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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 acres 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, 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]
FORECLOSURE BY NOTICE AND SALE
The average time to complete a non-judicial foreclosure is 150 days.
Upon default, the beneficiary of a deed of trust sends a letter
by certified mail to the grantor (trustor) giving notice of default
and demand for performance of the trust obligation(s) in default.
After the time for cure as required in the deed of trust has expired,
a foreclosure report is ordered. A Notice of Default is recorded
in the recorder’s office of the county where the property
is situated, as well as a Resignation of Trustee and Appointment
of Successor Trustee if applicable. A copy of this notice must be
sent by registered or certified mail, return receipt requested,
to any person who has recorded a request for notice. A Notice of
Sale, which is to be held in the county wherein the property is
situated, must be sent by registered or certified mail, return receipt
requested, to the grantor, any successor in interest, and any person
having a lien or interest which is subordinate to the deed of trust
(i.e. instituted subsequent to the formation of the deed of trust),
at least 120 days prior to the date set for the sale. The Notice
of Sale must also be published in a newspaper of general circulation
in the county in which the property is situated, once a week, for
four successive weeks, with the last date of publication no less
than 30 days prior to the date of sale.
When the real property subject to a foreclosure action is occupied,
at least three good faith attempts must be made to serve the Notice
of Sale, on different days, during a seven-day period, on an adult
occupant of the real property. These attempts at service must be
made no less than 30 days prior to the date of sale, and must be
made in the same manner as a summons would be served. If service
is not completed, or if the occupant served is not one of the persons
who is required to receive notice by registered or certified mail,
a copy of the Notice of Sale must be posted conspicuously on the
real property, at the time of each such attempt. Affidavits of service
by mail, publication, and personal service or posting must be recorded
no less than 20 days prior to sale.
The grantor of the deed of trust, or any successor in interest to
any part of the trust property, or any beneficiary under a subordinate
deed of trust, or any person having a subordinate lien or encumbrance
of record thereon, has a statutory right to cure the default within
115 days of the recording of the Notice of Default by paying to
the beneficiary the entire amount due under the terms of the note,
(other than such portion of the principal as would not then be due
had no default occurred), including all costs and expenses incurred
by the beneficiary in preserving and protecting the property and
the beneficiary’s interest in said property, as well as all
costs of foreclosure, according to the terms of the deed of trust,
and attorneys’ fees as may be provided in the promissory note.
Upon cure of default, a notice rescinding the Notice of Default
is recorded in the county recorder’s office in the county
wherein the real property is situated. The deed of trust remains
in full force and effect.
A trustee’s sale may be postponed up to 30 days at the request
of the beneficiary, and a rescheduled sale may also be postponed.
[See Idaho Code § 45-1506(8)] A trustee’s sale may also
be stayed, by order of a court of competent jurisdiction, or upon
automatic stay under the United States Bankruptcy Code [11 U.S.C.
362]. The trustee’s sale may be rescheduled and conducted
once the stay has expired or been terminated. Notice of the rescheduled
sale must be given no less than 30 days prior to the rescheduled
sale date by registered or certified mail, to the last known address
of all persons who were entitled to notice by mail of the original
sale. Notice of the sale must be given to any person who has recorded
a request for such notice of sale, no less than 45 days prior to
the date of rescheduled sale, in the manner as is required in I.C.
