The Idaho Supreme Court recently reversed a trial court’s decision in favor of a highway district and found that there were issues of fact as to whether a purchaser of a property along a public road was a bona fide purchaser without knowledge of a right-of-way.  See Nampa Highway Dist. No. 1 v. Knight, 166 Idaho 609 (2020).  The case concerned a right-of-way along a 22-foot wide public road. In 1941, the owners of the properties at issue gave the Nampa Highway District (“NHD”) a Deed of Right-of-Way, giving the NHD a 66-foot wide ROW so that the NHD could improve the road.  The NHD did not record the deed at that time, and the properties were conveyed several times before the NHD recorded the deed in 1989.  The current owners of the properties purchased in 1998 and 2018, after the deed was recorded.  In 2018, NHD brought a quiet title action, claiming that the owners and their predecessors “had notice of NHD’s interest in the deeded right-of-way either pursuant to the recorded Deed of Right-of-Way or pursuant to the construction, use, maintenance, and physical possession of the Road by the public.”  The parties cross-moved for summary judgment, with the owners arguing that they are entitled to bona fide purchaser status through the “Shelter Rule,” which gives a purchaser bona fide purchaser status if their predecessor was an innocent purchaser.  The trial court denied the owners’ motion and granted NHD’s motion, finding that it owned the ROW in fee simple and that “because the Road has existed as a public highway since 1921, every subsequent purchaser had constructive notice of a possible adverse claim and therefore had a duty to inquire further, which [the owners] failed to prove they did.”

The Court reversed.  The Court held that the owners could only benefit from the Shelter Rule if they took title from bona fide purchasers, which raised the question of whether their predecessors were bona fide purchasers.  The Court found that “the existence of the Road was sufficient to impart constructive notice to Appellants’ predecessors in interest,” which should have prompted them to inquire further.  Nonetheless, the Court found that there were issues of material fact as to what any further inquiry would have revealed because it was not clear that NHD itself was even aware of the deed when the predecessors purchased the properties.  “[T]here is no evidence in the record indicating why the deed was not recorded in 1941, where the deed was located from 1941 to 1989 (the year it was eventually recorded), or whether NHD was even aware that it possessed the deed over much of the forty-seven years it remained unrecorded, yet in its possession.”  Accordingly, the Court remanded the case for a determination of what any reasonable inquiry would have revealed.  Finally, the Court found that the trial court erred in finding that NHD owned the land in fee simple.  It found that, even if NHD prevailed on the bona fide purchaser question, its interest would be limited to an easement because the Deed of Right-of-Way “clearly limit[ed] the use of the land to ‘a public highway.’”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.