Credit Suisse Foreclosure   Legal Update

TO:         TMA Membership

FROM:     Stephen J. Lord, Attorney at Law, Counsel to Tamarack Municipal Association

RE:           Credit Suisse Foreclosure

DATE:   September   20, 2012

Teufel Landscape appealed to   the Idaho Supreme Court on Judge Owen’s determination that Teufel’s liens   were junior to Credit Suisse. In August, Teufel also requested that judge   Owen “stay” or prohibit Credit Suisse from getting to a sheriff’s   sale. In a hearing conducted on September 20, 2012, Judge Owen ruled from the   bench and denied the stay request.

Nothing now blocks Credit   Suisse from taking the matter to a sheriff’s sale. Generally, a plaintiff has   the right to proceed at its own pace in pursuing collection on a judgment, so   the timing of a sheriff’s sale is largely at Credit Suisse’s discretion. Assuming   that the lenders wish to proceed expeditiously, Credit Suisse could have the   matter to Sheriff Bolen and concluded in 60 days or less. At a sheriff’s   sale, the successful bidder receives a sheriff’s certificate of sale that   allows the successful bidder the right of possession. Ownership, that is,   marketable “title” to the land, does not transfer until the right   of redemption expires. Rights of redemption can expire through passage of   time (one year in the case of parcels larger than 20 acres) or if the   redemptioner/debtor sells or in some other way loses the right (eg, in   bankruptcy).

Teufel still has the option   to file a motion with the Idaho Supreme Court to block or “stay”   Credit Suisse’s effort to proceed to a sheriff’s sale. Such motions are considered   unusual and rarely granted, but it remains an option for Teufel.

Remaining issues, such as   disposition of Village Plaza and Lake Wing, remain suspended because of the   Teufel appeal. Consequently, BAG, Banner Sabey, OZ Architects and MHTN do not   yet have final judgments allowing them to foreclose, via a sheriff’s sale, on   their liens, even though those are senior to Credit Suisse’s mortgage. In   order for their cases to be brought to judgments of foreclosure, they need   permission from the Supreme court to allow Judge Owen to continue processing   their claims.

They also have the hurdle of   overcoming the receivership mortgage, another hurdle that is likely to take   months to resolve. That hurdle exists because none of them amended their   complaints to foreclose on the receivership mortgage, so its status remains   undetermined. The take-away is that Village Plaza, the BAG properties   (Belvedere Ridge/Fairmont Hotel), Trillium Townhomes and Lake Wing are   unlikely to be in new ownership soon.