§ 45-1511, but the requirement of recording such a request
prior to notice of default is waived in this instance only. Notice
of the rescheduled sale must be published in the newspaper(s) used
for original publication, once a week, for three successive weeks,
with the last publication no less than 10 days prior to the date
of the rescheduled sale. In addition, the trustee must prepare an
affidavit stating he complied with the above-described notice requirements
for the rescheduled sale. The trustee must make this affidavit available
for inspection at the time of the rescheduled sale, as well as any
affidavits regarding mailing and posting, if such were required,
which were not of record as required in Idaho Code § 45-1506(7)
when the stay of sale became effective. Finally, these affidavits
must be attached thereto or incorporated into the trustee’s
deed. [See Idaho Code § 45-1506A]
The beneficiary of the deed of trust has the option of allowing
cure up to the date of sale. If no timely cure occurs, or no cure
is accepted, the property will proceed to foreclosure pursuant to
trustee’s sale. The beneficiary typically enters a credit
bid, which may include all of the fees and costs incurred in protecting
the beneficiary’s interest in the property, and in the foreclosure
proceedings, as provided in the deed of trust. Upon payment of the
bid amount, the trustee shall issue a trustee’s deed to the
purchaser.
The trustee’s deed conveys to the purchaser all of the interest
which the grantor had, or had the power to convey, at the time of
execution of the deed of trust, together with any interest the grantor
or his successors in interest acquired after the execution of such
trust deed. [See Idaho Code § 45-1506(10)] The sale of the
property at trustee’s sale terminates all interest in the
property covered by the deed of trust of all persons to whom notice
was given as required, and of any other person making a claim through
such persons. [See Idaho Code §§ 45-1508 and 45-1510]
The purchaser of the property is entitled to possession of the property
after the tenth day following the trustee’s sale. Any person
remaining on the premises of said property, except a person whose
interest predates the deed of trust, shall be deemed a tenant at
sufferance. [See Idaho Code § 45-1506(11)]
EVICTION SYNOPSIS
Ten days after the foreclosure process is completed, the grantee
of the trustee’s deed (purchaser) may proceed with an eviction
of any person remaining in possession of the property by filing
a complaint seeking a writ of assistance. The complaint must be
served upon the person(s) in possession, who then has a right to
make an appearance, file an answer denying the purchaser right to
possession, and proceed to trial on the matter. If the court rules
in favor of the purchaser, a writ of assistance is issued directing
the sheriff to place the holder of the deed of trust in possession
of the premises. Damages may also be obtained along with attorneys’
fees and costs.
In rare circumstances, an action for eviction under unlawful detainer
statutes may be used to obtain an accelerated trial. [See Idaho
Code § 6-303, et. seq.] Three days’ written notice must
be given to the tenant prior to initiating court action, which includes
a statement of the default and what is required to cure the default.
If the default is not cured within three days, a complaint may be
filed and a hearing held within 12 days. The complaint and notice
of trial setting must be served immediately upon the tenant. No
damages may be sought in this accelerated court action. However,
a subsequent suit may be brought to recover damages incurred in
pursuing the original unlawful detainer action. Proceedings based
on unlawful detainer are not common after foreclosure sale. [See
also Noble v. Harris, 33 Idaho 401, 195 P. 543 (1921) and Coe v.
Bennett, 39 Idaho 176, 226 P. 736 (1924)]
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.
ESCROW ADMINISTRATION
Mortgage companies must conspicuously disclose to borrowers
all contractual provisions relating to the administration of escrow
accounts. A mortgage company shall not keep more than 120 percent
of the amount necessary on an annual basis to pay expected insurance,
taxes or other agreed charges. Within 30 days of written notice
by the borrower, the mortgage lender must refund any excess amounts
or provide an explanation as to why the excess amounts are believed
to be necessary.
The Director of the Department of Finance may order the lender to
reduce its reserves for such accounts. The burden of proof that
escrows are not excessive is borne by the lender. [See Idaho Code
§ 26-2807]. There is no statutory provision in Idaho regarding
payment of interest on escrow funds. Further, the lender must provide
a cumulative annual statement during January, without charge. The
statement must provide the unpaid balance, date and amount of all
payments, escrow receipts and disbursements, and any tax penalties
or interest paid from the borrower’s escrow account. Borrowers
are also entitled to additional statements for a fee, which shall
be delivered to the borrower within 30 days after receipt of written
request for said statement. [See Idaho Code § 26-2808]
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:
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