Utah Legislative Update

Utah Legislative Update

The Utah legislature recently amended certain provisions related to foreclosure of residential rental property and non-judicial foreclosure.  Both bills discussed in this memorandum are effective May 9, 2016.

 

UTAH SENATE BILL 22

 

In regard to residential rental property, the Notice of Trustee’s sale must now be posted in at least three (previously two) conspicuous places on the property to be sold.  The promulgated notice has also been revised to provide that tenants may be allowed to occupy their rental unit until their rental agreement expires, or until 45 days (previously 90 days) after the date tenant is served with a notice to vacate, whichever is later.

 

“Bona Fide Residential Rental Agreement” means an agreement, for a property secured by a trust deed:

  • That was the result of an arm’s-length transaction;
  • Established before:
    • The trustee records a notice of default; or
    • The trustee or beneficiary files an action to foreclose the trust property;
  • That provides an individual the right to exclusive use and occupancy of the residential property:
    • On an at-will basis; or
    • For a period specified by the agreement that is no longer than twelve months; and
  • That requires the individual to pay rent in an amount that:
    • Is not substantially less than fair market rent for the property; or
    • Is less than fair market rent due to a federal, state, or local subsidy.

 

“Bona Fide Tenant” means an individual who:

  • Has the right to occupy a residential property under a bona fide residential rental agreement;
  • Is not the trustor; and
  • Is not the trustor’s child, spouse, or parent.

 

“Foreclosed Rental Property” means a property that:

  • Is the subject of a bona fide residential rental agreement; and
  • Is either:
    • The subject of a trustee’s sale; or
    • Is foreclosed.

 

“New Owner” means the immediate successor in interest of a foreclosed rental property following a foreclosure or trustee’s sale of the property.

 

Except as provided below, a new owner assumes ownership of a foreclosed rental property subject to a bona fide tenant’s right to occupy the foreclosed rental property:

  • According to the terms of a bona fide residential rental agreement; and
  • Until the end of the term of the bona fide residential rental agreement.

 

A new owner who intends to occupy a foreclosed rental property as the new owner’s primary residence may terminate:

  • The bona fide residential rental agreement; and
  • The bona fide tenant’s occupancy of the foreclosed rental property.

 

A new owner who terminates a bona fide tenant’s occupancy of a foreclosed rental property must serve, to the bona fide tenant, a notice to vacate at least 45 days before the day on which the new owner requires the bona fide tenant to vacate the foreclosed rental property in the manner provided by law.

 

A notice to vacate must:

·         Be in at least 14-point font;

·         State the new owner’s name, address, and contact information;

·         Explain the reason the new owner requires the bona fide tenant to vacate the rental property;

·         State the date on which the bona fide tenant is required to vacate the rental property; and

·         Refer to the law under which the notice to vacate is provided.

 

UTAH SENATE BILL 220

 

A party in a legal action that involves a trust deed is not required to join the trustee as a party in the action unless the legal action pertains to a breach of the trustee’s obligations

under the law or under the trust deed.

 

A trustee of a trust deed is required to act pursuant to a court order against the trust deed beneficiary to the extent the order requires an action that the trustee is authorized to take

under the law or under the trust deed.

 

If a party in a legal action that involves a trust deed joins the trustee in an action that does not pertain to the trustee’s obligations under the law or under the trust deed, the court must dismiss the action against the trustee and award the trustee reasonable attorney fees

arising from the trustee being joined in the legal action.

 

A trustee in a trustee’s sale may require a successful bidder to make a deposit.  A successful bidder who fails to pay the bid amount forfeits their deposit.  A trustee must, within five (previously three) business days of receiving payment of the bid price, execute and submit the trustee’s deed for recording and, upon request of purchaser, provide an unrecorded copy of a signed trustee’s deed to purchaser.

 

Not later than 10 days after the day on which a notice of default is recorded, the trustee or beneficiary must mail a signed copy of the Notice of Default:

  • By certified or registered mail, return receipt requested, with postage prepaid;
  • With the recording date shown;
  • Addressed to each person whose name and address are set forth in a request that has been recorded prior to the filing for record of the notice of default; and
  • Directed to the address designated in the request.

 

The following Appointment or Substitution of Trustee form has been amended as follows:

 

Appointment or Substitution of Trustee

 

_________________________ (name and address of appointed or substituted trustee) is hereby appointed trustee under the trust deed executed by ____ as trustor, in which ____ is named beneficiary and ____ as trustee, and filed for record ________(monthdayyear), and recorded in Book ____, Page ____, Records of ____  County, (Utah or filed for record __________(monthdayyear), with recorder’s entry No. ____,____ County), Utah.

 

(Insert legal description)

 

Signature_____________________________

 

(Certificate of Acknowledgment)