Case Law Student Guide 2013

Commission Core 2013
Course Approval #: C2013
CASE LAW
Learning Objectives By the end of this module you will be able to: Describe the effects of a free look provision in a real estate purchase agreement Contrast a deed reserving geothermal resources to a deed reserving mineral rights Summarize the elements for setting aside an Idaho sheriffs sale Identify the parties who can void a real estate transaction involving community property Define a purchase money mortgage Identify the elements which determine the priority of two recorded purchase money mortgages Differentiate between compensable and non-compensable property rights in a condemnation action Define a constructive trust and recall when a court may apply this remedy Explain when the equitable remedy of rescission can and cannot be obtained
Student Guide
Idaho Real Estate Commission Rev. 07/01/2013
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Buku Properties LLC v. Clark 2013 Opinion No. 39 (February 2013) Idaho Supreme Court http://www.isc.idaho.gov/opinions/buku38561.pdf Summary Out of Jefferson County (East Idaho) Buku Properties, LLC (Buyer) entered into two land sale contracts to buy adjacent properties, one owned by the Clarks and the other by the Petersons (both Sellers). Buyer put down $327,000 in earnest money for the property owned by the Clarks and $25,000 for the piece owned by the Petersons. Both contracts provided that all but $10,000 of the earnest money was refundable until closing and that Buyer had a 4 month window to be fully satisfied with the condition of the property. Buyer became concerned about the impact of a possible Jefferson County zoning change that would negatively impact the value of the property. Within the 4 month window, Buyer asked for an extension to resolve the zoning issue, and Sellers refused. Buyer elected to cancel the contract and demanded refund of both earnest monies over $10,000, Sellers refused. Buyer sued for return of earnest money and district court granted summary judgment in favor of Buyer. Sellers appealed.
Supreme Court Holding The Supreme Court affirmed. The Court stated that the language in the Buyers Obligation Clause permitting the Buyer to be fully satisfied with the condition of the property was a type of free look provision permitting the Buyer to walk away from the sale. The Court construed Buyers request to extend the review period as an exercise of Buyers right to refuse to close. Therefore, Buyer was entitled to a refund of its earnest money (all but the $10,000) under each of the contracts.
Practical Application Buyers may wish to consider putting free look provisions in real estate purchase agreements where there are large earnest money deposits or potential issues with the property. Sellers who accept contracts with these clauses should understand that the buyer is free to walk on the deal, and that the buyers unconditional right to walk is enforceable. However, large earnest money deposits may be an invitation to litigate, even if the contract language is clear and unambiguous, as the Court found here. You should advise the buyers and sellers to seek legal counsel before submitting or accepting any offer with a free look provision, and also whenever a buyer attempts to exercise the free look and walk away.
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Ida-Therm, LLC v. Bedrock Geothermal, LLC 2012 Opinion No. 147 (December 20, 2012) Idaho Supreme Court
http://www.isc.idaho.gov/opinions/idatherm39108.pdf Summary Out of Bonneville County (East Idaho) In 1946, the Bells (Grantor) conveyed a piece of property near Grays Lake to the Manns (Grantee), reserving all the oil, gas, and minerals, in, on, or under the surface. Geothermal resources were discovered on the property and Grantors successors leased the same to Bedrock Geothermal, LLC. Grantees successors leased the same geothermal resources to Ida-Therm, LLC. Ida-Therm filed a declaratory action to determine the rightful owner of the geothermal resources. The District Court found that the deed clause concerning subsurface rights was unambiguous and encompassed the geothermal resources. Ida-Therm appealed to the Idaho Supreme Court.
Supreme Court Holding The Idaho Supreme Court reversed, holding the term minerals - and whether it included geothermal resources - was ambiguous: geothermal resources have value separable from the soil, but it is unclear if they have an easily recognizable, definite chemical composition; they are not crystalline solids, yet are exploited for commercial value; and while some Idaho statutes recognize geothermal resources as minerals, others do not. After deciding that the mineral reservation in the Deed was ambiguous, the Court set out to interpret its meaning. The Court agreed with the district judge there was no extrinsic (parol) evidence to indicate the grantors original intent. The Court resorted to the rule of construction applicable to ambiguous reservations in deeds: in general, the court views grants in a deed expansively and reservations restrictively, so where there is any uncertainty or ambiguity in the language used, the grantee should have the benefit of the doubt or the ambiguity. Applying that rule here, the Supreme Court construed the grant in favor of the Bell Property Owners (the grantees) and held as a matter of law that the geothermal resources were appurtenant to the property, and were not included as mineral rights reserved to the Reservation Owners (the Grantors). Accordingly, Ida-Therm, not Bedrock, was the rightful lessee of the geothermal resources.
