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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:

     
 
  • 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.

Release of a Mortgage or Deed of Trust Upon Satisfaction

In your state, what is the maximum time allowed by statute to accomplish
a release of a mortgage or deed of trust on residential real property?

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]

     
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