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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

Idaho

Deed of trust may be used for any property that meets one of the following criteria: (i)&nbsp;located within an incorporated city or village at the time of transfer, or (ii)&nbsp;not exceeding 80 acres, regardless of location, that is not used principally for agricultural production of crops, livestock, dairy, or aquatic goods, or (iii)&nbsp;40 acres or less in area regardless of use or location. Otherwise, a mortgage must be used. If a deed of trust is used for property that does not meet one of the required criteria, a court will likely construe the deed of trust as a mortgage.

SECURITY INSTRUMENT USED

Notary acknowledgment required. In 2017, Idaho adopted the Revised Uniform Law on Notarial Acts, IC &sect;&sect;&nbsp;51-101 et seq.

RECORDING REQUIREMENTS

STATUTES TO BE WAIVED

UNUSUAL TREATMENT OF STANDARD PROVISIONS

Security instruments may secure future advances, but priority depends on mandatory vs. optional nature of the advance.

SECURING FUTURE ADVANCES

Advances necessary to protect the collateral (which may include the payment of taxes and insurance) are secured by the security instrument.

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL

Trustee of the deed of trust must be a member of the Idaho State Bar, any bank or savings and loan association authorized to do business under the laws of Idaho or the U.S., any trust institution chartered under Idaho or U.S. law, or any licensed title insurance agent or title insurance company authorized to transact business under the laws of the state of Idaho.

CORPORATE OR INDIVIDUAL

No residency required for the trustee.

RESIDENCY REQUIREMENT

Nonjudicial foreclosure of deeds of trust may be accomplished by notice, advertisement, and sale, which may be followed by a judicial proceeding to obtain a deficiency. Deeds of trust may also be foreclosed judicially. Mortgages must be foreclosed by judicial foreclosure proceedings.

BRIEF DESCRIPTION OF PROCEDURE

Nonjudicial foreclosure requires a minimum of 120 days after recording the notice of default. Judicial foreclosure typically requires 150 days, if uncontested.

TYPICAL LENGTH OF PROCEDURE

The foreclosing lienor is allowed to credit bid, which may be offered by 1 bid in writing conveyed to the trustee. The bid in nonjudicial foreclosure is generally the lesser of the fair market value of the property or the amount of the debt foreclosed. A 2013 case (Phillips v. Blazier-Henry, 154 Idaho 724, 730, 320 P.3d 349, 355 (2013)) held that in a judicial foreclosure, gross inadequacy of price, standing alone, does not provide grounds for setting aside a sheriff's sale; there must be some irregularity in the sale or other slight additional circumstance in addition to gross inadequacy of price to set aside the sale. REINSTATEMENT:&nbsp;A deed of trust may be&nbsp;reinstated by&nbsp;the grantor or any beneficiary under a subordinate deed of trust or any person having a subordinate lien or encumbrance of record any time within 115 days of the recording of the notice of default or at any time prior to the entry of a decree of foreclosure by paying to the beneficiary the entire amount then due under the terms of the deed of trust and the obligation secured thereby (including costs and expenses actually incurred in enforcing the terms of such obligation, a reasonable trustee's fee, and attorney's fees as may be provided in the promissory note) other than such portion of the principal as would not then be due had no default occurred, and thereby curing the default. Upon such payment the deed of trust is reinstated and shall be and remain in force and effect, the same as if no acceleration had occurred. ONE-ACTION RULE: Idaho has a one-action rule applicable to both mortgages and deeds of trust (IC &sect;&sect;&nbsp;6-101 and 45-1503, respectively). In general, a lender may not sue the borrower for collection of the secured obligation without first foreclosing on the real property collateral, unless the lender's lien in such collateral is “substantially valueless.” However, IC &sect;&nbsp;6-101 sets out numerous types of proceedings that are not “actions” and therefore do not violate the one-action rule. These proceedings include bringing actions in other states to foreclose on other real and personal property collateral, foreclosing on personal property collateral in Idaho, suing for the appointment of a receiver,&nbsp;enforcing an assignment of rents.&nbsp;

FORECLOSURE BID REQUIREMENTS

No redemption is available following nonjudicial foreclosure. After judicial foreclosure the redemption period is 1 year for property greater than 20 acres, or 6 months for property 20 acres or less. The redemption price includes the bid amount (but only attorneys' fees actually paid or unconditionally obligated to be paid), interest at the judgment rate, taxes, and other assessments. If the foreclosure purchaser is also a creditor who has a prior lien to that of the redemptioner, other than the judgment under which the foreclosure sale was conducted, the amount of such lien with interest at the judgment rate is included in the redemption price.

