Under Utah foreclosure laws, a foreclosure may be judicial or nonjudicial, meaning the foreclosure process may move through the courts (judicial) or be conducted without additional judicial review (nonjudicial). Utah foreclosures typically take about 120 days to complete if they are nonjudicial and uncontested, but a variety of factors can make the pre-foreclosure process extend much longer.
Utah, unlike many other states, did not enact statewide foreclosure forbearance or moratorium policies in response to the emergence of the 2020 COVID-19 global pandemic. However, the state does abide by all national policies. This can affect pre-foreclosure and foreclosure timelines. Real estate investors must check foreclosure forbearance and eviction moratorium guidance in the state and locally when planning to buy Utah foreclosures and prior to implementing eviction procedures.
The Utah pre-foreclosure process begins when the servicer attempts to contact the homeowner about delinquent loan payments and, in many cases, notify them about options for avoiding foreclosure. However, most real estate investors consider pre-foreclosure to start when the homeowner first misses a mortgage payment, since this is the beginning of the mortgage delinquency and frequently the time at which a homeowner first begins to consider selling their property.
Utah foreclosure laws state that lenders and loan servicers may not officially start the foreclosure process until the borrower has been notified of the lender’s intent to file a notice of default. This packet, called a pre-foreclosure notice, must include:
· Information about getting a loan modification
· Information about who to contact for foreclosure relief and foreclosure alternatives
· Information about borrower rights
Under Utah foreclosure law, borrowers are entitled to a single point of contact while seeking foreclosure alternatives and 30 days to cure their default before the foreclosing party files a notice of default. Once that deadline passes, the trustee may officially begin the foreclosure process by recording a notice of default at least three months prior to the notice of sale.
To begin judicial foreclosure proceedings, 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.
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. When auctions cannot be held in person or on-site, the state may use an online platform for the public auction or simply postpone the event. You can find out what types of hearings and other public activities are postponed or held remotely in times of crisis or public health threats by visiting UTCourts.gov/alerts and checking the color-coded system listed by county.
Under Utah foreclosure laws, a borrower can reinstate their loan by paying the overdue amount, fees, and associated foreclosure costs any time up to three months after the trustee records the notice of default. In some cases, the deed of trust in the loan documents may provide a borrower with even more time to reinstate.
There is typically no redemption period for the borrower after a nonjudicial foreclosure sale in Utah. However, in judicial foreclosures, borrowers have six months in which they may redeem the property by paying the full purchase price of the property, costs and fees paid by the mortgage holder, and a six percent redemption fee. In some cases, the court may extend the six-month period.
Utah foreclosure laws permit deficiency judgments in nonjudicial foreclosures as long as the lawsuit is filed within three months of the foreclosure sale. The deficiency judgment is limited to the lesser value of the following:
For example, if a homeowner owes $200,000 on a property (including interest, costs, and fees) and the property sells for $120,000 and has a fair market value (FMV) of $150,000, then the deficiency judgment could not be for more than $30,000 because the difference in the sale price and FMV is $30,000. The difference between the total debt, interest, costs and fees and FMV would be $50,000.
When a real estate investor successfully buys a Utah foreclosure, the foreclosed homeowner may remain in the property during the right of redemption period, if there is one, without paying rent. After the investor receives the deed on the property at the end of this period, the former homeowner must move out. If they fail to do so, then the investor can file for a notice of eviction. If there are tenants living in the property, they may be entitled to a 90-day notice after the right of redemption expires before they can be evicted. This is the case if the mortgage on the property was federally related. However, the tenants cannot receive this additional protection if they are the foreclosed homeowners or the spouse, parent, or child of the former homeowner, received special provisions in their lease that the former homeowner would not have made for a stranger, or are paying rents substantially less than fair market value.
Investors should note the state of Utah has adjusted eviction policies and procedures in the past in response to public health threats. In response to the 2020 COVID-19 global pandemic, for example, the Utah Supreme Court and the Utah Judicial Council required a COVID Eviction Declaration to be submitted during the eviction process in order to verify the eviction complied with all relevant relief laws and requirements. However, Utah is known for its expeditious eviction process and has remained an “investor friendly” state in this regard. Check foreclosure forbearance and eviction moratorium guidance in the state and locally when planning to buy Utah foreclosures and prior to implementing eviction procedures.
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