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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

Utah

SECURITY INSTRUMENT USED: Either mortgages or trust deeds may be used, although the trust deed form is most commonly used. The statutory form of mortgage is found in Utah Code &sect;&nbsp;57-1-14. Trust deeds are addressed in Utah Code Ann. &sect;&sect;&nbsp;57-1-19 through 57-1-44.

SECURITY INSTRUMENT USED

RECORDING REQUIREMENTS: A document must be either (a) an original; or (b)&nbsp;an electronic document that satisfies the requirements under Utah Code Ann. Title 17, Chapter 21a, Uniform Real Property Electronic Recording Act. The documents must also contain a brief caption on the first page of the document stating the nature of the document; a legal description of the property as required under Section Utah Code Ann. &sect; 57-3-105. If a document is a master form, as defined in Utah Code Ann. &sect; 57-3-201, the caption shall state that the document is a master form. Pursuant to Utah Code Ann. &sect;&nbsp;17-21-25, documents to be recorded must have typed or printed on it the name of each person whose signature appears on the instrument whose name is required to be indexed and the person&rsquo;s typed or printed name shall appear just beneath that person&rsquo;s signature. Documents to be recorded must include a certificate of the acknowledgment as defined in Section 46-1-2, or other notarial certificate containing the words &ldquo;subscribed and sworn&rdquo; or their substantial equivalent, that is signed and certified by the officer taking the acknowledgment. A &ldquo;Statutory Short Form of Acknowledgment&rdquo; is found in Utah Code Ann. &sect;&nbsp;57-2a-7. A &ldquo;Form of Notarial Certificate for Document Notarizations&rdquo; is found in Utah Code Ann. &sect;&nbsp;46-1-6.5. In addition, pursuant to Utah Code Ann. &sect; 17-21-20(3), a county recorder may require that the tax identification number of the property be noted on the document.

RECORDING REQUIREMENTS

STATUTES TO BE WAIVED: N/A.

STATUTES TO BE WAIVED

UNUSUAL TREATMENT OF STANDARD PROVISIONS: None.

UNUSUAL TREATMENT OF STANDARD PROVISIONS

SECURITY FOR FUTURE ADVANCES: Future advances can be secured. Mandatory future advances will maintain the original priority of the instrument and optional future advances will ordinarily maintain the original priority of the instrument if the advance is made at a time that the advancing party is without actual notice or knowledge of intervening encumbrances. Please note that notice may be constructive. Recent cases relating to mechanic&rsquo;s liens have held that a lender had notice of such liens where the work was done on-site and for the benefit of the collateral. SECURITY FOR ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL, INCLUDING PAYMENT OF TAXES AND INSURANCE: Such advances can be secured according to the same principles applicable to other future advances.

SECURITY FOR FUTURE ADVANCES

CORPORATE OR INDIVIDUAL: Trustees can be (a)&nbsp;any individual who is an active member of the Utah State Bar, or any entity in good standing that is organized to provide licensed professional legal services and employs an active member of the Utah State Bar, if the individual or entity is able to do business in the state and maintains an office in the state where the trustor or other interested parties may meet with the trustee to: (i) request information about what is required to reinstate or payoff the obligation secured by the trust deed; (ii) deliver written communications to the lender as required by both the trust deed and by law; (iii) deliver funds to reinstate or payoff the loan secured by the trust deed; or (iv) deliver funds by a bidder at a foreclosure sale to pay for the purchase of the property secured by the trust deed; (b)&nbsp;any depository institution as defined in Utah Code Ann. &sect;&nbsp;7-1-103, or insurance company authorized to do business and actually doing business in Utah under the laws of Utah or the United States; (c)&nbsp;any corporation authorized to conduct a trust business and actually conducting a trust business and actually conducting a trust business in Utah under the laws of Utah or the United States; (d)&nbsp;any title insurance company or agency that: (i) holds a certificate of authority or license under Title 31A, Insurance Code, to conduct insurance business in the state; (ii)&nbsp;is actually doing business in the state; and (iii) maintains a bona fide office in the state; (e)&nbsp;any agency of the United States government; or (f)&nbsp;any association or corporation that is licensed, chartered, or regulated by the Farm Credit Administration or its successor. The trustee of a trust deed may not be the beneficiary of the trust deed, unless the beneficiary is qualified to be a trustee under Subsection (b), (c) (e) or (f) above. The power of sale under a trust deed may only be exercised by the trustee of a trust deed if the trustee is qualified under Subsection (a) or (d) above. Utah Code Ann. &sect; 57-1-21.5 outlines certain duties and prohibited conduct for trustees and regulates certain fees. Utah Code Ann. &sect; 57-1-23.5 provides civil liability for an unauthorized person who exercises a power of sale. An unauthorized person who conducts an unauthorized trustee&rsquo;s sale is liable to the trustor for the actual damages suffered by the trustor as a result of the unauthorized sale or $2,000, whichever is greater. Attorney&rsquo;s fees may also be awarded. A trust deed with an unqualified trustee or without a trustee shall be effective to create a lien on the trust property, but the power of sale and other trustee powers under the trust deed may be exercised only if the beneficiary has appointed a qualified successor trustee.

CORPORATE OR INDIVIDUAL

RESIDENCY REQUIRED: See above.

RESIDENCY REQUIRED

BRIEF DESCRIPTION OF PROCEDURE: Utah is a &ldquo;one form of action&rdquo; state. Under either a trust deed or mortgage, action must first be taken against the property before bringing an action against the trustor. Judicial foreclosure under a mortgage follows ordinary requirements for a prosecution of a civil action. Under a trust deed, the beneficiary can elect either to judicially foreclose or to cause the power of sale to be exercised. The power of sale may be exercised by the trustee without express provision for it in the trust deed. Exercise of power of sale is commenced by the trustee filing for record, in the office of the recorder of each county where the trust property or some part or parcel of the trust property is situated, a notice of default that (a) identifies the trust deed by stating the name of the trustor named in the trust deed, (b)&nbsp;gives the book and page, or the recorder&rsquo;s entry number, where the trust deed is recorded, (c)&nbsp;contains a legal description of the trust property, (iv) contains a statement that a breach of an obligation for which the trust property was conveyed as security has occurred, and (d)&nbsp;sets forth the nature of that breach and of the trustee&rsquo;s election to sell or cause to be sold the property to satisfy the obligation. Not later than 10 days after the day on which a notice of default is recorded, the trustee or beneficiary shall mail a signed copy of the notice of default by certified or registered mail, return receipt requested, with postage prepaid, with the recording date shown, addressed to each person whose name and address are set forth in a Request for Notice that has been recorded prior to the filing for record of the notice of default. Any trust deed may contain a request that a copy of any notice of default and a copy of any notice of sale under the trust deed be mailed to any person who is a party to the trust deed at the address of the person set forth in the trust deed. However, if the loan secured by the trust deed was incurred for personal, family, or household purposes and secures an owner-occupied residential property, before a notice of default is filed for record the beneficiary or loan servicer shall (a) designate a single point of contact; and (b)&nbsp;send written notice to the trustor at the trustor&rsquo;s current address or, if none is provided, the address of the property described in the trust deed. The notice shall advise the trustor of the intent of the beneficiary or servicer to file a notice of default and state (i) the nature of the default; (ii)&nbsp;the total amount the trustor is required to pay in order to cure the default and avoid the filing of a notice of default, itemized by the type and amount of each component part of the total cure amount; (iii)&nbsp;a date, not fewer than 30 days after the day on which the beneficiary or servicer sends the notice, by which the default trustor must pay the amount to cure the default and avoid the filing of a notice of default; (iv)&nbsp;disclose the name, telephone number, email address, and mailing address of the single point of contact designated by the beneficiary or servicer; and (v) direct the default trustor to contact the single point of contact regarding foreclosure relief available through the beneficiary or servicer for which a default trustor may apply, if the beneficiary or servicer offers foreclosure relief. Before the expiration of the three-month period described in Subsection 57-1-24(2), a default trustor may apply directly with the single point of contact for any available foreclosure relief. The statute does not require a lender to adopt foreclosure relief policies or approve an application for relief. A trustee may give a notice of a trustee&rsquo;s sale to a trustor who has applied for foreclosure relief if, in the exercise of the sole discretion of the beneficiary or servicer, the beneficiary or servicer determines that the default trustor does not qualify for the foreclosure relief for which the default trustor has applied; or elects not to enter into a written agreement with the default trustor to implement the foreclosure relief. Certain other provisions and notices apply with regard to postponement and cancellation of sales. After providing the notice of default, not less than three months must elapse before the trustee may provide a notice of sale to set the date and time of sale. During such period, the trustor and certain other persons may cure the default. If the 3-month period lapses without cure, the trustee may give written notice of the time and place of sale particularly describing the property to be sold: (a)&nbsp;by publication in a newspaper having a general circulation in each county in which the property to be sold, or some part of the property to be sold, is situated, of the notice at least once a week for three consecutive weeks with the last publication to be at least 10 days but not more than 30 days before the date the sale is scheduled; (b)&nbsp;posting, at least 20 days before the date the sale is scheduled, the notice in some conspicuous place on the property to be sold and at the office of the County Recorder of each County in which the property, or some part of it, is located; and (c)&nbsp;at least 30 days before the date the sale is scheduled, on the Utah Legal Notices Website - https://www.utahlegals.com/. In addition, at least 20 days before the date of sale, the trustee shall mail a signed copy of the notice of the time and place of sale by certified or registered mail, return receipt requested, with postage prepaid, to each person whose name and address are set forth in a request that has been recorded prior to the filing for record of the notice of default. The notice of sale process requires approximately 35 days. Certain additional requirements regarding notices to tenants apply with respect to the notice if the purpose of the obligation for which the trust deed was given as security is to finance residential rental property. In particular, if the stated purpose of the obligation for which the trust deed was given as security is to finance residential rental property, the notice of sale must include an additional statement specified by statute regarding a tenant&rsquo;s right to continue to occupy the rental unit until its rental agreement expires, or until 45 days after the date the tenant is served with a notice to vacate, whichever is later, and other related information regarding rent and replacement leases. Sale of the property is then conducted by the trustee in an auction at the courthouse in the county where the property is located. Utah Code Ann. &sect;&sect;&nbsp;57-1-23 through 57-1-34. Following the sale of the trust property, the trustee must execute and submit the trustee&rsquo;s deed to the County Recorder within 5 business days of the day the trustee receives payment of the bid price. The trustee must also provide an unrecorded copy of the signed trustee&rsquo;s deed to the purchaser, upon the purchaser&rsquo;s request.