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Practical Application A Deed's reservation of mineral rights does not necessarily include geothermal resources. Reservations and exceptions in deeds are narrowly construed, and generally construed against the grantor. Consequently, an intent to reserve all subsurface rights should be clearly and unambiguously expressed in the deed, or else risk being unenforceable.
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Phillips v. Blazier-Henry 2013 Opinion No. 45 (April 11, 2013) Idaho Supreme Court
http://www.isc.idaho.gov/opinions/38666SUB.pdf Summary Out of Bonner County (North Idaho) Carole Blazier-Henry (Borrower) had signed a series of promissory notes with Chance (Lender). The notes were secured by a deed of trust on a piece of real property owned by Borrower. Borrower failed to make payments and Lender filed suit to foreclose or, in the alternative, for award of a money judgment. Borrower failed to respond and Lender elected to take a default money judgment for $72,667, plus late fees and interest (instead of pursuing the foreclosure), and then levied on the property to satisfy the judgment. A sheriffs sale was scheduled to satisfy the levy. On the day of the sale, Lenders attorney failed to appear, incorrectly assuming, that the sheriff would enter a credit bid on behalf of her client for the amount of the judgment. Jacobson, an unrelated third party, was the successful bidder and purchased the property at the sheriffs sale for $1,000. When notified the property had sold for only $1,000, Lender filed a motion in district court to have the sale set aside on the grounds of gross inadequacy of consideration. The district court granted the motion. Jacobson brought this appeal.
Supreme Court Holding The Idaho Supreme Court reversed, holding that gross inadequacy of price, alone, does not provide grounds to set aside a sheriffs sale. Inadequate price must be coupled with some slight additional circumstance, such as an irregularity in the sale to void the sale. No such circumstance or irregularity was established here. The Court advised that, absent instructions, a sheriff is not obligated to enter a credit bid on behalf of a judgment creditor at a sheriffs sale. Chances misunderstanding of the law on this point did not constitute additional circumstance that warrant setting aside a sheriffs sale. On the contrary, the additional circumstance involved this case weighed against Chance, the judgment creditor: Chance failed to take action to protect her own interests, first by failing to submit a bid, and then by failing to take appropriate timely action to try to redeem the property.
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Practical Application A low bid, even if a grossly inadequate price, is not sufficient grounds to set-aside a sheriffs sale without accompanying circumstances favoring setting aside the sale. Such circumstances may include irregularity in the sale, but a creditor's mistake of law, or the failure to take action to protect its rights, does not constitute such circumstance. Sheriffs sale practices can vary from county to county. Interested parties and their representatives should determine what those practice are and they may wish to consult an informed expert. Do not assume the sheriffs office will automatically enter a credit bid on behalf of the judgment creditor. Absent instructions, a sheriffs office has no obligation to - and probably should not - enter a credit bid.
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New Phase Investments LLC v. Jarvis 2012 Opinion No. 101( June 29, 2012) Idaho Supreme Court
http://www.isc.idaho.gov/opinions/newphase38447.pdf Summary Out of Idaho Falls, Bonneville County (East Idaho) Joshua and Rebecca Jarvis were married in 2006. In 2008, Joshua Jarvis (Jarvis) purchased a piece of ground as his sole and separate property to build a spec home. But, given the marriage, it was community property. In order to build the spec house, Jarvis took out two sets of construction loans, both secured by the property. The first loan, which was not signed by his wife, was obtained through Snake River Funding, LLC and assigned to DAFCO, LLC (DAFCO). The DAFCO deed of trust was recorded first. The second set of loans was through New Phase Investments, LLC. New Phase filed a second deed of trust. The Jarvises then defaulted on all of the loans. In the foreclosure action that followed, DAFCO argued that it should have first priority because its Deed of Trust was recorded first. New Phase argued that it should have first priority because the DAFCO Deed of Trust was not signed by the wife, as required by Idaho Code 32-912 which specifies that both a husband and wife must sign an instrument encumbering their community property. The district court held that the DAFCO Deed of Trust was void. DAFCO appealed.
