Forclosures
Mortgages, Trust Deeds and Uniform Real Estate Contracts in Utah may all be foreclosed by judicial action. Judicial foreclosures are a civil lawsuit initiated by the filing of a Complaint in the county where the property is located, and serving of a copy of the Complaint and a Summons upon the debtor and interested parties. Once the lawsuit is filed, the defendants are entitled to file an Answer and possible counterclaim to the Complaint and defend the claims as in any other lawsuit. Once a judgment is obtained, the sheriff of the county in which the property is located will be instructed to conduct a Sheriff's Sale of the property. At the sheriff's sale, the property is sold and a Certificate of Sale is issued to the highest bidder. After the sheriff's sale, a six month right of redemption period begins, during which the debtor may redeem the property by paying the amount of the purchase price plus an additional 6%. If no other redemptions of the property occur, the sheriff will issue a Sheriff's Deed to the final certificate holder. Generally, Judicial Foreclosures are more time consuming and costly than power of sale foreclosures.
Power of Sale Forclosures
The most common means of foreclosing real property loans in Utah is by Trust Deed. Trust Deeds may be foreclosed by "power of sale", enabling a trustee to foreclose the security without resorting to a lawsuit as follows:
- The creditor, known as the "beneficiary" of the Trust Deed, signs a Declaration of Default or other request for legal services, and Substitution of Trustee assigning the matter to us and appointing one of our attorneys as Successor Trustee of the Trust Deed.
- The Successor Trustee records a Substitution of Trustee and Notice of Default in the county where the property is located, and obtains a Certified Foreclosure Report or Trustee's Sale Guaranty of the property, which lists the parties entitled to notice.
- After the Notice of Default has been recorded, and the notices have been sent to the necessary parties by certified mail, a three month reinstatement period begins during which the debtors or "trustors", and other interested parties, can cure their default under the Trust Deed by paying all delinquent sums and the beneficiary's attorney's fees and costs incurred in enforcing the Trust Deed. If the Trust Deed does not contain the address of the trustor, a copy of the Notice of Default must be published in a newspaper of general circulation in the county in which the property is located, or personally served upon each trustor individually.
- If the default is not cured within the three month reinstatement period, then the Trustee sets a trustee's sale date and serves a Notice of Trustee's Sale as follows:
- by Certified U. S. Mail, return receipt requested, to interested parties at least 20 days before the date of the sale; and
- by posting the property and three other public places in city or county where the property is located at least 20 days before sale date; and
- by publication once a week for three consecutive weeks in a newspaper having general circulation in the county in which the trust property is located, and the last publication must occur at least 10 days, but not more than 30 days before the actual date of the Trustee's Sale.
- Prior to the date of the Trustee's Sale, the Beneficiary provides the Successor Trustee with a "credit bid", to be entered on behalf of the Trustee at the sale.
- The Trustee or attorney for the Trustee conducts the sale, and may enter the credit bid on behalf of the Beneficiary. Anyone may bid at the Trustee's Sale, including the Trustors, Beneficiary, and the general public.
- If the debt exceeds the value of the property on the date of the trustee's sale, a separate lawsuit to recover the balance may be commenced within three months after the Trustee's Sale.
- Federal Tax Liens against the property require special notice to be served at least 25 days prior to the date of the Trustee's Sale. Trust properties, which are subject to Federal Tax Liens, may be redeemed by the I.R.S. for 120 days after the date of the date of the Trustee's Sale.
If you would like to speak to an attorney regarding foreclosures contact:
