Presidents Report

JT_JacobsenDear ILTA Members,
On February 13th and 14th ILTA held its annual education seminar in Boise. What a great event!
This year we decided to hold it a month earlier so we could add a legislative reception to the mix,
which I believe proved to be very beneficial. The idea for holding a legislative reception was derived
from the ALTA Federal Conference in Washington, D.C. last year, where we had an opportunity
to meet directly with our federal legislators. This was such a great opportunity we decided
to give the ILTA the chance to do the same thing on a state level. Much like the general public,
our state representatives typically do not have an idea of the impact our industry has in the state.
It was fun to share with them what we do and how it impacts the constituents from their respective
districts, as well as them personally. We were also able to educate them on how bills that are
coming up for vote soon will affect us all.
The two day seminar was full of great information that I was excited to bring back to my office.
Sticking to the theme of my last letter, I will give you the One thing that I found amazing. ILTA
flew in Dr. Cynthia McGovern, founder of Orange Leaf Consulting, to talk to us about reframing
the idea of “sales” and uniting everyone around organizational growth. Dr. Cindy proved to be a
very engaging speaker and lectured on the importance of getting everyone in our organizations
involved in the sales process; from title to escrow and everyone in between. She also gave us 5
common growth strategies that can help improve market share, which she referred to as the 5 R’s
(Retention, Referral, Renew, Revive and Recruit). She ended her presentation by challenging everyone
to come up with a differentiation statement as we all know we have essentially the same
product and price in the market place. We need to all look inside our companies, recognize the
things that makes us different from the next guy, and inform the customer how this will benefit
them. Simply saying you provide excellent customer service is not enough anymore, as I believe
everyone in the association does this. I challenge you all to try this exercise and see what you
come up with.
Thank you again to all who attended and made the 2017 education seminar a success. We are always
looking for ideas to make our events even more valuable and entertaining, so please send me
an email with suggestions. Have a great spring selling season and have some fun while you are at
it!!
Thank you,
J.T. Jacobsen, ILTA President

2017 ILTA Ed Seminar Recap
This year had a varied lineup of speakers to cover several areas at the forefront of our industry. Many of the
topics crossed over with other topics. Patrick Burns and Les Lake spoke about cyber security and fraud. Cyber security
issues are developing rapidly as the “bad guys” are getting more sophisticated. In the past the message was generally
review the language used. The “bad guys” use bad grammar and unusual phraseology. Unfortunately, the “bad guys”
recognized this weakness and have cleaned up their language. As such, it is more important to be extra careful when
clicking on a link even if it comes from a source that looks familiar. If you have any doubt the best defense is to call
the person who sent the message and ask if they sent you a link. Only upon confirmation should you proceed forward.
A prevention and detection plan is the best deterrent for fraud and embezzlement issues. Segregation of duties and
control over checks, assets, and records is a must. Having a positive work environment that rewards integrity and detection
is a huge deterrent. Instilling an understanding that preventing fraud is important not only to reduce losses but
is also an important process to protect honest employees and preserve jobs and paychecks.

Jeff Wiener had some interesting statistics in his presentation on trends and claims. Jeff stated that the average
age in an office is 57. This statistic dovetailed with our ALTA HOP presentation and Cindy McGovern’s presentation
that JT referred to in his President’s message. Age/generations bring into focus succession planning at the office level
but also that producers of title business are getting younger and there is a need to recognize the various generations
(millennials, generation X, baby boomers) and their differences in communication and doing business. Bringing back
the legislative reception was designed to foster grassroots with our legislators and to help educate them about title insurance
and what our industry does. Jeff advised that in a lifetime the average person pays $316,000 for health insurance
with $1.17 spent on claims for every $1.00 of premium; $100,000 for auto insurance with $0.67 spent on claims
for every $1.00; and, only $10,000 for title insurance where losses average 6%. As JT pointed out, the majority of our
legislators and the general public do not understand the uniqueness of title insurance and that the vast cost of title insurance
is incurred in title plants and search and exam costs before issuance of policy. Jeff advised that in the western
states the largest number of claims occur in closing errors followed by searching errors, boundary and survey issues,
fraud and forgery and access. However, while the number of fraud and forgery claims is further down the list in number
of claims they cover the largest in terms of $ losses. Social engineering crimes are up 1,000%. Fraudsters are posing
as lenders and title companies and requesting wire instruction changes and infiltrating systems with spyware and
targeting words like “wire instructions”. Calling to verify any change in wire instructions is a must. Perhaps simplifying
phraseology like “instructions” versus “wire instructions” may be necessary to prevent spyware targeting. Another
trick fraudsters do is purposely leave flash drives on the ground, on desks, etc. hoping someone will take the bait and
load them to see what is there, unaware that the drives are loaded with viruses.