Supreme Court Holding The Supreme Court overturned the district court. The Supreme Court held that Idaho Code 32912 was designed to protect non-signing spouses, not to protect creditors. Therefore, while a spouse can void a real estate document that such spouse did not sign, third parties cannot.
Practical Application Only the non-signing spouse can void real estate transactions involving community property. Third parties cannot.
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Insight LLC v. Gunter 2013 Opinion No. 48 (April 16, 2013) Idaho Supreme Court http://www.isc.idaho.gov/opinions/gunterSUB.pdf
Summary Out of Bonner County (North Idaho) Summit, Inc. (Buyer) owned a 142-acre parcel and the Gunters (Seller) owned an adjoining 18-acre plot. Buyer agreed to purchase the Gunters parcel for $799,000 cash. Instead of proffering the cash, Buyer contacted Independent Mortgage Ltd. Co. (Lender) to obtain a loan for the purchase price. Lender agreed to loan $616,000 but only if Buyer gave both parcels as security for the IM Mortgage. Buyer, without disclosing the IM Mortgage, advised the Seller it could not come up with the entire purchase price and asked them to finance $200,000. The Seller agreed. Buyer asked the escrow company (EasyWay) to prepare a deed of trust for them (Sellers Deed of Trust). Buyer signed the Lenders Mortgage on June 19, 2006 at IMs office. Later that day, Buyer signed the Sellers Deed of Trust at EasyWays office. Both sets of documents were delivered to Sandpoint Title for recording. Per IMs instructions, the Lenders Mortgage was recorded first at 4:17 p.m. and the Sellers Deed of Trust second at 4:18 p.m. Buyer defaulted on its obligations to both Lender and Seller. The ensuing litigation concerned which lien had priority on the Sellers 18 acres. The district court decided that the Sellers Deed of Trust had priority, even though it was recorded second. The court found that the IM Mortgage was not a purchase money mortgage because the Lender knew about the Sellers Deed of Trust and therefore lacked good faith required under the recording statute. Lender appealed.
Supreme Court Holding Supreme Court overruled the district court on appeal. The Court held the IM Mortgage was a purchase money mortgage and that because it was the prior conveyance and first recorded, IM had the superior lien. The Court began its analysis referring to the applicable statutes. Idaho Code 45-112 provides that a purchase money mortgage has priority over all other liens created against the purchaser, subject to the operation of the recording laws. Idahos recording laws provide that Every conveyance of real property . . . is void as against any subsequent purchaser or mortgagee of the same property, or any part thereof, in good faith and for valuable consideration, whose conveyance is first duly recorded. I.C. 55-812. Idaho Real Estate Commission Rev. 07/01/2013
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The IM Mortgage was a Purchase Money Mortgage The Court held the IM Mortgage was a purchase money mortgage. First, the mortgage was given to enable the purchase of the property: the money was given to the escrow agent handling the sale (EasyWay), and it was given after IM examined the property to be purchased. Second, the IM Mortgage and Gunters Deed of Trust were part of the same transaction. Even though each closed at different times and different locations, both were intended to be part of a single transaction. The Court noted that under Idaho law, a land sale transaction concludes upon delivery of the deed. Here, before the deed was delivered to Summit, the proceeds and documents for both mortgages were delivered to the escrow and title company. The Court also noted that nothing in the law prevents more than one purchase money mortgage, and held that IM Mortgage and the Gunters Deed of Trust both were purchase money mortgages for purposes of the priority statutes.
Third, and deciding the issue for the first time in Idaho, the Court ruled IMs taking of additional security (i.e., the 142 acres owned by Summit in addition to the 18 acres being deeded) did not destroy the purchase money status of IMs mortgage. The Court emphasized that the loan was primarily intended to enable Summit to purchase the property, and therefore it was a purchase money mortgage. IMs Mortgage has priority under the Recording Statute Where both mortgages were purchase money mortgages, priority must be determined by operation of the recording laws. Under the recording statute, a subsequent conveyance voids a prior conveyance only if (1) the subsequent conveyance was made in good faith, i.e., without notice, and (2) the subsequent conveyance is the first duly recorded. Idaho law defines conveyance as the instrument in writing by which any estate or interest in real property is created, alienated, mortgaged or encumbered. I.C. 55-813. A conveyance does not depend upon when it is recorded. Here, the IM Mortgage was executed first and therefore was the prior conveyance. The Summit deed of trust, executed later that same day, was the subsequent conveyance. As the subsequent conveyance, the Gunters Deed of Trust could not take priority unless it was recorded first. It was not recorded first, and therefore, the Gunters Deed of Trust was junior to the IM Mortgage. The Court made a special effort to explain that knowledge of an actual and existing encumbrance is required to defeat a partys good faith status, and that knowledge of an intent to encumber is not knowledge of an actual encumbrance. Accordingly, a prior conveyance is necessarily made without knowledge of the subsequent conveyances, and for that reason, good faith regarding the prior conveyance is irrelevant.
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Practical Application Idaho is a race-notice-recording state (the first to record without actual notice of prior existing encumbrances gets priority). The time of execution and recording are therefore critical. Here, had Summit signed (executed) IMs Mortgage earlier in the day, and signed the Gunters Deed of Trust afterwards. If these documents had been signed in reverse order, IM would have had notice, and therefore lacked good faith to claim priority under the recording statute. Parties and stakeholders should be aware of any escrow instructions regarding the order in which instruments in the transaction are to be created and recorded and should submit their own instructions when seller financing is contemplated.
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First Federal Savings Bank of Twin Falls v. Riedesel Engineering, Inc. 2012 Opinion No. 120 (September 14, 2012) Idaho Supreme Court http://www.isc.idaho.gov/opinions/correction%20copy.pdf
Summary Out of Twin Falls County (Magic Valley) Riedesel Engineering, Inc. (Claimant) was hired by and performed engineering services for a developer of a subdivision in Twin Falls County. Claimant also filed a mechanics lien against the property. Claimants lien had a priority date earlier than Lenders. The developer then granted First Federal Savings Bank (Lender) mortgages in the property to secure promissory notes, which Lender duly recorded. When the developer went out of business, Lender brought an action to foreclose, naming the developer and Claimant. Claimant counterclaimed, asserting that its mechanics lien had priority. The district court found in favor of the Claimant. Lender appealed.
Supreme Court Holding The Supreme Court reversed, holding that the Claimants lien was invalid because it was not properly verified in accordance with the requirements of the mechanics lien statute. To be valid and enforceable, a mechanics lien must comply with the requirement of I.C. 4507(4) that the claim of lien be verified by the oath of the claimant, his agent or attorney, to the effect that the affiant believes the same to be just. This requirement is met by a formal declaration made in the presence of an authorized officer, such a as a notary. Here, the notary block recited only that the notary had witnessed the claimants signature; it did not state that the claimant was sworn before the notary. The Court held that Claimants recital at the beginning of the claim, I [Claimant], being first duly sworn, depose and say . . . failed to substantially comply with the oath requirement, because it did not state that Claimant was sworn by a person authorized to administer oaths. Absent a statement that the Claimant was sworn and by a person authorized to administer oaths, the lien claim failed to satisfy statutes requirements, and was invalid.
Practical Application The Court requires strict compliance with the requirement that the lien claim demonstrate the claimant was sworn by a person authorized to administer oaths. Many notary blocks do contain sufficient verbiage, such as subscribed and sworn to by me this __ day. . . . However, if the notary purports only to witness the claimants signature, the lien claim will be deemed Idaho Real Estate Commission Rev. 07/01/2013
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invalid under this case. Also, it is not merely the recital that is required; the notary is actually required to take the oath. Thus, if the claim is signed on a date other than the date the claim is notarized (which would demonstrate the oath was not given in the presence of the official), the lien claim could be held invalid.
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State of Idaho v. HI Boise, LLC 2012 Opinion No. 141 (November 19, 2012) Idaho Supreme Court http://www.isc.idaho.gov/opinions/38344-CORR.pdf
Summary Out of Boise, Ada County (Treasure Valley) Dispute between the Idaho Transportation Department (Plaintiff) and HI Boise, LLC (Defendant), the owner of a Holiday Inn at the junction of Interstate 84 & Vista. Plaintiff rebuilt the adjacent freeway interchange, added lanes, modified ramps and added a 20-foot sound wall. The Defendants main access was from Vista but there were two other entrances. On the Defendants property, Plaintiff condemned a narrow strip for a new bike lane & sidewalk but essentially left the main access alone. Plaintiff offered $38,177 based upon an appraisal. Defendant refused that offer. Plaintiff filed a condemnation action and Defendant counterclaimed for $7.1 to $7.5 million on a theory of inverse condemnation, specifically that the project backed up traffic past the Defendants main access and the Holiday Inn was less visible because of the sound wall. On summary judgment, the district court dismissed Defendants access and visibility claims, holding that damages due to mere changes in traffic flow are non-compensable, and that Idaho law provides no property right to continued visibility. Defendant appealed.