BRIEF DESCRIPTION OF PROCEDURE

ONE ACTION RULE: Utah&rsquo;s single action rule (See Utah Code Annotated &sect;&nbsp;78B-6-909) is patterned after California&rsquo;s. The one-action rule precludes a lender whose collateral includes real property from exercising any other remedies against the borrower until the beneficiary has foreclosed upon and exhausted its real property collateral. As amended, the &ldquo;one-action rule&rdquo; provides as follows: There is only one action for the recovery of any debt, or the enforcement of any right, secured solely by mortgage upon real estate and that action shall be in accordance with the provisions of this chapter. Case law construing the prior language of the one action rule held that the rule applies to mortgages as well as to deeds of trust. The purpose of the one-action rule is to protect debtors from multiple actions for the recovery of a debt secured by real estate collateral, and to require recourse to and the exhaustion of the collateral before looking to the general assets of a debtor for payment of the debt. Except in limited circumstances (e.g. environmentally impaired property meeting certain statutory requirements - See, for example, Utah Code Annotated &sect;&nbsp;78B-6-909), the creditor is not permitted to waive its collateral and commence an action on the debt but is required to foreclose and exhaust its collateral before it has any recourse to the general assets of the debtor. The one-action rule has been held to apply to setoffs, attachments, garnishments, and actions to quiet title. A well-recognized exception to the &ldquo;collateral first&rdquo; construction of the one-action rule arises when the collateral has no value through no fault of the creditor. Under those circumstances, an action may be maintained by the creditor directly on the underlying debt without the necessity of first going through foreclosure. Cases in other jurisdictions have held that loans secured by mixed real and personal property collateral are not subject to local single action rules. While Utah state courts have not addressed the import of the &ldquo;solely&rdquo; phrase, one case in the U.S. Bankruptcy Court for the District of Utah held that where a creditor holds both real estate and personal property collateral (&ldquo;mixed collateral&rdquo;) securing the same debt, the foreclosure of the personal property collateral before the foreclosure of the real property collateral does not violate the Utah one action rule. However, no cases in Utah state courts have construed that language to date and a subsequent bankruptcy case in Nevada construing Utah law held that the one action rule does apply in mixed collateral situations.

ONE ACTION RULE

FORECLOSURE BID REQUIREMENTS: The beneficiary may credit bid. The beneficiary shall receive a credit on the beneficiary&rsquo;s bid in an amount not to exceed the amount representing: (i)&nbsp;the unpaid principal owed; (ii) accrued interest as of the date of the sale; (iii)&nbsp;advances for the payment of: (A)&nbsp;taxes; (B) insurance; and (C) maintenance and protection of the trust property; (iv)&nbsp;the beneficiary&rsquo;s lien on the trust property; and (v) costs of sale, including reasonable trustee&rsquo;s and attorney&rsquo;s fees. Trustees customarily require a deposit of certified funds in the form of a cashier&rsquo;s check in order to bid, with the balance of the successful bid payable within 24 hours of the sale or as provided in the published Notice of Sale. If the highest bidder at a sale refuses to pay the amount bid for the property, the trustee, or the attorney for the trustee, shall either renotice the sale in the same manner as notice of the original sale is required to be given; or sell the property to the next highest bidder. The highest bidder forfeits any deposit made at the sale and is liable for any loss occasioned by the refusal, including interest, costs, and trustee&rsquo;s and reasonable attorney fees;

FORECLOSURE BID REQUIREMENTS

REDEMPTION PERIOD AND PRICE: Mortgage&mdash;6 months, during which the mortgagor or junior creditors can redeem for the amount of judgment plus 6% thereof (not per annum). Trust Deed&mdash;There is no right of redemption following a trustee&rsquo;s sale.