REDEMPTION PERIOD AND PRICE

Waiver of the equity of redemption is thought to be available if granted by agreement after default. As elsewhere, the farther into the foreclosure process waiver is granted, the more likely it is to be enforced.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

Actions for deficiency must be filed within 3 months after trustee's sale on a deed of trust. Deficiency judgment may be collected for 5 years from the date of judgment up to the judicially approved amount. The deficiency amount is set by judicial hearing following foreclosure sale, in the amount of the difference between the amount of the debt and the greater of (a)&nbsp;the fair market value (for deeds of trust) or the reasonable value (for mortgages) and (b)&nbsp;the amount bid at foreclosure sale. A lender must be able to support its claim of deficiency. This is typically done with an appraisal of the property. In a judicial foreclosure, a lender must specifically request that the court determine the reasonable value of the mortgage property in the decree of foreclosure.

DEFICIENCIES

Subordinate leases foreclosed upon notice in nonjudicial foreclosure or inclusion in judicial foreclosure.

EFFECT OF FORECLOSURE ON LEASES

Since September&nbsp;1, 2011, with respect to foreclosure of a deed of trust encumbering a borrower's residence, along with a notice of default, the lender must provide the borrower: a notice of the potential ramifications of foreclosure; a statement that the borrower can contact the lender about potential loan modification programs; and a form the borrower may use to request a loan modification. The lender must respond to a request for modification within 45 days and may not proceed to a foreclosure sale until it has done so. When a foreclosure sale has been postponed, a written notice of the rescheduled foreclosure sale must be mailed to the borrower at least 14 days before the rescheduled sale is conducted. The legislation also prohibits the collection of loan modification fees unless the person charging the fee is licensed or exempted from licensing by Idaho law. Property encumbered by a materialman's lien may be unencumbered by posting a bond in lieu of the property, and the substitution of a bond for the property lien does not affect the relative rights of lien creditors. A 2013 Idaho Supreme Court case (Am. Bank v. Wadsworth Golf Constr. Co. of the Sw., 155 Idaho 186, 192, 307 P.3d 1212, 1218 (2013)) held that a lien release bond is merely a substitute security for the real property and does not affect the priorities of interested parties in the real property collateral, so a lien claimant whose subordinate lien is released by a lien release bond is only entitled from the bond to the amount that the lien holder could have recovered against the real property in a foreclosure action. Deed of trust trustee is an indispensable part to a materialmen's lien foreclosure action. A recent court decision (Sims v. ACI Northwest, Inc., 342 P.3d 618 (Idaho 2015)) held that failure of a materialmen's lienholder to name the trustee of a deed of trust encumbering the liened property in the lien foreclosure action within the 6-month materialmen's lien foreclosure period set forth in IC &sect;&nbsp;45-510 resulted in unenforceability of the materialmen's lien.

RECENT CHANGES RESULTING FROM FORECLOSURE LITIGATION

Parties may contract for any rate of finance charge.

USURY CEILING

USURY EXEMPTIONS

Financing statements for a security interest in timber to be cut, as-extracted collateral, or fixtures are filed in the county real estate records. Otherwise, financing statements are filed with the secretary of state. Financing statements to perfect a security interest in collateral of a transmitting utility (including fixtures) are also filed with the secretary of state. A UCC-1F form must be filed to perfect a security interest in farm products, and must be “signed, authorized or otherwise authenticated” by the debtor.

LOCATIONS FOR FILING

Security instruments are acceptable as filings for fixtures, as-extracted collateral, or timber to be cut when the (i)&nbsp;security instrument indicates the goods or accounts it covers; (ii)&nbsp;the goods are or are to become fixtures related to the described real estate or are as-extracted collateral or timber to be cut related to such real property; (iii)&nbsp;the security instrument complies with the requirements for a financing statement other than the recital that it is to be filed in the real estate records; and (iv)&nbsp;the security instrument is duly recorded.

