In ParkWest Homes, LLC v. Barnson (Feb. 4, 2013) (ParkWest II), the Idaho Supreme Court affirmed the district court’s ruling that where a property encumbered by a mechanics lien is not brought to foreclosure against an interested party within six months of the filing of the lien, the court cannot enforce the lien against that unnamed party, and the lien claim will fail as to that party. In ParkWest I (2010), the Idaho Supreme Court had previously held that ParkWest’s lien on the property was valid as against the buyer and the deed of trust holder.
After the Court’s decision in ParkWest I, the encumbered property was transferred to a third party (“Residential”) via a trustee’s sale from the original trustee. However, the trustee had not been named in the original foreclosure action, and was therefore not a party to raise the legal issue to the district court or Supreme Court in those prior proceedings. Residential intervened in the action after gaining title, and filed a motion for summary judgment, seeking dismissal on the grounds that the mechanics lien was void because ParkWest failed to comply with Idaho Code § 45-510 (failing to file foreclosure within six months).
The district court dismissed the original deed holder from the action, as it no longer held an interest in the property, and granted Residential summary judgment. The Court explained that since Idaho is a title theory state, and a deed of trust is a title-passing procedure, legal title to the property passes to the trustee, and it is a necessary party to the foreclosure action for any party against which the mechanics lien is to be enforced. Since ParkWest had not filed an action within six months of the filing of the mechanics lien against the trustee who held an interest in the property – the predecessors-in-interest of Residential – the Court ruled that Residential took the property free and clear of ParkWest’s lien on the property.