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Questions

How are trust deeds or mortgage liens treated in Idaho?
How are Idaho mortgages/deeds of trust foreclosed?
What are the legal instruments that establish a Idaho mortgage?
How long does it take to foreclose a property in Idaho?
Is there a right of redemption in Idaho?
Are deficiency judgments permitted in Idaho?
What statutes govern Idaho foreclosures?

Answers

How are trust deeds or mortgage liens treated in Idaho?

Idaho primarily operates as a title theory state where the property title remains in trust until payment in full occurs for the underlying loan. Foreclosure is a non-judicial remedy under this theory. The document that secures the title is usually called a deed of trust. Idaho law also permits mortgages to serve as liens upon real property and for judicial foreclosures to occur through the courts. Because the power of sale provisions in deeds of trust is a faster mechanism to effectuate foreclosure, this is the primary vehicle to foreclose. judicial foreclosures are usually used when no power of sale language is contained in the loan documents and the use of such a mechanism gives rise to certain redemption rights.

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How are Idaho mortgages/deeds of trust foreclosed?

The primary method of foreclosure in Idaho involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly called foreclosure by advertisement. When the trust deed is initially signed, it will usually contain a provision called a power of sale clause, which upon default allows a trustee to sell the property in order to satisfy the underlying defaulted loan. The trustee acts as a representative of the lender to effectuate the sale, which typically occurs in the form of an auction. Because this is a non-judicial remedy, there are very stringent notice requirements and the legal documents are required to contain the power of sale language in order to use this type of foreclosure method. A deed of trust may be used if the size of the property is 40 acres or less or the subject property is located within an incorporated city or other municipality at the time of the sale transfer.


Foreclosure By Notice of Sale Notice Requirements:

  1. Prior to initiating a foreclosure, the lender must record a notice of default in the county in which the property is located and the defaulting borrower must be personally served with such notice at least 120 days before the sale date. A copy of the notice of default must be published date at least 4 consecutive weeks in a newspaper of general circulation in the county in which the property is located with the last notice published at least 30 days before the proposed sale.
  2. When the property being foreclosed upon is occupied at least three (3) good faith attempts must be made to serve the Notice of Sale on different days during a seven (7) day period on the adult occupants of the property. These service attempts must be made at least 30 days before the date of the sale.
  3. Foreclosure sales must take place on a day other at the time, place and date designated in the notice of sale as part of a public auction. The trustee will auction the property to the highest bidder. The foreclosure sale may be postponed for 30 days from the original sale date if at least 20 days written notice is provided to the original recipient of the notice of default.

In Idaho, the lenders can also go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. If the deed of trust does not contain the power of sale language, or if the property is more than 40 acres, the lender must usually seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

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What are the legal instruments that establish a Idaho mortgage?

The documents are known as the deed of trust, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, a mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

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How long does it take to foreclose a property in Idaho?

Depending on the timing of the various required notices, it usually takes approximately 150 days to effectuate an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and postponements of sales, or files for bankruptcy.

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Is there a right of redemption in Idaho?

Idaho has no post-sale statutory right of redemption for non-judicial foreclosures, which would allow a party whose property has been foreclosed to reclaim that property. Default can be cured within 115 days of the recording of the Notice of Default. This will stop the foreclosure proceeding and require that all defaulted sums and costs be paid.

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Are deficiency judgments permitted in Idaho?

Yes, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage or deed of trust secures. Deficiency actions must be brought within 90 days after the foreclosure sale. Judgment cannot exceed the difference between the amount of the debt and the fair market value of the property. Costs and fees in filing the deficiency can also be recovered.

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What statutes govern Idaho foreclosures?

The laws that govern Idaho foreclosures are found in Title 45 Idaho Statutes (Liens, Mortgages and Pledges, Chapter 15 Trust Deeds) Section 45-1503 et. seq. Laws related to the postponement of foreclosure sales are found in Section 45-1506B.
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