SECURITY INSTRUMENT USED AS FIXTURE FILING

Accommodation parties on a note secured by a security instrument may have a defense similar to the principal obligor, limiting recovery for a deficiency as described under the explanation of deficiencies. This defense is probably not available to guarantors who are not makers on the secured debt.

UNUSUAL PROVISIONS OR REQUIREMENTS

Although courts have held that IC&nbsp;&sect;&sect;&nbsp;6-108 and 45-1512, which provide for limitation on deficiency judgments against makers of the note secured by a deed of trust or a mortgage, do not apply to guarantors, they are typically waived in the guaranty.

Guaranties are generally enforceable according to their terms.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY

A suit to enforce a guaranty may be commenced against the guarantor prior to foreclosure as the courts have held that the one form of action rule does not apply to actions against a guarantor who is not a grantor of the security instrument. The courts have also held that the antideficiency statutes for mortgages and trust deeds do not apply to guarantors.

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING JUDGMENTS AGAINST A GUARANTOR

Foreclosure must be commenced within 5 years from the date of default of the secured obligation, or within 5 years of any stated maturity date contained in the mortgage or deed of trust. There is no requirement to state in the deed of trust or mortgage the maturity of the secured obligation.

STATUTE OF LIMITATIONS PERIOD

The release must be acknowledged or certified and recorded. Following satisfaction of a mortgage, the mortgagor must immediately upon demand of the mortgagor or property purchaser execute, acknowledge, and deliver a certificate of the discharge or record a satisfaction of mortgage. Penalty for non-compliance is “all damages” suffered and $100. IC &sect;&nbsp;45-915. Deeds of trust are reconveyed by trustee pursuant to beneficiary's request, and the consequences for failure to reconvey upon written request following satisfaction are the same as for refusal to execute a discharge or satisfaction of mortgage. IC &sect;&nbsp;45-1514.

REQUIREMENTS FOR RELEASE OF LIEN

Every person has an automatic homestead exemption in his or her principal residence up to&nbsp;the lesser of&nbsp;$125,000&nbsp;or fifty percent (50%) of the market value for assessment purposes of the homestead. If the owner is married, the homestead may consist of the community or jointly owned property of the spouses or the separate property of either spouse.&nbsp;A homestead exemption will not take priority over a consensual lien.&nbsp;

HOMESTEAD ISSUES

&nbsp;Idaho is a community property state, which means that both spouses have a presumptive community property interest in real property owned by either of them, whether or not both spouses' names appear on title.&nbsp;Therefore, if taking real property collateral from a married person, both spouses should sign the mortgage or deed of trust, whether or not both spouses' names appear on title. If the property is titled in the name of one spouse as his or her sole and separate property, and the parties object to requiring the non-owning spouse to sign the lien instrument, the lender should require the non-owning spouse to execute a quitclaim deed in favor of the owning spouse, such quitclaim deed to be recorded immediately following the deed of trust or mortgage. This&nbsp;procedure is effective to divest community property rights, but probably not homestead rights, so if the real property in question is the spouses' principal residence, both spouses should execute the security instrument.&nbsp;

COMMUNITY PROPERTY

MORTGAGE TAX

DOCUMENTARY STAMP TAX

TRANSFER TAX

Enforcement of choice of law provisions is potentially available, depending on relevant contacts as provided by the Restatement&nbsp;(2d) of Conflicts of Law.

ENFORCEABILITY OF AGREEMENTS AS TO CHOICE OF LAW

Appointment of receiver is available in mortgage foreclosure and during pendency of nonjudicial foreclosure proceedings on deeds of trust, if property is in danger of being lost, removed, or materially injured or the conditions of the mortgage have not been performed and the property is probably insufficient to discharge the debt, or the real property is in danger of substantial waste or the income therefrom is in danger of being lost. (IC&nbsp;8-601, 8-601A).

RECEIVERSHIP

A loan broker may not receive a fee until the loan is made or a commitment is issued by a lender who is exempt from the loan broker law.

