Utah primarily operates as a title theory state where the property title remains in trust until payment in full occurs for the underlying loan. Foreclosure is a non-judicial remedy under this theory. The document that secures the title is a deed of trust or trust deed. Utah law also permits mortgages to serve as liens upon real property and for judicial foreclosures to occur through the courts. Because the power of sale provisions in deeds of trust allow for a more expeditious process to effectuate foreclosure, this is the primary method used by lenders to foreclose. Primarily non-judicial foreclosure that does not involve court action is used in Utah. This requires that notice be given to the borrowers and the public, so this foreclosure method is commonly called sale of trust property by public auction. The trust deed usually contains a provision called a power of sale clause which allows a trustee to sell the property in order to satisfy the underlying defaulted loan. In Utah there is no express requirement for the power of sale language to actually be in the trust deed. Only certain parties or entities can serve as trustees, including attorneys, banks and title company officers. The trustee acts as a representative of the lender to complete the sale, which typically occurs in the form of an auction. There are strict notice requirements inherent in the non-judicial foreclosure process.
Power of Sale Notice Requirements
• Prior to initiating a foreclosure, the lender must file a notice of default in the county in which the property is located and with the defaulting borrower within three (3) months of the default. A copy of the notice of default must be published at least once a week for three (3) consecutive weeks in a newspaper of general circulation in the county, with the last notice of sale published at least 30 days before the proposed sale. A notice of the proposed sale must also be recorded with the recorder where the trust property is located.
• The notice of default must contain certain information, including the date, time and place of sale, a description of the default, the lender’s election to sell, and the document recording information from the deed of trust.
• Foreclosure sales must take place as a public auction between 9AM and 5PM on a business day at the time, place and date designated in the notice of sale. The trustee auctions the property to the highest bidder. The foreclosure sale may be postponed for 45 days from the original sale date if written notice is provided to the original recipient of the notice of default.
In Utah, the lenders can also go to court in a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. A complaint is filed in court along with a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed. Judicial foreclosure in Utah is an option which generally follows the same procedure as a non-judicial foreclosure, with the distinction that the process is pursued through the courts. The property is then sold as part of a publicly noticed sale. The documents are the trust deed, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, a mortgage is filed to evidence the underlying debt and terms of repayment, as set forth in the note.
How long does it take to foreclose a property in Utah?
Depending on the timing of the various required notices, it takes approximately 120 days to complete an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and postponements of sale, or files for bankruptcy. In Utah, foreclosures are accomplished either in court or out of court, although out-of-court foreclosures are more common. The out-of-court foreclosure process takes about five months.
Pre-Foreclosure Period
To begin foreclosure proceedings in court, the lender files a suit against the borrower for the amount owed. If the court finds default has occurred, it will determine the appropriate amount due on the loan and give the borrower a set time to repay the debt plus costs. If the borrower does not pay within the set time period, a public sale of the property is scheduled. Most foreclosures in Utah can be commenced without involving the court system. The lender starts the foreclosure process by recording a notice of default with the county recorder and mailing a copy of the notice of default to the borrower. After the notice of default is recorded, the borrower has three months before the property is sold at public auction. During this time, the borrower can stop the foreclosure by paying the amount in default and any applicable costs.
Notice of Trustee’s Sale (also called Auction of Real Estate
Three months after the notice of default is recorded and at least 20 days before the sale date, the notice of sale is posted in a conspicuous place on the property to be sold and at the office of the county recorder. In addition, the lender publishes a notice of sale once a week for three consecutive weeks in a local newspaper. The last publication must be at least 10 days, but not more than 30 days before the date of the sale. Foreclosure sales are conducted as public auctions at the county courthouse where the property is located between the hours of 8 a.m. and 5 p.m., with the property going to the highest bidder. If the sale price is above and beyond the amount owed to the lender, the extra monies go first to any junior lien holders and then to the borrower. There is typically no redemption period for the borrower after an out-of-court foreclosure sale.
Foreclosure Timeline: After You Receive a Formal Notice of Foreclosure
Before you lose your home to a foreclosure sale, you’ll get some sort of notice as required by your state’s foreclosure laws. Before a bank can sell your house at a foreclosure sale, you will get some sort of formal notice about the foreclosure. The kind of notice you will get depends on whether the foreclosure is judicial or non-judicial, and what your state’s foreclosure laws require.
Judicial Foreclosures
Judicial Foreclosure can be done in Utah, but it is not very common. In around half of the states, the bank has to file a lawsuit in court to foreclose. This is called a judicial foreclosure. If you live in a state where foreclosures go through the court system, you might get 30 days’ notice of the bank’s intent to file a foreclosure action. You will definitely get a summons and complaint telling you when a foreclosure action has been filed in the appropriate court. Once you receive notice about the lawsuit, most people typically have 20 to 30 days to respond to the suit. If you file a response contesting the foreclosure action, it may take a few months or even longer before judge rules on whether to grant the foreclosure. Even if you don’t contest the foreclosure action, the sale usually won’t take place until at least a month after the judge issues the foreclosure order. So you’ll have at least a couple of months from the first notice of the case to the date the court orders the sale to take place. You’ll probably have at least double that amount of time if you decide to oppose the foreclosure in court. In almost all judicial foreclosures, if the judge orders the foreclosure sale, you’ll get a notice telling you when and where the sale will take place.
