Law Summary

IDAHO

By Charles Just

STATUTE OF LIMITATIONS

Pursuant to Idaho Code § 45-1515, a foreclosure on a deed of trust is governed by the same statute of limitations as foreclosure on a mortgage for real property. Therefore, a foreclosure action on a deed of trust in the state of Idaho must be brought within five years of the date of maturity (default). [See I.C. §5-214A, and Isaak v. Idaho First National Bank, 119 Idaho 907, 811 P.2d 832 (1991)]. This five-year period begins to run from the maturity date of the defaulted obligation. There is no requirement that a foreclosure action be brought immediately upon default. [Isaak v. Idaho First National Bank, 119 Idaho 907, 811 P.2d 832 (1991)]

FORECLOSURE SYNOPSIS

The primary mechanism for securing loans in Idaho is the deed of trust. Action on a deed of trust is governed by Idaho Code §§ 45-1502 through 45-1515. A deed of trust may be used to secure a loan when the trust property consists of 40 to 80 acres, depending on the circumstance, or less, or is real property located within an incorporated city or village at the time of transfer. A deed of trust may be foreclosed non-judicially upon default by notice and sale, or through formal judicial proceedings. However, judicial foreclosure establishes redemption rights for the trustor and all holders of subordinate liens. In contrast, upon completion of non-judicial foreclosure by notice and sale, no party has a right of redemption after sale except the Internal Revenue Service.

DOCUMENTS NEEDED TO COMMENCE ACTION

Original deed and note or copy, and original assignments (if not recorded); copy of title policy, survey, and any intervening deeds; signed and notarized documents regarding appointment of a successor trustee; and notice of default, which should identify the deed of trust by setting out the recording information or a description of the trust property, the name(s) of the trustor(s), the nature of the breach, amount in default, including the date from which interest is accrued, and all advances, and election to sell or cause sale to satisfy the obligation. [I.C. § 45-1505]

NON-JUDICIAL FORECLOSURE

Idaho is a non-judicial state and in most cases Deed of Trust foreclosures can be processed non-judicially.

When referral is received, some of our mortgage companies require that we send out the 30 day demand letter to the borrowers. In those cases, we cannot proceed with any foreclosure action until the demand has expired.

Once demand has expired, a title report is requested from the local title company in the county the property is located in. When received we review the title report for any issues that may hold up the foreclosure process and in some cases require a judicial foreclosure, to correct title problems and further foreclosure action.

When necessary an Assignment is recorded to assign the beneficial interest of the Deed of Trust into the entity we are to foreclose in the name of, if different from the current beneficiary.

An Appointment of Trustee is also recorded to appoint Just Law, Inc. as trustee.

A Notice of Default is then recorded in the county in which the property is located, identifying the Deed of Trust by stating the name(s) of the trustor(s) and giving the instrument number of the same as recorded in the county the property is located. The Notice of Default must also provide the complete description of the trust property, and contain a statement that a breach of the obligation has occurred, setting forth the nature of such breach and trustee's election to sell or cause the property to be sold to satisfy such obligation.

Subsequent to the recording of the Notice of Default, at least one hundred twenty (120) days before the day fixed for the trustee's sale, a Notice of Trustee's sale is prepared and sent along with notice of default and given by certified mail, return receipt requested, to the last known address of the grantor(s), or any successors in interest of the grantor(s), whose interest appears of record prior to the recording of the notice of default, and to any person requesting such notice of record, and any individual who owns an interest in the property which is the subject of the foreclosure. This Notice of Trustee's Sale must set forth the names of the grantor(s), trustee and beneficiary in the Deed of Trust, or by assignment or appointment; the description of the property and recording information, ie. instrument number, of the Deed of Trust. It must also set forth the default for which the foreclosure is made and the sum owing on the obligation secured by the Deed of Trust, including the date, time and place of the sale which must be held at a designated place in the county the property is located.

Service of the Notice of Sale and Notice of Default must be made upon an adult occupant, 18 years or older, of the real property by making at least three (3) good faith attempts on different days over a period of not less than seven (7) days apart, with the last attempt being not less than thirty (30) days prior to sale. At the time of each attempt, a copy of the notice shall be posted in a conspicuous place upon the real property, unless during one of the attempts personal service was made, then no further attempts need to be made.

A copy of the Notice of Trustee's Sale must to be published in the newspaper of general circulation in the county that the property is situated once a week for four consecutive weeks, last publication being at least thirty (30) days prior to the date of sale.