REDEMPTION PERIOD AND PRICE

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD: There is no statutory authorization to waive the redemption period or to reduce the time period.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

DEFICIENCIES: Mortgage deficiency is limited to the difference between the foreclosure judgment (which includes costs) and the amount bid at the foreclosure sale. Trust deed deficiency is limited to the difference between the amounts owed (indebtedness with interest costs, and expenses of sale, including trustee&rsquo;s and attorney&rsquo;s fees) and the greater of the fair market value of the trust property at the date of sale. The fair market value is determined by the court. Any claim for deficiency must be initiated by a lawsuit filed not later than 3 months following the date of sale. Utah Code Ann. &sect;&nbsp;57-1-32. In any action brought under this section, the prevailing party shall be entitled to collect its costs and reasonable attorney fees incurred.

DEFICIENCIES

EFFECT OF FORECLOSURE UPON LEASES: If the lease date is earlier than the debt instrument&rsquo;s recording date and the lease has not been subordinated, the lease may remain in full force and effect following the foreclosure or trustee&rsquo;s sale. Utah&rsquo;s related case law provides that if the lease is executed prior to the recording of the deed of trust and the beneficiary under a deed of trust is aware of or should be aware of a lease (i.e. constructive notice, etc.), then the lender will not be able to foreclose out and terminate the lease. See for example, Garco v. R.O.A. General, Inc., 990 P.2d 945 (analyzing whether a subsequent purchaser of real property is bound by the terms of an unrecorded lease and finding that because the purchaser had constructive knowledge of the lease that it was bound by the terms of the same).

EFFECT OF FORECLOSURE UPON LEASES

USURY CEILING: In a non-consumer transaction, the parties may agree upon any rate of interest for the loan or forbearance of money. See Utah Code Ann. &sect;&nbsp;15-1-1. In consumer transactions, Utah requirements parallel federal law.

USURY CEILING

USURY EXEMPTIONS: N/A.

USURY EXEMPTIONS

LOCATIONS FOR FILING: Personal property financing statements under the Uniform Commercial Code must be filed with the Department of Commerce, Division of Corporations and Commercial Code. For financing statements relating to fixtures, place of filing is the office of the county recorder in each county in the state on which any mortgage or trust deed on the real estate would be recorded. Utah Code Ann. &sect;&nbsp;70A-9a-501(1).

LOCATIONS FOR FILING

SECURITY INSTRUMENT AS FIXTURE FILING: Permitted. Utah Code Ann. &sect;&nbsp;70A-9a-502(3).

SECURITY INSTRUMENT AS FIXTURE FILING

UNUSUAL PROVISIONS OR REQUIREMENTS: Utah&rsquo;s deficiency statute described above may create procedural issues and limit the absolute amount of the claims against guarantors. Under Utah law, a guarantor&rsquo;s obligation is separate and distinct from a debtor&rsquo;s obligation. The Utah Supreme Court has held that &ldquo;a guarantee of payment is absolute, and the guaranteed party need not fix its losses by pursuing its remedies against the debtor or the security before proceeding directly against the guarantor. Accordingly, the one-action rule does not protect guarantors. See Machock v. Fink, 2006 UT 30. The Machock case held that a guarantor is not entitled to the benefits of the one action rule but is entitled to the benefits of the deficiency statute if the creditor elects to foreclose. Thus, a creditor may sue a guarantor prior to foreclosing the real property collateral. The Utah Supreme Court specifically rejected the guarantor&rsquo;s argument in the Machock case that all foreclosure rules apply to guarantors. This holding is consistent with an earlier opinion issued by the United States Bankruptcy Court for the District of Utah.

UNUSUAL PROVISIONS OR REQUIREMENTS

STATUTES TO BE WAIVED: None. Some guaranties attempt to waive Utah&rsquo;s one action rule and deficiency statute, but case law provides that guarantors are not entitled to benefits of the one action rule and no case law supports a waiver of the deficiency statute.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY: Utah law is generally considered favorable to the enforcement of guaranties. However, Utah has adopted a domestic asset protection trust statute &ndash; See Utah Code Ann. &sect; 25-6-504. Accordingly, lenders often add language to a guaranty to prohibit the transfer of guarantor assets to such a trust that could potentially defeat the subsequent attempts of a lender to collect on the guaranty. With regard to carve out, limited or partial guarantees, Utah has case law on payments made by a guarantor (as opposed to borrower payments) that can have the effect of reducing the guaranty in an unintended manner. This can occur when a guarantor makes a payment on behalf of the borrower and the lender is deemed to have a reasonable basis to know that the guarantor meant for their partial guaranty to reduce as the pre-default payments were made to the lender rather than simply paying some other amount then due under the loan.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING DEFICIENCY JUDGMENTS: As noted above, Utah Courts have held that a guarantor is not entitled to the benefits of the one action rule but is entitled to the benefits of the deficiency statute. Thus, a creditor may sue a guarantor prior to foreclosing the real property collateral but if foreclosure is commenced, the guarantor is entitled to the protections described above with regard to Utah Code Ann. &sect;&nbsp;57-1-32. With respect to a trust deed deficiency against a guarantor, the lender&rsquo;s claim is limited to the difference between the amounts owed by the borrower (indebtedness with interest costs, and expenses of sale, including trustee&rsquo;s and attorney&rsquo;s fees) and the greater of the fair market value of the trust property at the date of sale. The fair market value is determined by the court. Any claim for deficiency must be initiated by a lawsuit filed not later than 3 months following the date of sale. See Utah Code Ann. &sect;&nbsp;57-1-32. In any action brought under this section, the prevailing party shall be entitled to collect its costs and reasonable attorney fees incurred.

