By Art Macomber, Attorney
Macomber Law, PLLC
1900 Northwest Boulevard, Ste. 110
Coeur d’Alene, Idaho 83814
Coeur d’Alene, Idaho, May 10, 2017. Have you ever considered that if your neighbor doesn’t pay his property taxes and the county or city takes the property you could lose your easement and not be able to drive home for dinner? This is a question now before the Idaho State Supreme Court. On April 6, 2017, Macomber Law argued to the Idaho State Supreme Court that the issuance of a tax deed by a government entity should not extinguish easements on a parcel taken for unpaid taxes.
The Court has not issued a decision, but here is the background — in case you end up hungry.
In 2014, Idaho Code section 63-1009 stated that the issuance of a tax deed by a governmental entity which had seized it for back taxes would give the new owner “absolute title” without any “encumbrances.” Absolute title is not defined anywhere in Idaho law. For encumbrances, Idaho Code section 55-613 states, “[t]he term ‘encumbrances’ includes taxes, assessments, and all liens upon real property.”
In a 1929 case, the State Supreme Court noted that statute defining encumbrances uses the word “includes,” which means the existing list was not all inclusive. Using that as a springboard, the 1929 Supreme Court divined a “benefit/burden” definition of an “encumbrance” to be anything that burdens a parcel that does not benefit the parcel. Certainly an easement used by one’s neighbor to reach their property burdens the property they cross over, and is of no benefit to the parcel being crossed.
However, the interpretive error in the 1929 case was that in looking for things that could be included in the definition of an encumbrance, they should have stuck with things that were similar to “taxes, assessments, and all liens.” The similarity between those three examples is that all three indicate a third party has the power to strip the owner of title by pressing their claim. For example, a claim could exist if an owner does not pay their property taxes or assessments, or if the owner doesn’t pay the contractor who then has power to enforce his or her mechanic’s lien. Therefore, the better definition of absolute title is title that is unencumbered by a third party’s present power to strip title from the owner. Of course, if later the taxes went unpaid on the same parcel, a power would arise in the government to take the parcel for back taxes again, and once that power arose in the government then absolute title would no longer exist in the owner.
Unfortunately, in the 2014 Idaho case of Regan v. Owen, 339 P.3d 1162, the State Supreme Court gave guidance to the First District Court that pursuant to the 1929 case Idaho Code section 63-1009 requires the issuance of a tax deed by a governmental entity to result in the destruction of easements on a parcel seized for unpaid taxes, whether express, implied, or prescriptive.
Specifically, the 2014 case stated an encumbrance is “any right or interest in land to the diminution of its value, but consistent with the free transfer of the fee.” Hunt v. Bremer, 47 Idaho 490, 494, 276 P. 964, 965 (1929). Whether something is an encumbrance does not depend upon the extent to which it diminishes the value of the land. An encumbrance “embraces all cases in which the owner does not acquire the complete dominion over the land which his grant apparently implies.” Id. An easement is not an encumbrance if the easement is essential to the enjoyment of the land and it enhances the land’s value. Id. There is no finding by the district court that the alleged prescriptive easement across the [parcel at issue] increased its value.” Regan v. Owen, 339 P.3d 1162, 1169.
In Idaho, “an easement is the right to use the land of another for a specific purpose.” Abbott v. Nampa School Dist. No. 131, 119 Idaho 544, 548, 808 P.2d 1289, 1293 (1991). Thus, by definition, an easement is always a burden to the underlying landowner, and would neither be “essential to the enjoyment of the land” nor would it “enhance[ ] the land’s value.” Regan, 339 P.3d at 1169.
As you can imagine, the Regan case caused a bit of an uproar in the legal community and the Idaho legislature, which promptly in the 2016 session altered Idaho Code section 63-1009 to specifically save easements from being destroyed by the issuance of a tax deed. But, since tax deeds are contracts, the legislation more than likely cannot have retroactive effect.
Therefore, if the State Supreme Court rules that the old version of the statute mandates that easements are erased by tax deeds, it could result in claims that hundreds of easements were wiped out across the State of Idaho. There is a four-year backward-looking window for the statute of limitations on takings claims by owners whose easements may have been taken without notice in violation of Idaho’s Constitution and the 14th amendment to the U.S. Constitution. In other words, for tax deeds issued before March 30, 2016 when SB 1388 changed Idaho Code section 63-1009, any easements on parcels conveyed by a governmental entity by tax deed may have had the easements on them erased, whether those easements were express, implied, or prescriptive easements.
We are waiting on the Court’s determination regarding the analysis given above. Let’s hope we get home for dinner!
Note: This post is not legal advice, and should not be relied upon as such. Different sets of facts will likely lead to different legal conclusions. If you need assistance with real property matters, call Macomber Law, PLLC for a one-hour, no charge hour consultation to see if we can help.
 The amended statute is here: https://legislature.idaho.gov/statutesrules/idstat/Title63/T63CH10/SECT63-1009/.