The Affidavit of Mailing, Affidavit of Service, and the Affidavit of Publication shall be recorded in the county in which the property is located at least twenty (20) days prior to the date of sale.

On the scheduled date of sale, the trustee, or an agent of the trustee shall conduct the sale and act in such sale as the auctioneer of trustee. Any person, including the beneficiary may bid at the trustee's sale and the property shall be sold to the highest bidder. Sale may be postponed at the request of the beneficiary by publicly announcing at the time and place of the originally scheduled sale, the postponement to another date. No sale may be postponed to a date more than thirty (30) days from the date of the originally scheduled sale date, and no less than 14 days. Certified mailings are sent to interested parties with new sale date.

At the sale, the purchaser shall pay the price bid and upon receipt of the funds, we prepare a Trustee's Deed to convey the property to such purchaser and cause the Trustee's Deed to be recorded in the county that the property is situated.

The purchaser shall be entitled to possession of the property on the tenth day following the sale.

LITIGATION

Just Law has a full service litigation department covering various types of real property related issues. From assisting individuals to nationwide mortgage companies in relation to real property concerns in Idaho.

Just Law represents numerous mortgage companies in protecting their investments in Idaho real property. The attorneys have experience in handling judicial foreclosures when there is a need to clear title, show chain of custody of the loan, or serve active military debtors. Complaints are filed in a timely manner and personal service completed. The action is followed through the default procedure receiving a judgment from the Court and a sheriff sale completed when necessary. Replevin actions regarding mobile homes follow the same procedures ending with a writ of execution returning the mobile home to the agency holding the current loan. In the case of deficiency claim, a complaint is appropriately filed with the corresponding court and a judgment obtained. The judgment is then recorded against the debtor and action taken to obtain the deficient monies due to the current promissory note holder.

The attorneys and staff are skilled in the preparation of sale documents and work in close contact with local title companies for title searches and title policies. Property disputes regarding boundary issues, enforcement of homeowner association covenants and restrictions, construction contracts both for contractors and property owners, and numerous other property related concerns are handled in a case by case manner and may often be resolved without court involvement. If however, the need arises, there is no hesitation in filing a complaint and following through with formal court proceedings to protect the client.

Just Law looks forward to assisting you in protecting your real property investments in the State of Idaho.

EVICTION SYNOPSIS

Post-foreclosure occupants of real property in Idaho must be ejected (or evicted) through legal process. Notice is initially served on occupants giving them 3 days to vacate the premises unless they are bona fide tenants as defined under federal law. If the occupants fail to vacate the property, an action for ejectment (or eviction) is filed in district court. After service of the summons and complaint, the occupant has 20 days in which to respond. If no response is made, default judgment is obtained. If the action is contested, summary judgment based on the strength of title to the property is sought. The process for summary judgment takes 60-120 days. Upon entry of judgment, a writ of ejectment and writ of restitution is issued directing the sheriff to remove the occupants and their personal property and restore possession to the titled owner. Sheriff's fees and costs associated with forcible ejectment are usually required to be paid in advance. "Lock out" is triggered when a sheriff has served a writ and determined the occupants either have vacated or were removed. Possession is then restored to the titled owner or its agent.

BANKRUPTCY SYNOPSIS

Just Law Office specializes in representing Mortgage clients and other secured creditors in Bankruptcy cases throughout the State of Idaho. Steven W. Boyce leads our skilled Bankruptcy Department with the expertise gained from years of experience in personally handling all of our Idaho Bankruptcy cases. This expertise ensures that the interests of our clients are diligently represented throughout the Bankruptcy process, including representation in Chapter 7, Il, 12 and 13 cases, and in litigated adversary proceedings.

In Chapter 7 liquidation cases, we strive to immediately file any Motion for Relief from Stay or take any other necessary action once a complete referral is received. ln reorgarization cases, we conduct a Plan Review, file any necessary Proof of Claim, and object to any Plan treatment that fails to fully cover any secured claim of our clients. We have successfully litigated many contested adversary proceedings against both Debtors and Bankruptcy Trustees in ensuring the fair treatment of our creditor clients throughout the Bankruptcy process.

We further offer services to ensure that debtors with a Confirmed Plan continue to make their required post-petition payments to our clients, and routinely file motions to enforce those payment obligations through the procedures available in our Bankruptcy Courts. In the event that the debtor is surrendering the secured property, we take every step to ensure a quick and cost-effective solution for our clients in obtaining an Order from the Court removing the Bankruptcy Automatic Stay, so that the foreclosure process can continue without unnecessary delay and expense.