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING DEFICIENCY JUDGMENTS

STATUTE OF LIMITATION PERIOD: 6 years for mesne profits of real property and actions upon any contract or obligation or liability founded upon an instrument in writing. Utah Code Ann. &sect;&nbsp;78B-2-309. A judicial foreclosure action must be commenced within the 6-year period. In a non-judicial foreclosure proceeding, the foreclosure trustee&rsquo;s sale must be completed within the 6-year period. Utah Code Ann. &sect;&nbsp;57-1-34. Note that the statute of limitations cannot be waived. See Hirtler v. Hirtler, 566 P.2d 1231 (Utah 1977). The Court held that a stipulation in a written instrument waiving the defense of the statute of limitations permanently as to any breach of contract that might occur is void and unenforceable as contrary to public policy.

STATUTE OF LIMITATION PERIOD

STATUTE OF FRAUDS: Utah Code Ann. &sect;&nbsp;25-5-4 provides that &ldquo;Each credit agreement shall contain a clearly stated typewritten or printed provision giving notice to the debtor that the written agreement is a final expression of the agreement between the creditor and debtor and the written agreement may not be contradicted by evidence of any alleged oral agreement. The provision does not have to be on the promissory note or other evidence of indebtedness that is tied to the credit agreement.&rdquo;

STATUTE OF FRAUDS

REQUIREMENTS FOR RELEASE OF LIEN: Releases of security interest must be given within 90 days after the receipt of the final payment of the loan or the lender may be liable for the greater of $1,000 or treble actual damages as well as reasonable attorneys&rsquo; fees and court costs. Utah Code Ann. &sect;&nbsp;57-1-38.

REQUIREMENTS FOR RELEASE OF LIEN

HOMESTEAD ISSUES: A homestead exemption in Utah will not take priority over the consensual lien created by a trust deed or mortgage.

HOMESTEAD ISSUES

COMMUNITY PROPERTY: Unlike many Western states, Utah does not have a system of community property laws. Accordingly, community property rules do not apply to the distribution of marital property under Utah law. Such distribution is determined by the court.

COMMUNITY PROPERTY

MORTGAGE TAX: None.

MORTGAGE TAX

DOCUMENTARY STAMP TAX: None.

DOCUMENTARY STAMP TAX

TRANSFER TAX: None. Please note that in 2019 the Utah Legislature considered House Bill 441. It did not pass but comprehensive tax reform is expected to pass in the near future. House Bill 441 would have enacted a real estate transfer tax. The following written instruments would be subject to the real estate transfer tax (a) written instruments for the sale or exchange of property or any interest in the property or any combination of sales or exchanges or any assignment or transfer of property or any interest in the property; and (b)&nbsp;deeds or instruments of conveyance of property or any interest in property, for consideration. The current status of the tax legislation should be verified.

TRANSFER TAX

PROPOSED TAX ON LEGAL SERVICES: None. However, House Bill 441 would have enacted a tax on legal services and any subsequent legislation may include such a tax.

PROPOSED TAX ON LEGAL SERVICES

ENFORCEABILITY OF AGREEMENT OF BORROWER AND LENDER AS TO CHOICE OF LAW PROVISIONS: If parties to a contract expressly choose the law governing their contract, Utah courts will honor that choice if the requirements of Sections 187 and 188 of the Restatement Second, of Conflicts of Laws are met. It is generally agreed that Utah law will govern requirements for creating the lien and establishing its priority. Utah also follows the Restatement approach where a non-judicial foreclosure proceeding is governed by the laws of the state in which the property is located. See Restat. 2d of Conflict of Laws, &sect; 229 comment a. Additionally, a Utah court will apply Utah&rsquo;s laws to determine the effect of the foreclosure upon the continuing interests in the land, including the power of redemption. In Bullington v. Mize, 25 Utah 2d 173, 478 P.2d 500 (Utah 1970), the Utah Supreme Court held that the Utah deficiency statute reflects a fundamental public policy with respect to the collection of a deficiency judgment after a foreclosure sale.

