A lender acquires a residential fourplex in Nampa, Idaho through a non-judicial trustee's sale under the Idaho Trust Deeds Act after the borrower defaults. The lender now wants to sell the property. The listing agent tells the lender that completing a Property Condition Disclosure Form is optional in this situation. Which of the following most accurately reflects Idaho law regarding this transaction?

Correct Answer

A) The disclosure is not required because the lender acquired the property through foreclosure, and lender-owned foreclosure sales are a recognized exemption under the Idaho Property Condition Disclosure Act

Under Idaho Code § 55-2501 et seq., the Idaho Property Condition Disclosure Act includes a specific exemption for transfers made by a lender or its affiliate who acquired the property through foreclosure—including a non-judicial trustee's sale under the Idaho Trust Deeds Act (Idaho Code § 45-1501 et seq.). The rationale is that a lender-owner typically has no firsthand knowledge of the property's condition and was never an occupant. Therefore, the listing agent is correct that the lender in this scenario may be exempt from completing the Property Condition Disclosure Form. This is a classic Idaho-specific trap: exam takers who know the 1-4 unit rule often overlook the foreclosure acquisition exemption.