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

&nbsp;No license is required outside of consumer or residential lending transactions. A&nbsp;Mortgage Broker/Lender License&nbsp;is required&nbsp;for&nbsp;any&nbsp;company or sole proprietors,&nbsp;unless exempt,&nbsp;regardless of location, conducting direct or indirect mortgage origination activity on residential property located in Idaho.&nbsp;A&nbsp;Mortgage Loan Originator License&nbsp;is required of any natural persons conducting residential mortgage origination activities in Idaho on behalf of a mortgage broker or mortgage lender from locations licensed to conduct activity in Idaho.&nbsp;A&nbsp;Regulated Lender License&nbsp;is required&nbsp;for&nbsp;any person, unless exempt, regardless of location, making regulated consumer loans; or taking assignments of and undertaking direct collection of payments from or enforcement of rights against debtors arising from regulated consumer loans.&nbsp;Exempt persons include federal or state-chartered banks, savings and loans, credit unions, and industrial loan companies. The Idaho Department of Finance in Guidance Statement 2020-05-CFB has interpreted the Idaho Mortgage Practices Act (Idaho Code &sect;&sect; 26-31-101 et. seq.)(“IMPA”) to require licensure when a lender is making a loan to a borrower that is a natural person, directly and not through a licensed mortgage broker, and the loan is secured by real property currently improved with, or using the loan proceeds to be improved with, 1-4 family housing units (regardless of whether the loan is characterized for consumer or commercial purposes). The Department's position is also that if a lender makes a loan to a borrower secured by more than one dwelling (i.e., 2 or more 1-4 family unit structures), the lender is not making a residential mortgage loan and is not required to be licensed under the IMPA.

LENDER QUALIFICATION AND/OR LICENSURE

If the maturity date for a loan secured by a deed of trust or mortgage is being extended and the deed of trust or mortgage states the maturity date of the secured obligation, a modification document should be recorded with the extended maturity date so that the statute of limitations does not run from the original maturity date.

MODIFICATION

Idaho law establishes the same lien procedures for the enforcement of commercial hazardous waste disposal fees and for the assessment and collection of amounts due thereunder that it does for its income tax liens. Thus, the lien applies to and covers all real and personal property. The lien is subject to pre-existing liens and must be properly recorded in order to have priority over subsequent liens.

ENVIRONMENTAL LIEN LAW ISSUES

Idaho does not have any local bar opinion reports.

LEGAL OPINIONS

<ol>
 <li> INCEPTION OF LIEN (Priority of Lien of Deed of Trust or Mortgage): Such liens have priority over any lien, mortgage, or other encumbrance that may have attached subsequent to the time when the lien claimant's involvement with the building, improvement, or structure was commenced, work done, or materials or professional services were commenced to be furnished. The same result occurs in the event that the lien, mortgage, etc. is not perfected prior to commencement of the lien claimant's work or delivery. Each lien claimant has a separate priority date based on the date when the lien claimant began to work or furnish materials. As a result, it is possible for some lien claimants to have priority over the lien of a deed of trust and some lien claimants to be subordinate to the lien of the deed of trust.</li>
</ol> A November 13, 2014, Idaho Supreme Court decision (Hap Taylor & Sons, Inc. v. Summerwind Partners, LLC, 338 P.3d 1204, 1211 (Idaho 2014)) interpreted the relevant statute to mean that the priority date for the materialmen's lien of an engineer providing professional services is the date the engineer commenced to furnish any authorized professional services under contract regardless of where the services were rendered (in that case, services were rendered under a professional services agreement in the engineer's office prior to entry on the project site); no visible evidence of the work on the site is required. No notice of commencement is required. On 1-4-family residential construction, general contractor must provide disclosure to owner of potential lien rights, and must provide the owner with a list of the names, addresses, and telephone numbers of all subcontractors, materialmen, and rental equipment providers who have supplied materials or performed work on the residential property of a value in excess of $500. The list of subcontractors must be provided within a reasonable time prior to closing on a purchase or final payment to the general contractor. IC &sect;&nbsp;45-07 provides that lien claimant must deliver notice of claim of lien to the owner or reputed owner not later than 5 business days following filing of the claim of lien. The “owner or reputed owner” does not include a trustee of a deed of trust. <ol start="510">
 <li> PRIORITY AS TO REMOVABLE FIXTURES (Priority of Lien of Deed of Trust or Mortgage): A perfected security interest in fixtures has priority over the conflicting interest of an encumbrancer or owner where (a)&nbsp;the security interest is a purchase money security interest, the interest of the encumbrancer or owner arises before the goods become fixtures, the security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter, and the debtor has an interest of record in the real estate or is in possession of the real estate; or (b)&nbsp;the security interest is perfected by a fixture filing before the interest of the encumbrancer or owner is of record, the security interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the debtor has an interest of record in the real estate or is in possession of the real estate; or (c)&nbsp;the fixtures are readily removable factory or office machines, readily removable equipment that is not primarily used or leased for use in the operation of the real property, or readily removable replacements of domestic appliances that are consumer goods, and before the goods become fixtures the security interest is perfected by any method permitted by Article&nbsp;9; or (d)&nbsp;the conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by Article&nbsp;9; or (e)&nbsp;the security interest is created in a manufactured home in a manufactured home transaction and is perfected pursuant to IC&nbsp;&sect;&nbsp;49-510.</li>
</ol>