ENFORCEABILITY OF AGREEMENT OF BORROWER AND LENDER AS TO CHOICE OF LAW PROVISIONS

RECEIVER AVAILABLE: Utah has adopted the Uniform Commercial Real Estate Receivership Act. See Utah Code Ann. &sect;&nbsp;78B-21-101 through 78B-21-129. The Act preempts prior receivership law for all commercial real estate receivership proceedings. It is modeled after the Uniform Commercial Real Estate Receivership Act that was adopted by the Uniform Laws Commission in July 2015. Specifically, the bill provides for the appointment of a receiver to dispose of commercial property under certain circumstances, provides rules of conduct for a court-appointed receiver, and provides rules of conduct for an owner of property subject to receivership.

RECEIVER AVAILABLE

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES: None, but a loan commitment must be in writing. Utah Code Ann. &sect;&nbsp;25-5-4(1)(f).

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

MODIFICATION OF MORTGAGE: No unusual requirements.

MODIFICATION OF MORTGAGE

ASSIGNMENT OF MORTGAGE OR DEED OF TRUST: Recording an assignment of a mortgage is not in itself considered notice to the mortgagor and will not invalidate any payment made to the mortgagee. Utah Code Ann. &sect;&nbsp;57-1-15. The recording of an assignment of a beneficial interest under a trust deed or a notice of assignment of a beneficial interest does not in itself impart notice of the assignment to the trustor, or the trustor&rsquo;s heirs or personal representatives, so as to invalidate any payment made by the trustor, or the trustor&rsquo;s heirs or personal representatives, to the person holding the note, bond, or other instrument evidencing the obligation by the trust deed. Utah Code Ann. &sect;&nbsp;57-1-36.

ASSIGNMENT OF MORTGAGE OR DEED OF TRUST

UTAH UNIFORM ASSIGNMENT OF RENTS ACT: Utah has adopted the Utah Uniform Assignment of Rents Act. An assignment of rents arising from real property is created if an enforceable security agreement (a deed of trust or mortgage) is signed and delivered on or after the effective date of the Act. An assignment of rents creates a presently effective security interest in all accrued and unaccrued rents arising from the real property described in the document creating the assignment, regardless of whether the document is in the form of an absolute assignment, an absolute assignment conditioned upon default, an assignment as additional security, or any other form. The security interest in rents is separate and distinct from any security interest held by the assignee in the real property. A creditor may realize on an assignment of rents in 3 ways: (1)&nbsp;through the traditional method of appointing of a receiver; (2)&nbsp;through notification to the assignor to turn over the rents; and (3)&nbsp;through written notification to the tenants who owe rent to the assignor. This legislation makes the enforcement of an assignment of rents more efficient by enabling the lender to control the property&rsquo;s income more easily and allowing the application of rents to pay down the loan. Utah Code Ann. &sect;&nbsp;57-26-101 et seq.

UTAH UNIFORM ASSIGNMENT OF RENTS ACT

ENVIRONMENTAL LIENS: A property is &ldquo;Environmentally Impaired&rdquo; when the cost to clean up a release of hazardous material on to the real property exceeds 25% of the higher of the aggregate fair market value of all security for the loan at the time (1)&nbsp;the loan was made; (2)&nbsp;the release was discovered or threatened; or (3)&nbsp;an action was brought under the statute. A secured lender may elect between the following if a property is Environmentally Impaired and the borrower&rsquo;s obligations are in default to the secured lender: (1)&nbsp;waive its lien against the Environmentally Impaired property, or any portion thereof, including all fixtures and personal property attached thereto, and instead exercise the rights of an unsecured creditor, including the right to reduce its claims against the borrower to a judgment; or (2)&nbsp;exercise the rights or remedies of a creditor having rights secured by a trust deed or mortgage and, if applicable, a lien against fixtures or personal property attached the real property security, including the right to obtain a deficiency judgment. Utah Code Ann. &sect;&nbsp;78B-6-909.

