What is the FORECLOSURE PROCESS in Utah?
The most common security instrument in Utah is a Trust Deed and not a "Mortgage." A trust deed has three parties including a trustor (the borrower(s)), a trustee (the bank, attorney or title company) and the beneficiary (the lender). The use of a trust deed instead of a mortgage allows for the beneficiary (lender) to foreclose a property through the trustee (bank, attorney or the title company) with an out-of-court or non-judicial process requiring approximately 120 days. The following outline provides a brief summary of the events and timelines involved in a non-judicial foreclosure.
- Notice of Default. The beginning of the non-judicial foreclosure requires the trustee (the bank, attorney, or title company) to record a "Notice of Default" at the county recorder's office where the property is located. The Notice of Default period runs for 90 days (approximately three (3) months) during which time the trustor (borrower(s)) may cure the default by paying all outstanding fees due including attorney's fees, penalties, late payments and interest.
- Notice of Sale. A notice of sale identifies the time, place, and location of the public auction or trustee's sale. The notice of sale must be published for three weeks in a paper of general circulation in the county where the property is located. The public auction or trustee's sale cannot occur in less than 10 days or more than 30 days after the last date of publication. The notice of sale must also be posted at the county recorder's office where the property is located no less than 20 days prior to the date of sale.
- Trustee's Sale. The auction of the property or "Trustee's Sale" usually occurs on the courthouse steps. The trustee will normally require a cashier's check in a designated amount (typically $5,000) to be shown to the trustee before the auction begins. The trustee will usually designate the minimal amount of each incremental bid ($100, $500, $1,000). The successful bidder will tender their cashier's check at the time of the auction and usually have 24 hours to pay the remaining balance of the bid. A public auction must take place between 9AM and 5PM on a business day at the time, place and date designated in the notice of sale.
- Trustee's Deed. Upon receipt of the full amount of the bid, the trustee conveys or transfers the property to the successful bidder through a "trustee's deed." The trustee's deed does not extinguish federal taxes, property taxes, or protect the successful bidder from bankruptcy court orders. The foreclosure process may foreclose out junior liens such as second mortgages, mechanic's liens, and other judgments subordinate to the foreclosing trust deed.
When a "mortgage" is used instead of a "trust deed" a judicial foreclosure is required. The judicial foreclosure process begins with the filing of a summons and complaint in district court and a notice of civil action called a "Lis Pendens" being recorded at the county recorder's office where the property is located. The foreclosure is effected with a judgment against the debtor and a public auction called a "Sherrif's Sale." The final conveyance to the successful auction bidder is called a "Sherrif's Deed." Utah has a post-sale statutory right of redemption for judicial foreclosures, which may allow the borrower to reclaim the property up to six (6) months after the auction by making payment in full of the sum of the unpaid loan, plus penalties, attorney fees, interest, and costs. Under some circumstances, the court may extend the redemption period.