Supreme Court Holding No property right in the continued flow of traffic The Supreme Court affirmed the district court. The Court began by noting that access to an adjacent public street is a long-recognized right incident to land ownership. However, because an owners right of street access is subservient to the primary rights of the public to travel on the streets, the government may, in the exercise of its police powers, regulate that right. Therefore, no compensable taking occurs where the right of access is not destroyed or substantially impaired, so long as the remaining access is reasonable. Moreover, the right of access does not include the right to any particular pattern of traffic flow. Thus, government action that merely results in a change in traffic flow, requiring traffic to reach a property by a more circuitous route, does not amount to a taking. Therefore, because HI Boise retained reasonable access to its property - even if by a more circuitous route - no compensable taking occurred.
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Although there was contemporaneous physical the taking - i.e., the narrow strip to build the bike lane - that taking was not the cause of the limitation of access, and therefore does not change the analysis. No property right to visibility The Court also refused to recognize a property right to continued visibility of the property. The court explained that, given a property owner does not have a property right in traffic flow around his property, he cannot assert a property right in that same traffics ability to see his property. Citing a noted property law treatise, the Court explained that the right to visibility is denied, principally on the theory that one has no control over his neighbors property and therefore could not prevent his neighbor, under most principals of property law, from erection barriers to prevent his right to be seen. Therefore, a taking by a public authority takes nothing from him.
Practical Application Property ownership does not include a right to continued traffic flow along propertys adjacent public road, and does not include a right to continued visibility to the public. Where a contemporaneous physical property taking is not the cause of the decreased traffic or lost visibility, such losses are not compensable as severance damages.
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Snider v. Arnold 2012 Opinion No. 136 (November 15, 2012) Idaho Supreme Court http://www.isc.idaho.gov/opinions/snider38572.pdf
Summary Out of Valley County (West Idaho) Ron Arnold (Brother) and Toni Snider (Sister) are siblings, and both are married. Brothers and Sisters father built a cabin on land permitted to him by the U.S. Forest Service. He left the cabin to his wife (Mother) in his will. In 1983, Mother signed a permit transfer form naming both Brother and Sister as owners. Bu, a new Forest Services directive limited permits to a single person or married couple. The permit was accordingly issued only in the Brothers (and spouse) name. For the next 20 years, both couples shared the use and expenses of the cabin. In 2009, the personal dynamic changed and the Brother told Sister that it was solely his and his wifes property. Sister sued for a declaratory judgment and the district court found that Brother held the property in a constructive trust with half ownership by the Sister. Brother appealed.
Supreme Court Holding Affirming the district court judgment, the Idaho Supreme Court reiterated the elements of a constructive trust: a constructive trust arises when legal title to property has been obtained through actual fraud, misrepresentations, concealments, taking advantage of ones necessities, or under circumstances otherwise rendering it unconscionable for the holder of legal title to retain beneficial interest in property. Imposition of a constructive trust is an equitable remedy and does not require that the holder of legal title intend to create a trust interest in another. Rather, a constructive trust arises from the legal title holders wrongful actions and not from any intent to create a trust. The Supreme Court noted that the district court imposed a constructive trust after finding that (1) Bette intended to give the cabin and permit to both the Sniders and the Arnolds and (2) Ron took advantage of his confidential relationship with his sister Toni by representing to her that the permit would be in his name, but both couples would jointly own it. Concluding that these findings were supported by the evidence at trial, the Supreme Court affirmed. The Supreme Court distinguished resulting trusts, which require an agreement to create a trust, from a constructive trust found by the court here. No agreement is required for a constructive trust.