ENVIRONMENTAL LIENS

UTAH ATTORNEY LIEN LAW: Utah Code Ann. &sect;&nbsp;38-2-7 permits an attorney to claim a lien upon any moneys or property owned by the client that is the subject of the work performed, including real or personal property. Thus, if the borrower has counsel, that counsel has a lien on the loan collateral for unpaid legal fees. For personal property, the lien has priority as of the date that services were first provided and future unpaid fees related back like a mechanic&rsquo;s lien. For real property, priority dates only for the recordation of a notice in the real property records. A prudent lender may consider requiring a waiver of any such lien as a condition of closing. LABOR AND MATERIAL LIEN CLAIMS (&ldquo;L&amp;M LIENS&rdquo;): <ol>
 <li> INCEPTION OF L&amp;M LIEN: A person who provides preconstruction service or construction work on or for a project property has a lien on the project property for the reasonable value of the preconstruction service or construction work.</li>
</ol> To claim a preconstruction lien, a claimant must file a notice of preconstruction service with the Utah State Construction Registry (&ldquo;Registry&rdquo;) no later than 20 days after the person commences providing preconstruction service for the anticipated improvement on the real property. Within 90 days after completing a preconstruction service for which a claimant is not paid in full, a claimant who desires to claim a preconstruction lien must record a notice of preconstruction lien with the applicable county recorder. To claim a construction lien, a claimant must file a preliminary notice with the Registry no later than 20 days after the day on which the claimant commences providing construction work on the real property (provided, however, if a claimant files a preliminary notice outside of this period, but not later than 10 days after the filing of a notice of completion with the Registry, the preliminary notice is applicable to construction work the claimant provides to the project 5 days after the filing of the preliminary notice). To claim a construction lien a claimant must record a notice of construction lien with the applicable county recorder within 180 days after final completion of the original contract, if no notice of completion is filed, or 90 days after the filing of a notice of completion. <ol>
 <li> ACTIONS TO ENFORCE: Subject to certain bankruptcy related exceptions, a claimant must file an action to enforce a preconstruction lien within 180 days of recording the preconstruction lien and a claimant must file an action to enforce a construction lien within 180 days of recording the construction lien &ndash; as well as a notice of pendency of the action with the applicable county recorder. Statutory materials must be served by claimants seeking to assert lien claims against a residence. Successful parties are entitled to attorney fees, but a claimant may waive this entitlement by failure to provide notice of recording a preconstruction lien or construction lien within 30 days of recording the preconstruction lien or construction lien. Certain additional conditions apply to liens against personal residences. See Utah Code Ann. &sect;&sect;&nbsp;38- Chapter 11 - Residence Lien Restriction and Lien Recovery Fund Act.</li>
 <li> RELATION BACK AND PRIORITY: A preconstruction lien relates back to and takes effect as of the timely filing of the earliest filed notice of preconstruction service and has priority over any lien, mortgage, or other encumbrance that attaches after the earliest timely filed notice of preconstruction service is filed or of which the claimant had no notice and that was unrecorded at the time the earliest filed notice of preconstruction services was filed, but a preconstruction lien is subordinate to an interest securing a bona fide loan if and to the extent that the lien covers preconstruction service provided after the interest securing the bona fide loan is recorded.</li>
</ol> A construction lien relates back to and takes effect as of the time of the first preliminary notice filing and has priority over any lien, mortgage, or other encumbrance that attaches after the first preliminary notice filing or of which the claimant had no notice and that was unrecorded at the time the first preliminary notice filing, but a recorded mortgage or trust deed that secures a construction loan attaches immediately before the first preliminary notice filing for the construction project if each claimant that has a preliminary notice on file on the construction project before the mortgage or trust deed was recorded receives full payment for all construction work the claimant performed before the mortgage or trust deed was recorded, regardless of whether the claimant receives full payment before or after the day on which the mortgage or trust deed is recorded. <ol start="503">
 <li> PRIORITY AS TO REMOVABLE FIXTURES: If a fixture filing as well as a personal property filing is made, the priority of a lien with respect to fixtures, regardless of whether the fixtures are removable, is established by the priority between the date of the preliminary notice filing and the date of the fixture and/or personal property filings. Utah Code Ann. &sect;&sect;&nbsp;38‑1a‑302(3) and&nbsp;38-1a-503.</li>
 <li> NOTICE OF CONSTRUCTION LOAN: After recording a mortgage or trust deed securing a construction loan on a private project, a construction lender is required to promptly file, in the Utah Construction Registry, a notice of construction loan. If a construction loan goes into default, within 5 business days after a notice of default is filed for recording, a notice of construction loan default shall be filed in the Utah Construction Registry.</li>
 <li> GOVERNMENT PROJECTS: A preconstruction lien or construction lien may not be asserted against a &ldquo;government project.&rdquo; However, a claimant against a payment bond on a government project (or claimant for failure to obtain a payment bond on a government project) where a notice of commencement has been filed with the Utah Construction Registry is subject to the preliminary notice requirement applicable to construction liens.</li>
 <li> BONDS: Payment bonds are required on commercial contracts exceeding $50,000 and a claimant against a payment bond on a commercial project (or claimant for failure to obtain a payment bond on a commercial project) is subject to the preliminary notice requirement applicable to construction liens. See Utah Code Ann. &sect; 14-2-1.</li>
 <li> WAIVERS AND RELEASES: A provision in a contract purporting to waive or limit a preconstruction lien or construction lien right or privilege is void, provided however, that conditional waiver and release of lien rights on progress payment and waiver and release of lien rights upon final payment are permitted. Utah does not recognize unconditional lien waivers even after payment. Case law provides that a form meeting the requirements of the statute are acceptable. Statutory forms are available at Utah Code Ann. &sect; 38-1a-802. For restrictive endorsements on a check, the endorsement must be in substantially the same form as those set forth in the statute.</li>
</ol> A preconstruction lien and/or construction lien may also be removed from the project property through a substitution of alternate security. See Utah Code Ann. &sect;&nbsp;38‑1a‑804. Similar limitations apply to subordinations of lien rights. <ol>
 <li> ASSIGNABILITY: Preconstruction liens and construction liens are assignable.</li>
</ol>