Nancy Hughes and Lisa Steele presented ALTA HOP (Homebuyer Outreach Program) which helps to easily
communicate the benefits of title insurance. Data from interviews and surveys indicate that prospective home owners
are getting more sophisticated and researching about home ownership ahead of contacting a realtor. This is causing
some concern with realtors and lenders who don’t want us necessarily talking to buyers as they feel they will lose control
of the transaction. Nevertheless, the dynamic of buying a home is evolving and your office needs to be prepared ahead of the curve. Nancy and Lisa advised of some important factors to bear in mind in addressing the new dynamic.

It is important to try and engage with consumers as soon as possible like when they come into the office
for a form. Putting useful information on your website is also helpful. Nancy and Lisa advised that in doing so
keep in mind that that the average person has a 7 second attention span and a 7th grade reading level. Consumers
do not want to hear about the technical side of our business or that we help consumers achieve the American
Dream of home ownership. Through exhaustive research ALTA has come up with a phrase to summarize what
we do—We provide peace of mind by protecting people’s property rights. We need to project a personality
of being trustworthy, practical, and responsible. We need to have a tone of confidence that is simple, clear, and
concise. We need to shift from stating the value we provide which people equate to $ versus the benefit we provide
which people think of as what we are doing for them. The dynamic with our producers of title business was
summarized as Find (realtors), Buy (lenders), and, Protect (title companies). Nancy and Lisa also advised of the
many benefits ALTA has created for its members. Visit ALTA.org to see the multitude of marketing materials,
flyers, etc. that are available for use. These materials are available to members at no charge and can be customized
and tweaked to fit your specific name, logo, and market. ALTA can also assist in printing with low cost options.

JT provided a summary of Cindy McGovern’s’ presentation. Other tidbits to add would be that Cindy advised
the most important question to ask yourself is “What else can I do?” As touched on by Jeff, recognizing the
generation you are working with is important—i.e.. millennials like to text. If you don’t recognize how different
generations communicate you will be behind the eight ball from the start. We need to educate realtors on the
benefits we provide and we need to find out how we are doing. You should review yourself on Yelp and Glass
Door to see what comments might be made about your company. We need to survey after closing to get feedback
as well as meet internally as often as weekly to discuss how we are doing and what else can we do. Cindy offered
to help and discuss issues further and can be reached at *protected email* or (415)277-5901.

Robin Aberasturi talked about Best Practices and the need to keep updating your manual on policies and
procedures. Practices Robin touched on were having specific shredding and waste basket protocols for dealing
with personal identity information; cutting check overcharges and changing the closing disclosure and revising the
closing statement even if the lender doesn’t want to do it; maintaining separate trust accounts; and, vetting mobile
notaries to ensure they are best practice compliant. Robin also spoke about wire fraud. A practice worth considering
is a cover sheet that states in bold that we won’t email wire instructions—only verbal—and have the parties
sign acknowledgment to this practice. It is paramount that title companies address wire fraud issues as cyber
crime does not seem to be on the mind of realtors as they feel it falls to title companies. This mindset seems evident
even though the Idaho Association of Realtors has created an Idaho Fraud Notice that they are supposed to
have buyers and sellers sign that speaks to wire fraud and that no instructions will be by email.

Lastly, Cindy Guanell spoke on railroad issues. The PowerPoint is available online at
www.idaholandtitle.com. Cindy spoke about the Brandt v USA case and the 1875 act where the issue was whether
the RR grant was an easement versus fee. In Brandt the US wanted the grant deemed a fee but in an earlier case
the US argued and won determination that the grant was an easement. The Brandt case decided the US could not
have it both ways and deemed the grant an easement.

CASE REVIEW
Matt Ryden

Greetings, Members. The following is recap of Idaho Supreme Court decisions discussed at the ILTA Winter Education
Seminar.

Salladay v. Bowen, Idaho Supreme Court Docket No. 43603 (January 23, 2017)
This case involved a challenge to a Tax Deed Sale conducted by an irrigation District
Facts: The personal representative (Salladay) of an estate sold a residential property under Contract of Sale. In February
2012, the PR recorded a Memorandum of Sale, identifying the Buyer and certain material terms. In July 2014, the Caldwell
Irrigation Lateral District (CILD) issued a tax deed due to tax deficiencies. CILD gave notice of the pending sale of the Tax
Deed by publication and directly to the Buyer identified in the Memorandum of Sale. In December 2014, the Bowens purchased
the parcel through the tax deed sale.

Lawsuit: The PR brought suit to invalidate the sale on the ground that he was entitled to notice of the tax deed sale. The
District Court remanded the case to the CILD for continuation of the proceedings after proper notice to the PR.
Issues on Appeal: The Bowens appealed contending that: 1) the PR was not entitled to notice because the Memorandum of
Sale was improperly recorded; and, 2) the written notice provided to the contract Buyer was sufficient to satisfy the statutory
notice requirements.