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Practical Application A constructive trust is an equitable remedy and may be available to an otherwise rightful owner where the legal title to the property is obtained through wrongful conduct, such as dishonest acts, taking advantage of a relationship of trust, or other circumstances that make it unconscionable for the wrong-doer to keep the property for himself. A constructive trust differs from a resulting trust; a constructive trust does not require the wrong-doer/legal title owner to agree to create the trust.
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Bolognese v. Forte 2012 Opinion No. 141 (November 19, 2012) Idaho Supreme Court http://www.isc.idaho.gov/opinions/38472bologneseopinion.pdf
Summary Out of Kootenai County (North Idaho) The Bologneses (Buyer), who lived in Las Vegas, purchased an older cabin on the shore of Hayden Lake from the Fortes (Seller) in October 2005. In August 2006 year, Buyers adult daughter moved from Florida to live in the house, intending to stay indefinitely. She moved out 11 months later due to various issues with the house, including freezing pipes and cold floors. About a year after purchasing the house, Buyer hired a contractor to see if the garage could be enlarged. The contractor discovered several issues, including the fact that some of the previous improvements had been made without the proper building permits. These issues had not been disclosed on the Sellers property disclosure. In October 2007, Buyer sued Seller seeking damages for violation of the Disclosure Act, misrepresentation, and breach of contract. In the alternative, Buyer asked that the real estate contract be rescinded. The case went to trial before a jury on the Buyers claims, and the jury found against the Buyer on all claims. The district court separately ruled that the Buyer was not entitled to have the contract rescinded. Buyer appealed.
Supreme Court Holding The Supreme Court affirmed the district court decision not to grant rescission of the contract. Since the jury had returned a verdict against the Buyers on each of their three claims: (1) violation of the Disclosure Act, (2) misrepresentation, and (3) breach of contract, a rescission could not be predicated on those claims. The Buyers also asked the Court to grant rescission based on a mutual mistake of fact theory. However, the Court rejected this argument because Buyers did not assert it in their Complaint.
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Practical Application Rescission is an equitable remedy. To obtain rescission, a buyer needs to prove there is no adequate remedy at law, meaning money damages will not make the buyer whole. If requesting rescission under the Property Condition Disclosure Act, a buyer should request rescission within the three-day period provided by the Act. If asserting a claim of mutual mistake of fact, the contract will only be rescinded if the mistake is so substantial and fundamental so as to defeat the object of that party. If the judge will decide the issue of rescission separately from other claims tried to the jury, a buyer should be prepared to offer the court additional evidence related to the issue of rescission.
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related to the issue of rescission. Idaho Real Estate Commission Rev. 07/01/2013
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Other Cases of Interest Liens Kinghorn v. Clay (2012 Supreme Court Opinion No. 117) (August 9, 2012) http://www.isc.idaho.gov/opinions/38109CORR.pdf (although a real estate-related case with lots of interesting facts, the court does not discuss those facts or the laws that apply to them. The one issue raised on appeal, whether the defending partys attorney could pursue its attorneys fee lien, was dismissed by the Supreme Court for lack of standing/jurisdiction.) Harris v. Bank of Commerce (2013 Supreme Court Opinion No. 36) (March 29, 2013) http://www.isc.idaho.gov/opinions/39204.pdf (upon a buyers (vendees) breach of a real estate contract, the seller (vendor) has three possible remedies: (1) rescind the contract; (2) sue for balance owing on the purchase price; or (3) sue for damages measured by the difference between the contract price and market value of the property at the time of breach, unless the contract provides otherwise. These remedies are mutually inconsistent. Although a seller can bring an action seeking alternative inconsistent remedies, he cannot obtain judgments for inconsistent remedies; that is, he cannot obtain judgments that both affirm the sale of the property and rescind the sale. Where sellers previous judgment against the buyers for the balance owing on the purchase price - a judgment that was based on the legal theory that the property was validly transferred to buyers sellers could not pursue a claim against the bank on the theory that the sale buyers should be rescinded or was void.) ParkWest Homes, LLC v. Residential Real Estate Holdings, LLC (2013 Supreme Court Opinion No. 50) (April 18, 2013) http://www.isc.idaho.gov/opinions/38919SUB.pdf (in a foreclosure action, a lienor seeking to enforce a mechanics lien against property encumbered by a deed of trust must name the trustee of the deed of trust within the period required by statute (Idaho Code 45-510) in order to give effect to the mechanics lien against subsequent holders of legal title. A parties failure to comply with the statutory requirement divests the court of jurisdiction to enforce the lien.) Indian Springs, LLC v. Andersen (2012 Supreme Court Opinion No. 119) (September 14, 2012) http://www.isc.idaho.gov/opinions/indian38369.pdf (following mortgage foreclosure sale, former owners, who had continued in possession of property and operated its recreational facility until ejected, brought action against purchasers to receive compensation for unjust enrichment. Rejecting former owners arguments, the Court held that, in context of a mortgage foreclosure sale, the benefit conferred to the purchaser must occur after the foreclosure sale, and former owners failed to demonstrate improvements occurred after the sale. The Court also rejected arguments that were based on continuing to operate a recreational facility on the property, which arguably conferred a valuable benefit. However, because they had operated the business for their own benefit, any benefit conferred to purchaser was incidental, and former owners were not entitled to compensation. Dealing with a second issue of assignment, the Court held that the Assignee of a mortgage is liable only for the obligations assumed under the contract of Assignment. Because Assignee did not assume any obligations of any kind, Court refused to hold Assignee liable for any claims against the original mortgage holder.)