UTAH ATTORNEY LIEN LAW

FORM USUALLY REQUIRED BY LENDER: Lenders generally require an American Land Title Association (ALTA) or California Land Title Association (CLTA) policy. These forms are referred to as an &ldquo;ALTA Lenders Policy&rdquo; or &ldquo;CLTA Lenders Policy&rdquo; and are similar. The ALTA Lenders Policy provides insurance against L&amp;M Liens unless specifically excepted. Due to Utah&rsquo;s unique mechanic lien laws which permit parties to cure broken priority, pending disbursement coverage for mechanic liens is unusual. Title insurance policies do not typically contain an exception for broken lien priority and do not include any pending disbursement, or any similar limitation or coverage or requiring future endorsements to increase mechanic lien coverage under Covered Risk 11(a) of the 2006 Form of Mortgagee&rsquo;s Title Insurance Policy.

FORM USUALLY REQUIRED BY LENDER

ENDORSEMENTS COMMONLY REQUESTED:

ENDORSEMENTS COMMONLY REQUESTED

ALTA 3.1 insures against loss if the zoning classification and permitted uses for the property are not as indicated in the endorsement plus losses if the improvements do not comply with the zoning ordinances (including matters such as the area, width and depth of land, floor space area, set-backs, and height limitations).

ALTA 3.1

ALTA 3.2 (if for a construction loan) insures against the same losses as the ALTA 3.1 but makes reference to future improvements shown on approved site plans.

ALTA 3.2

ALTA 4 condominium endorsement.

ALTA 4

ALTA 5 planned unit development endorsement.

ALTA 5

ALTA 6 variable rate endorsement. Utah has a statute that provides that a change in interest rate does not affect the priority of the deed of trust and accordingly the endorsement is often omitted.

ALTA 6

ALTA 8.1 insures against environmental protection liens having priority over the insured mortgage.

ALTA 8.1

ALTA 9 provides a variety of coverages dealing with covenants, conditions, restrictions, setback violations, and damage to current improvements caused by encroachments or mineral extraction.

ALTA 9

ALTA 9.6 provides a variety of coverages dealing with a covenant, condition, limitation or restriction in a document or instrument and Private Rights -- (i) a private charge or assessment; (ii) an option to purchase; (iii) a right of first refusal; or (iv) a right of prior approval of a future purchaser or occupant.

ALTA 9.6

ALTA 9.7 (if for a construction loan) provides a variety of coverages dealing with covenants, conditions, restrictions, setback violations, and damage to current and future improvements caused by encroachments or mineral extraction.

ALTA 9.7

ALTA 17 insures against loss if land does not abut a named public street as shown on a current survey or if the street is not physically open.

ALTA 17

ALTA 18 insures against loss or damage if the land is not being taxed as a single and separate parcel or as part of a larger parcel.

ALTA 18

ALTA 18.1 insures against loss or damage if the land is taxed as a part of other parcels or if any insured easements will be cut off or disturbed be a tax sale of the servient estate.

ALTA 18.1

ALTA 19 insures against loss if multiple tracts of land are not contiguous or have any gaps between their boundaries.

ALTA 19

ALTA 22 insures against loss if a designated improvement is not located within the boundaries of the insured land or if that improvement&rsquo;s location is not shown on the attached survey.

ALTA 22

ALTA 25 insures against loss if the land is not the same as shown on the plat or survey referenced in the title policy.

ALTA 25

ALTA 26 insures against loss if the land has not been properly platted and subdivided in accordance with applicable local and state laws.

ALTA 26

ALTA 28 insures against loss from damage to or the compelled removal of an improvement that encroaches on an easement.

ALTA 28

ALTA 35 series minerals endorsement.

ALTA 35

ALTA 41 series water endorsement. Utah State Construction Registry Endorsement insures against loss by reason of the failure of a Notice of Construction Loan to be filed for the lender in the Utah State Construction Registry established pursuant to Utah Code Ann. &sect; 38-1a-201. (Typically, the title company will file the Notice of Construction Loan and will then issue this endorsement.)

Utah

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for Utah

Utah

Mortgage Law Summary

Continue reading theMortgage Law Summary for Utah

Continue reading the
Mortgage Law Summary for Utah