Holding:
1) Improperly Acknowledged Memorandum of Sale Ineligible for Recording.
The Bowens contended that the Memorandum of Sale was improperly acknowledged and, therefore, ineligible for recording.
As such, they argued the instrument could not serve as a basis for a requirement to give notice to the PR.
The acknowledgement of the PR’s signature on the Memorandum of Sale read as follows: SUBSCRIBED AND SWORN
TO before me this 2nd day of February, 2012.

The court found that this endorsement (set forth in I.C. § 51-109) is intended for oaths and affirmations, not acknowledgements.
The Court held that when a party executes an instrument in his capacity as PR the form of acknowledgement for
officials and fiduciaries (set forth in I.C. § 55-713) must be used. As a result, use of the improper form of acknowledgement
in the Memorandum of Sale made it ineligible for recording under I.C. § 55-805.
As such, CILD could not be required to give notice to the PR on the basis of his appearance in the Memorandum of Sale.
As seen below, however, CILD still failed to comply with notice provisions.

2) Failure to Give Notice to the “Record Owner(s)” is a Fatal Defect.
Under I.C. § 43-716, a taxing district is not entitled to a tax deed until it meets the notice requirements set forth in I.C. § 43-
717. That section requires notice to two distinct groups: 1) the record owner(s); and 2) parties in interest of record.
The Court noted that notice to record owners is not only a matter of statute, but also necessary to satisfy constitutional requirements
of due process. Such notice enables notice and a hearing before taking property, as required by the Fourteenth
Amendment. Failure to give such notice is a “fatal defect.” In this case, the contract Buyer was the only party to receive
written notice. The court stated that, though it was unclear who the record owners were at the time the tax deed was issued,
it is clear that it was not the Buyer. Therefore, CILD did not comply with the requirement for notice to record owners and
the Tax Deed was void.

The Court also noted that, because the Memorandum of Sale was improperly recorded, the contract buyer was not a “party
in interest of record.” Thus, the only party to receive direct written notice was neither a record owner nor a party in interest.
Idaho Land Title Association Page 5

3) “Imputed” Notice to PR insufficient.
The Court rejected the Bowens claim that written notice to the Buyer imputed actual knowledge to the PR, whereby such
notice should be deemed sufficient under the language of the statute. The Court recalled existing law under which “notice
to one owner cannot constitute notice to another.” Moreover, permitting the imputation of notice would violate the constitutional
concerns noted above.

Schoorl v. Guild Mortgage Company, Idaho Supreme Court Docket No. 43902 (February 2, 2017)
This case examines the retroactivity of the July 1, 2006 revision to Idaho Code § 5-210 which increased the minimum time
for occupying adversely possessed property from five to twenty years.
Facts: At the time of the July 1, 2006 amendment of the statute, the Plaintiffs had adversely possessed a strip of land for
four years and eight months.

Lawsuit: In 2015 the Plaintiffs filed an adverse possession action to quiet title to the strip. The District Court dismissed
the Complaint on the ground that I.C. § 5-210 applied in its current form and the Plaintiffs had not possessed the property
for the minimum 20-year period.

Appeal: The Plaintiffs appealed arguing that changing the statutory period from five years to twenty years during the
course of their possession of the property amounted to an unconstitutional taking.
Holding: The Idaho Supreme Court rejected the Plaintiff’s contention that adverse possession created vested property
rights at the time the adverse possession began. Instead, the court relied on extensive Idaho Case law indicating that I.C. §
5-210 creates a vested property right only at the time the adverse possessor has complied with all the requirements of the
statute.

Since the Plaintiffs had not satisfied the requirements of § 5-210 by the time the statute was changed, it had no “vested”
right which could be prejudiced by the amendment of the statute. A party has no cause of action for adverse possession
until it has met the statutory occupancy requirement. Therefore, the Plaintiffs had no cause of action at the time of the
statutory amendment or when they brought the current case.

Union Bank v. Northern Idaho Resorts (II), Idaho Supreme Court Docket No. 42467 (January 27, 2017)
This case examined the retroactivity of a corrective deed.

Facts: Northern Idaho Resorts (“NIR”) entered into an Agreement to release its vendor’s lien on certain real property it
had sold to a developer. On March 15, 2007 NIR recorded a copy of the Agreement. The parties later realized that the
recorded version of the Agreement erroneously included two Exhibit A’s, thereby placing an “of record” release of more
parcels than intended.