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Actions to Quiet Title - Statute of Limitations Peterson v. Gentillon (2013 Supreme Court Opinion No. 30) (February 26, 2013) http://www.isc.idaho.gov/opinions/peterson38878.pdf (addressing the issue for the first time in this quiet title action, the Supreme Court held that the five-year statute of limitations for actions arising from contract (Idaho Code 5-216) does not apply to bar a claimant who has purchased real property, and is in possession of that property, from asserting a claim for specific performance. A claim for specific performance does not begin to run until that possession has been interrupted.)
Easements & Rights of Way Trunnell v. Lomu (2012 Supreme Court Opinion No. 83) (May 31, 2012) http://www.isc.idaho.gov/opinions/tru37984.pdf (the Court holds that the defense of bona fide purchaser for value is inapplicable to extinguish a public roadway; the only avenues through which a validly created public roadway may be extinguished are set forth in Idaho Code 40203, which establishes the exclusive avenues through which a public right of way may be abandoned.) Paddison Scenic Properties, Family Trust, L.C. v. Idaho County (2012 Supreme Court Opinion No. 76) (May 25, 2012) http://www.isc.idaho.gov/opinions/padd38154.pdf (collecting and discussing the development of common law dedication of public roadways, but ultimately dismissing the case for lack of justiciable controversy.) Capstar Radio Operating Company v. Lawrence (2012 Supreme Court Opinion No. 80) (May 29, 2012) http://www.isc.idaho.gov/opinions/cap38300.pdf (discussing elements for finding an easement by implication, easement by necessity, and prescriptive easement.) Ruddy-Lamarca v. Dalton Gardens Irr. Dist., (2012 Supreme Court Opinion No. 150 (December 2012) http://www.isc.idaho.gov/opinions/ruddy39217.pdf (the scope of an otherwise undefined express easement for a ditch is determined by its initial use; initial use for this purpose does not include all area occupied during the construction of the easement, but is limited to the physical dimensions of the actual pipeline. The scope of the secondary easement, i.e., the right to enter and repair, must be reasonable, and what is reasonable may change over time.) Pioneer Irrigation District v. City of Caldwell (2012 Opinion No. 132) (Nov. 14, 2012) http://www.isc.idaho.gov/opinions/PioneerCORR.pdf (irrigation easements, ditch-owners right to self help to remove encroachment.) Machado v. Ryan (2012 Opinion 102) (June 29, 2012) http://www.isc.idaho.gov/opinions/machado37888.pdf (in this action to establish easement for access to newly constructed home and for snow removal, the Court discusses necessary elements to establish claims of express easement; implied easement by necessity; easement implied by Idaho Real Estate Commission Rev. 07/01/2013
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prior use; and easement by prescription. Rejecting claim for express easement, Court held that language in a deed providing the conveyance is subject to easements of record, does not in itself reserve an easement; such language is not evidence of a grantors intent to reserve or except an easement, but merely an attempt to create an exception to the grantors warranties of title and quiet enjoyment and thereby limit the grantors potential liability.)
