August 1, 2013
by Jeffrey R. Christenson
Ringert Law Chartered – USFN Member (Idaho)
Idaho Community Property Law (which includes Idaho Code Sec. 32-912) requires that both spouses sign an encumbrance of the community property. The case summarized here involved a judicial foreclosure action brought by a second creditor.
In New Phase Investments, LLC v. Jarvis, 153 Idaho 207, 280 P.3d 710 (Idaho 2012), the first creditor claimed priority even though the borrower’s wife did not join in the execution of a first-recorded deed of trust in favor of the first creditor. The second creditor filed a foreclosure action on a subsequent deed of trust that secured the property. Summary judgment was granted to the second creditor at the trial court level.
The Idaho Supreme Court reversed, holding summary judgment should not have been granted to the second creditor because Idaho Code § 32-912 was enacted for the protection of the community, not a third-party creditor of the community. The benefit of § 32-912 was only intended to flow to the non-signing spouse, and it was only that spouse who could ask a court to declare an attempted transfer void under § 32-912. Therefore, the first creditor’s deed of trust was valid, and it had priority under Idaho law.
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