Foreclosure Process in Utah
How the Foreclosure is Initiated in Utah
Once a Borrower is in default or breach of the contract, the Lender may request the trustee to exercise the power to sell the real property in order to satisfy the outstanding debt. U.C.A. §57-1-23. The trustee will file a Notice of Default and Election to Sell in the county recorder where the property is located to notify the Borrower and all other interested parties that the Borrower is in breach and/or default and that the Lender intends to foreclose on the property. The Notice of Default should contain the following information:
- Identification of the Deed of Trust, including the name of the Trustor (Borrower) named in the deed of trust, the book and page where the deed of trust is recorded, and a description of the property;
- A statement that there has been a breach of the secured obligation;
- A description of the nature of the breach in enough detail that the Trustor (Borrower) or other interested parties can cure the default; and
- A statement of the Trustee’s election to sell the property to satisfy the obligation. U.C.A. §57-1-24(1).
Time Frames and Conduct of Sale
A three-month period must elapse after recording of the Notice of Default before the trustee can give notice of the sale. U.C.A. §57-1-24(2). The trustee must mail by registered mail the Notice of Default to the Trustor (Borrower) and to any person who requested such notice. After three months from the recording of the Notice of Default, the trustee may give written Notice of Sale by publishing it once a week for at least 3 consecutive weeks, posting the Notice of Sale on the property, posting the Notice of Sale in 3 public places for at least 20 days, and mailing the Notice of Sale to the Trustor (Borrower) and to any party which had requested notice. Approximately 10-30 days after the last publication, the Trustee may hold the sale between 9:00 am and 5:00 pm. The property must be sold at the courthouse in the county where the real property is located. U.C.A. §57-1-25
Postponement of the Foreclosure
The Trustee “may for any cause he deems expedient, postpone the sale from time to time” at any time prior to the actual sale. U.C.A. §57-1-27.
Reinstatement of the Mortgage
Subject to U.C.A. §57-1-31, the Trustor (Borrower) may cure the default and/or breach by paying the arrearages and costs. Borrower’s Liability if there is a Deficiency The Lender at any time within 3 months after the sale may sue the Borrower for the deficiency. The Deficiency shall be limited to the lesser of:
- Fair market value less the sales price; or
- Balance owed at the time of sale (including costs) less the sales price
If the Lender conducting the foreclosure does not bring an action in the appropriate court within 3 months of the sale date, then the lender has waived its right to recover the deficiency. However, if there are junior lien holders, they may have a 6 year statute of limitations to sue for their respective deficiencies. Distribution of the Proceeds of the Sale Pursuant to U.C.A. §57-1-29, the trustee shall pay the proceeds of the sale as follows in the following order:
- Costs and expenses associated with the sale of the property, including the payment of the trustee’s and attorney fees actually incurred.
- Payment to the Lenders and/or creditors in order of priority (e.g.: first mortgage, second mortgage, judgment creditor).
- Any surplus would then be paid to the Trustor (Borrower).