In conjunction with our Foreclosure and Eviction Departments, Just Law Office's Bankruptcy representation allows our Mortgage clients to be well-represented in all aspects of default servicing in Idaho.

DEFICIENCY ACTIONS

Within 90 days after the foreclosure sale, suit may be brought for a deficiency judgment, initiated by filing a complaint which sets forth the entire amount of indebtedness secured by the original deed of trust, including interest and foreclosure fees and costs, and the fair market value of the property at the time of sale. Judgment may not exceed the difference between the entire amount of the debt and the fair market value of the property at the time of sale. Costs and reasonable attorneys' fees incurred pursuing a deficiency judgment are recoverable. [Faber v. Howell, 721 P.2d 731 (Idaho Ct.App. 1986)]. Fair market value at the time of sale is an evidentiary question to be determined by the court. [See Idaho Code § 45-1512] The successful bid at foreclosure sale is not conclusive of fair market value.

RECONVEYANCE OF A DEED OF TRUST

Upon payment of the obligation, and upon written request of the beneficiary to the trustee, the trustee shall cause to be reconveyed, by written document, the subject deed of trust. This document shall be recorded in the county in which the deed of trust was originally recorded. There are no time requirements. However, there is a penalty provision contained in the mortgage satisfaction statutes that indicates the same shall be accomplished immediately. The custom and practice in the state of Idaho is to accomplish reconveyance within 30 to 60 days from receipt of the promissory note indicating payment and the request of the beneficiary to reconvey. [See Idaho Code §§ 45-1514 and 45-915]

MOBILE HOME ACTIONS

OBTAINING TITLE TO A MANUFACTURED HOME AFTER FORECLOSURE

When a lender is not secured in a manufactured home, a complaint is filed alleging theories of quiet title, declaratory judgment, equitable lien, etc. A deficiency judgment can be satisfied by levying on the home. Prior lien holders' interests must be considered.

A lender that is properly secured in the manufactured home may, upon foreclosure, file an Affidavit of Repossession and an Affidavit of Indemnification with the Idaho Department of Transportation. Both of these documents may be obtained from the Idaho Department of Transportation.

Once a new motor vehicle title is issued in the lender's name, the home can be sold as personal property, or it can be "converted" into real property by recording that title along with a Statement of Intent to Declare Manufacture Home as Real Property, pursuant to Idaho Code § 63-304. The county assessor will verify the home's vehicle identification number, ensure that it is affixed to a permanent foundation, update the county's tax records, and arrange to have the motor vehicle title cancelled.

EVICTION

(EJECTMENT) FROM A MANUFACTURED HOME NOT INCLUDED IN TRUSTEE'S DEED

If the lender does not want to acquire title to the manufactured home (process outlined above), a complaint is filed alleging that the occupant and the personal property home are trespassing on the lender's property, and seeking an order authorizing the home's removal.

Excess Foreclosure Sale Proceeds/Surplus Monies:

Junior Liens:

A person or entity holding a lien, which is inferior, or junior, to another lien on the same property, has the same right(s) to redeem the property from the superior lien holder as the property owner. In addition, the junior lien holder has the right to be subrogated to the benefits of the superior lien, as required to protect his interests upon satisfaction of the debt secured by the property. [See Idaho Code § 45-114]

Late Charges: No statutory requirement.

Manufactured Housing/Mobile Homes:
See Chapter One (Idaho) regarding mobile homes/manufactured homes.

Notice Of Default/Acceleration Requirements:
No statutory requirement.

NSF Fees: Idaho Code § 28-22-105 provides statutory guidelines for the collections of dishonored checks. In general, whenever a check has been dishonored and has not been paid within 15 days, if the holder of such check sends notice of dishonor to the drawer by certified mail at his last known address, the drawer of such check shall be liable for payment of interest at the rate of 12 percent per annum, from the date of dishonor, and costs of collection not to exceed $20 or the face amount of the check, whichever is less. If the holder of the dishonored check has the right to collect a set fee under a written agreement, or has notified the drawer by a posted notice at the point of sale that the drawer will be required to pay a set collection fee if the check is dishonored, the holder is not required to give the notice of dishonor as provided in Idaho Code § 28-22-106. Attorneys' fees incurred in collecting a dishonored check may be awarded by the court, provided the statutory notice of dishonor is appropriately given. The provisions of Idaho Code § 28-22-105 do not apply to any check that has been dishonored by reason of any justifiable stop payment order.