LABOR AND MATERIALMEN'S LIEN CLAIMS—PRIORITY ISSUES

ALTA Extended Coverage Lenders policies (for both residential and commercial properties).

FORM USUALLY REQUIRED BY LENDER

available endorsements are dependent upon the title company having filed the endorsement with the Idaho Department of Insurance. Commonly requested endorsements include: Restrictions, Easements and Agreements&nbsp;endorsements&nbsp;(ALTA 9&nbsp;Series)&nbsp;ALTA 9.1 - CC&Rs Unimproved Land; ALTA 9.2 - CC&Rs Improved Land; ALTA 9.3 - CC&Rs Loan Policy; ALTA 9.6.1 - Private Rights - Current Assessments; ALTA 9.7 - REM Land Under Development (Loan); ALTA 9.8 - CC&Rs Land Under Development (Owner's); ALTA 9.10 - REM Current Violations.

ENDORSEMENTS AVAILABLE

(ALTA&nbsp;22) insuring the type of improvement and street address. (Not available until completion of construction, for obvious reasons.)

Location endorsement

(ALTA&nbsp;8.1) insuring against any recorded liens and the existence at the time the policy is issued of any state statutes providing for “super priority” of environmental liens. (Not available on commercial loans, and does not insure against passage of such laws subsequent to the date of the policy.)

Limited environmental risks endorsement

(ALTA&nbsp;6 or 6.2) insuring against loss of priority on variable rate interest or negative accrual loans. Future advance priority&nbsp;endorsement&nbsp;(ALTA 14) insuring against&nbsp;loss or damage arising out of the invalidity, unenforceability, or lack of priority due to provisions that allow for future advances of principal, including re-advances, a variable interest rate, interest on interest, or the addition of unpaid interest to the principal.&nbsp;

Interest rate endorsement

(ALTA 32 paired with ALTA 33) insuring against construction liens and providing incremental coverage for construction loan advances.

Construction loan incremental coverage endorsements

(ALTA 25/CLTA 116.1) insuring against loss or damage by reason of the failure of the insured description to be the same as that identified on a specified survey.

Same as Survey endorsement

(ALTA 18/18.1) insuring against loss or damage by reason of the described property being taxed as part of a larger parcel (end. 18 - single parcel) or the described property not being assessed under the listed parcel numbers (end. 18.1 - multiple parcel).

Single/Multiple Tax Parcel endorsement

(19 multiple parcels/19.1 single parcel) insuring against loss or damage by reason of the failure of the boundary line of the described property to be contiguous to specified parcels or the presence of gaps, strips or gores separating the boundary lines of described properties.

Contiguity endorsement

(3/3.1/3.2) insuring against loss or damage by reason of the described property not being zoned as indicated.

Zoning endorsement

(17/17.1) insuring against loss or damage if the Land does not have actual vehicular and pedestrian access to a public street. &nbsp;

Idaho

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for Idaho

Idaho

Mortgage Law Summary

Continue reading theMortgage Law Summary for Idaho

Continue reading the
Mortgage Law Summary for Idaho