Non-judicial Foreclosures
Non-judicial Foreclosure is the most typical type of foreclosure in Utah. In the remaining states, the creditor can opt to use an out-of-court (non-judicial) process to foreclose. With a non-judicial foreclosure, the bank has to carefully follow a series of steps described in the state statutes to complete the process. Depending on which state you live in, you might get a pre-foreclosure notice stating the bank’s intent to file a foreclosure action. How much time you have from the first formal notice that foreclosure proceedings have started to the date your property will be sold and the procedures in between varies from state to state.
State law might require
• a notice of default giving you a certain amount of time to get current on the loan by making up all the back payments and then a notice of sale (if you haven’t brought the loan current by the deadline)
• a combined notice of sale and right to cure telling you that your home will be sold on a certain date unless you make up the missed payments
• a notice of sale, or
• in a couple of states, notice through publication in a newspaper and/or posting on the property or somewhere public.
You can probably count on at least 30 days’ notice before the foreclosure sale after the first official notice. In most states, you’ll get a couple of months. Check your state’s law in our Summary of State Foreclosure Laws to learn the process in your state.
Pre-foreclosure Notice Requirement
Before starting a foreclosure, the bank must mail a notice to the borrower giving at least 30 days to cure the default by getting current on the loan.
Utah Foreclosure Process
Residential foreclosures in Utah are typically non-judicial, which means the foreclosure happens outside of the state court system. (Learn more about the difference between judicial and non-judicial foreclosures.)
Notice of Default
The non-judicial foreclosure process formally begins when the trustee records a notice of default at the county recorder’s office. The notice of default gives the borrower three months to cure the default. Within ten days of recording, the trustee mails a copy of the notice of default to anyone who has requested a copy. Most deeds of trust in Utah include a request for notice, so you’ll probably get this notification.
Notice of Sale
If you do not cure the default, after three months, the trustee will record a notice of sale and:
• mail a copy to you at least 20 days before the sale (if your deed of trust includes a request for notice, which it probably does)
• publish notice of the sale in a newspaper, and
• post notice about the sale on the property at least 20 days before the sale.
The Foreclosure Sale
At the foreclosure sale, the property will be sold to the highest bidder, which is usually the foreclosing bank. At the sale, the bank doesn’t have to bid cash. Instead, it makes a credit bid. If the credit bid is the highest bid at the sale, the property then becomes REO.
Deficiency Judgment Following Sale
The foreclosing bank may obtain a deficiency judgment following a non-judicial foreclosure if it files a lawsuit within three months after the foreclosure sale. The deficiency amount is limited to the difference between the borrower’s total debt and the property’s fair market value.
Eviction Following Foreclosure
If you don’t vacate the property following the foreclosure sale, the new owner will probably:
• offer you a cash-for-keys deal, or
• take steps to evict you.
The eviction process starts with a notice to quit. If you still don’t leave by the deadline given in the notice, the new owner will go through the court system to evict you and obtain possession of the property.
Statutory Notice Requirements Foreclosure
When a lender seeks to conduct a foreclosure sale of secured property in Utah, the lender is required to follow a codified procedure for notifying the borrower of its intent to foreclose. Utah law requires that a lender to notify the borrower, in writing and by registered or certified mail, at least thirty days before it proposes to sell the property at foreclosure. Only fifteen days’ notice to the borrower of the lender’s intent to foreclose. The written notice should identify an individual (by name, address, and telephone number) who has authority to negotiate the loan on the lender’s behalf and should include a copy of the foreclosure advertisement. The notice should be sent to the property address unless the borrower has designated some other address, in writing, to the lender. Failure to provide the required notice should lead the court to set aside a foreclosure sale, to refuse to confirm a foreclosure sale, and potentially to hold the lender liable on a claim by the borrower for wrongful foreclosure.
A few keys points from interpretative foreclosure case law
• In the event that the property has been sold subject to the lender’s security interest, statutory notice should be sent to the current owner of the property encumbered by the debt if the owner is known to the lender.
• The required notice is complete upon mailing, whether or not the borrower actually received the notice.
• The notice should be sent to the property address unless another address is designated by the borrower in writing.
• A borrower designates another address if he lists another address as his contact address in the loan documents. A recent decision held this true even where the borrower listed a nonexistent address in the loan documents.
• The notice requirement does not apply to foreclosure of unimproved property.
Talking to an Attorney
Foreclosure procedures and timelines are different in each state. To learn exactly what type of notice you’ll receive and how long a foreclosure will take in your state and particular circumstances, consult with a local foreclosure attorney.
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