Additionally, Idaho Code § 1-2301A provides a significant penalty for makers of NSF checks. Under that section, in a small claims court action brought to collect on a dishonored check the plaintiff may recover 1) the face amount of the check and 2) the greater of $100 or three times the face amount of the check (up to a limit of $500 additional damages). To be entitled to this additional damage award, the plaintiff/holder of the check must send by certified mail to the maker of the check, 10 days before filing the small claims court action, a written demand for payment of the check, including a notice to that maker of these damages being sought under Idaho Code § 1-2301A.

Property & Preservation:
Not applicable.

Servicing Transfers:
A mortgage company must provide notice of servicing transfers to another person within 15 days after the date of sale or assignment of the note if the mortgage company does not retain the loan servicing. The purchasing mortgage company must provide a written statement of its escrow policies to the borrower within 30 days of the sale. [See Idaho Code § 26-2809]

Tax Sale Procedures:
Idaho Code § 63-1001 et seq. governs the county's right to a tax deed for failure of a landowner to pay real property taxes. Idaho Code § 63-1001 provides that "any delinquency shall have the force and effect of a sale to the county tax collector as grantee in trust for the county." The county's ownership in trust of the affected property ripens into a fee simple title upon the county's complying with the statutory provisions described herein. If taxes on real property remain unpaid for three years, the county must follow the following procedure in order to obtain title through a tax deed:

  • Send written notice of the delinquency to record owners and parties in interest of record (and parties in interest who have made appropriate demand for notice, as explained below). This notice must be sent by certified mail no less than two months and no more than five months before the time the tax deed is to issue.
  • If that notice is returned undelivered and the owner or party in interest cannot be located, then a summary of the notice must be published in the appropriate newspaper weekly for four consecutive weeks - not less than 14 days nor more than two months before the time the tax deed is to issue. The contents of that published summary are mandated by Idaho Code § 63-1005(4).

  • The county must record an Affidavit of Compliance with these statutory
    requirements before a tax deed can be issued.

Idaho Code § 63-1005(6) provides that "actual notice" that issuance of a tax deed is pending is sufficient notice whether or not the county has strictly complied with the notice provisions described above.

A hearing is held before the County Commission. If the record owners and parties in interest fail to appear at that hearing, the county tax collector, without further notice, is directed to issue a tax deed in favor of the county. A record of the proceedings is kept, and an aggrieved owner or party in interest may petition the district court for a review of that decision within 30 days of receipt of the final decision of the commission. That review is conducted by the court without a jury and is limited to the record in the county commission's minutes.

Redemption rights: A record owner or party in interest may redeem the property up to one year from the date of issuance of the tax deed to the county - provided that this redemption right expires at the earlier of:

  • One year from the date of issuance of the tax deed to the county; or
  • When the county transfers the property to a third party by
    county deed or enters into a contract to sell the property.


Idaho Code § 63-1011 provides that "no action shall be maintained" to contest a delinquency, assessment, issuance of a tax deed, or sale of any property taken by the county for unpaid taxes, after the third party purchaser has paid the taxes on the parcel for one year.

Subject to the foregoing limited redemption rights, a county tax deed conveys title in fee simple absolute, "free of all encumbrances except mortgages of record" whose holders have not received statutory notice of the tax seizure proceedings (including, presumably, actual notice, as provided above). Lenders may protect their interest by filing with the county tax collector (i.e. the county treasurer, not the county recorder) a request for notice of such delinquency. This notice [see Idaho Code § 63-1005(5)] must contain the following information:

  • The name and address of the record owner(s);
  • An accurate description of the subject real property or, alternatively,
    the county's tax number of the parcel;
  • The name and address of the party in interest;
  • An accurate description of the interest held;
  • The date of expiration of that interest.


Lenders and their counsel would be well advised to file this request for notice with the county treasurer as a matter of course.

Taxes: Property tax bills in Idaho are issued in November. Taxes may be paid in two equal installments on or before December 20 of that year and June 20 of the following year. The penalty for delinquent payment is 2 percent for each installment plus 1 percent per month. Payments are first applied to any outstanding delinquency. If taxes are three or more years' delinquent, the property may be deeded after notice of delinquency to the county by tax deed.

There is no discount for early payment. Idaho offers an exemption (reduction) for residents of owner-occupied properties and a Circuit Breaker discount for residents 60 or over, disabled persons, and widows and widowers who meet income qualifications.

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