In March 2008, the developer took another loan, secured by a mortgage on, among other parcels, the parcels that were erroneously
included in the recorded Agreement. In March 2009, NIR realized its mistake and re-recorded the Agreement to
remove the extra “Exhibit A.”
Lawsuit: In 2011 the lender commenced judicial foreclosure and NIR contended that, as to the initially erroneously included
parcel, its vendor’s lien had priority over the deed of trust. The District Court found that any vendor’s lien in favor of
NIR was inferior to the mortgage. NIR appealed.

Holding:
1. The “Relation Back” Doctrine Applies Only to Rights Between Parties to the Corrected Instrument.
Idaho law recognizes the “relation back” doctrine under which all rights set forth in a corrective deed are effective from the
date of the original deed. However, the doctrine applies only as to the rights between the parties to the deed. If third party
rights have intervened, as did the lender’s rights pursuant to the mortgage in this case, the relation back doctrine will not
prejudice such rights.

In this case the court maintained a bright line rule despite evidence the lender was aware of the mistake in the originally recorded
Agreement when it recorded its mortgage. The Agreement contained an obvious mistake by the inclusion of two Exhibit
A’s. Additionally, the lender was aware of NIR’s extensive history with the land project. Nevertheless, the Court
found that the lender was entitled to rely on the terms of the Agreement as they appeared in the record at the time it recorded
its mortgage.

2017 February Legislative Update
Martin Bilbao

The 2017 Idaho State Legislature is in full stride and we are roughly at the half way point of the 1st Regular Session
of the 64th Idaho Legislature. As always, this year has been an interesting session. During the first week we
started the session with a legislator being stripped of her committee assignments for comments made during the
December Organizational Session. She later had them returned after apologizing to House members she offended.
We also had our first contested legislative race since 1981 when candidate Tom Katsilometes challenged Senator
Mark Nye from District 29, Bannock County.

Aside from those early fireworks, things have somewhat calmed down and we are right in the middle of the session.
During the week of February 6, there was a major push to introduce bills as Monday, February 13 was the
last day to introduce bills in a non-privileged committee.

Early in the session, House and Senate leadership set a target Sine Die date of March 24 and as of now, it is anticipated
they will be able to stick to that date. Friday, February 17 was the last day of the budget hearing process and
the Joint Finance and Appropriations Committee has now started to set state agency budgets.

As in the past several years, education funding, transportation funding, and tax cuts are shaping up to be this
year’s legislative focus. Though always somewhat controversial, education seems to be on autopilot as the legislature
is working through the governor’s five year education plan. Transportation funding continues to be a major
need and the two bodies and Governor have not been able to find a solution they all agree on. Several ideas and
proposals have been introduced including increasing the gas tax, using general funds, and a surplus eliminator.
Currently there are a couple tax cut proposals including a cut in the personal property tax and cutting the personal
and corporate income tax rates. Tax cuts are consistently a battle between the two bodies and I expect tax cuts or
transportation funding will be this year’s going home issue.

Idaho Land Title Association Specific Issues
Flat Recording Fees
A subcommittee of the ILTA liaison committee and I have been working with a variety of associations including
the Idaho Association of Counties, Idaho Association of Realtors and the Idaho Bankers Association regarding
moving recording fees to a flat fee. We worked with the associations to set a page number limit as well as a document
fee. The counties pushed for us to include review language in the bill that would have the legislature review
the fees after four years. After several conversations with legislative leaders, we decided it would be best for us to
not add review language into our bill. I am happy to report that even without the desired language, the Counties
are supporting our bill. The bill has now been introduced and designated as HB 205.

Electronic Recording
E-Recording continues to be a major issue for six counties in Idaho. Currently two of the six counties are in the
process of moving to electronic recording. We have worked with the Counties throughout the interim to see if
they can help push those remaining to make the transition. We continue to work with the Counties and recently
provided association staff with draft language that would help transition the remaining counties.

CondoCert Legislation
This past summer a HOA issue with CondoCerts was brought to my attention. Our members are running into an
issue of access regarding assessments and the status of a selling owner’s account from the HOA. There have been
several cases where CondoCerts is not providing that information in a timely matter and sellers are having to pay a
high expedite fee. Most homeowners are not aware that their HOA uses CondoCerts and is getting hit with an
unexpected fee at closing, even if the closing doesn’t go through. The ILTA is working with the Idaho Association
of Realtors who have worked on draft language. The ILTA is currently reviewing the draft legislation for input
and I anticipate a bill will be introduced in the near future.

Orders for Title Commitments and Cancellation Fees
In late January I received a call from the Realtor’s association regarding orders for title commitments and cancellation
fees. It is my understanding though the statute and rule mandating cancellation fees be charged, enactment of
the rule has not been the practice from the Department of Insurance. The DOI has recently changed its policy
and begun enforcing the current rule. DOI Director, Dean Cameron, is currently reviewing the current statutes,
rules and enforcement with his office. I anticipate this will be an issue that we work through throughout the interim
in anticipation of the 2018 legislative session.

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