Construction of Deeds Marek v. Lawrence, (2012 Supreme Court Opinion No. 81) (May 30, 2012) http://www.isc.idaho.gov/opinions/mar38827.pdf (the district court erred in holding that the legal description in the deed was unambiguous as to the parties intent as to the location of the boundary, and further erred in considering extrinsic evidence (affidavit testimony and surveys) of where the parties believed that boundary to be. Either the deed is unambiguous, in which case no extrinsic evidence is necessary, or the parties intent is not clear from the deed, in which case the deed is ambiguous and the parties intent becomes a question for the trier of fact. The record on appeal was not sufficient to determine which was true here, and case was sent back to the district judge for further proceedings.)
Sale of Commercial Real Estate - Equitable Remedies Clayson v. Zebe (2012 Supreme Court Opinion No. 107) (July 2, 2012) http://www.isc.idaho.gov/opinions/clayson38471.pdf (Plaintiff made substantial improvements to a restaurant property before and after contracting to purchase it. He did not close, but assigned his rights to defendant, who did purchase the property. Plaintiff sued defendant to recover his costs of improvements. Although there was no express agreement between the parties, the court found the parties conduct gave rise to an implied in fact contract for repayment, and awarded plaintiff damages.)
Commercial Leases Boise Mode, LLC v. Donahoe Pace & Partners, Ltd. (2013 Supreme Court Opinion No. 10) (January 10, 2013) http://www.isc.idaho.gov/opinions/boiseFIX.pdf (where commercial lease unambiguously provided that tenant may not withhold for any reason the payment of rent, and conditioned its right to quiet enjoyment of the property upon keeping rent payments current, tenant could not maintain action for constructive eviction unless it was current with its rent.)
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Land Use - Government Takings Buckskin Properties, Inc. v. Valley County (2012 Supreme Court Opinion No. 38) (March 29, 2013) http://www.isc.idaho.gov/opinions/38830.pdf (holding that a government board may lawfully enter an agreement with a land developer for the funding and construction of a new infrastructure; where developer enters such agreement, it cannot thereafter recover damages for regulatory taking.)
Enforcement of Contract to Sell Property Tapadeera, LLC v. Knowlton (2012 Supreme Court Opinion No. 98) (June 29, 2012) http://www.isc.idaho.gov/opinions/tapadeera38498.pdf (Owners failure to subdivide its property in accordance with County ordinance did not render the contract to sell a parcel an illegal contract. Although the County had and would continue to recognize property only as a single parcel, and would deny permits to further develop it, the Countys ordinance does not prohibit the sale of the property.)
Agricultural Exemption for Property Tax Thompson Development, LLC v. Idaho Board of Tax Appeals (2012 Supreme Court Opinion No. 135) (November 15, 2012) http://www.isc.idaho.gov/opinions/thompson39265.pdf (whether agricultural use of real property in Moscow City would violate citys zoning ordinance was irrelevant to propertys qualification for the agricultural exemption from property taxes.)
Accrual of Buyers Legal Malpractice Claim Against Their Real Estate Attorney Reynolds v. Trout Jones Gledhill Fuhrman, P.A. (2013 Supreme Court Opinion No. 7) (January 23, 2013) http://www.isc.idaho.gov/opinions/38933fix.pdf (Buyers brought a legal malpractice action against their attorney, seeking to recover for Sellers failure to refund earnest money paid by Buyers under negligently drafted real estate agreement. Held: the applicable statute of limitation began to run at time seller refused Buyers demand for refund, not when district court entered judgment holding seller liable for the refund, and thus the action was time-barred.)
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Abuse of Process Based in Improper Use of Lis Pendens Berkshire Investments, LLC v. Taylor (2012 Supreme Court No. 86) (June 1, 2012) http://www.isc.idaho.gov/opinions/Berkshire%20Opinion.pdf (in this third appeal arising from a 2002 real estate sale transaction, the Supreme Court upheld the award of damages against attorney Thomas Maille based on claims of abuse of process and intentional interference with a prospective economic advantage. After losing the case, twice, Maille continued to litigate and also filed a lis pendens, both for an improper purpose. Court noted the proper purpose of a lis pendens is to provide constructive notice to third parties that an action affecting title to real property is pending, as authorized by Idaho Code 5-505. It is not properly used as some kind of lien to ensure payment; recording a lis pendens as leverage to demand money, property, or some advantage may provide the basis for an abuse of process claim.)
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Commission Core 2013

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Idaho Real Estate Commission Rev. 07/01/2013

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