Tara Martens Miller | Snell & Wilmer
The Idaho Contractor Registration Act (ICRA)1 imposes mandatory registration requirements on contractors operating within Idaho. Since January 1, 2006, it has been unlawful for any person to engage in the business of or hold themselves out as a contractor without being registered in accordance with the ICRA. The Act imposes significant penalties for noncompliance. Unregistered contractors are prohibited from filing lien claims on real property and are barred from bringing or maintaining legal actions to collect under contracts entered into while unregistered, as those contracts are considered illegal and unenforceable. However, as clarified by the Idaho Supreme Court in Genho v. Riverdale Hot Springs, LLC,2 equitable remedies and lien foreclosure may be available for work performed after registration if that work is severable from work performed while unregistered.
In Genho, the dispute arose from a construction project at Riverdale Resort. Genho, a contractor, performed work on the property, while initially unregistered. At Riverdale’s suggestion, Genho applied for a contractor’s registration on or about February 28, 2018, and received the confirmation of registration on March 19, 2018. Before receiving the registration, Genho submitted a bid, entered into a verbal agreement with the owner and received payment to purchase materials and begin work.
A payment dispute later developed. Genho recorded a mechanic’s lien on the property and sued Riverdale for breach of contract, unjust enrichment, quantum meruit, conversion, and lien foreclosure. The case proceeded to a jury trial. Riverdale moved for a directed verdict on all claims based on Genho’s unregistered status. The district court granted the motion on the breach of contract claim because Genho’s partial performance prior to receiving his registration violated the ICRA, but it denied the motion as to the remaining claims. The jury ultimately found in favor of Genho on the equitable claims and the lien foreclosure.
On appeal, the Idaho Supreme Court affirmed in part and reversed in part the district court’s judgment. It upheld the denial of a directed verdict on the equitable and lien foreclosure claims but vacated the attorney fee award on the conversion claim.
The Court reasoned that allowing equitable remedies for post-registration work strikes an appropriate balance between enforcing the ICRA’s registration requirement and preventing the unjust enrichment of property owners who receive legitimate work. Conversion claims are independent of seeking compensation under ICRA and thus fall outside its scope. The Court further explained that a mechanic’s lien arises from the work performed, not merely from entering into a contract; accordingly, post-registration work can support a lien foreclosure action even if the underlying contract was initially illegal under ICRA. As a result, Genho was entitled to a lien for severable work performed after becoming registered. Importantly, the Court affirmed the mandatory nature of attorney fee awards in lien foreclosure actions under Idaho Code § 45-513, aligning with precedent recognizing such fees as mandatory and part of the enforceable lien.
With respect to attorney fees on the remaining claims, the Court upheld the fee awards tied to the lien foreclosure and related commercial claims. In contrast, it reversed the fee award on the conversion claim, because conversion is an independent tort and was not integral to the commercial transaction governed by the ICRA.
In sum, while Genho prevailed on severable equitable claims and lien foreclosure for post-registration work, the decision underscores the importance of timely registration. Idaho courts strictly apply the ICRA, and contractors should ensure compliance before commencing work. The case offers practical guidance for contractors, property owners and practitioners navigating disputes involving contractor registration and lien rights in Idaho.
Footnotes
1. Idaho Code §§ 54-5201 through and including 54-5219.
2. 174 Idaho 894, 560 P.3d1041 (Idaho 2024).
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