditor after satisfying the judgment for the amount the creditor paid.) Instead, through a bookkeeping entry, the clerk simply credits the judgment with the amount of the creditor's bid thereby reducing the judgment by the amount of that bid. This is exactly what happened here. The clerk's docket in the foreclosure action shows that on May 12, 1988the date of the sheriff's salethe clerk entered partial satisfaction of the judgment in the amount of the bank's $320,000 bid price. The bank should therefore have given the defendants credit on the Iowa judgment for $320,000 as of May 12, 1988, rather than on July 12, 1989.