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First Substitute S.B. 53
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5 This act modifies provisions related to trust deeds. The act alters the qualifications and
6 outlines the duties for trustees of trust deeds. The act modifies provisions relating to
7 successor trustees. The act alters the trustee's requirements when filing a notice of default.
8 The act alters provisions relating to the trustee's sale of trust property and the proceeds of
9 the sale. The act modifies the requirements for the sale of trust property by public auction.
10 The act amends the requirements for the trustee's course of action once a default under a
11 trust deed is cured. The act designates the determinative value for trust property. The act
12 establishes the effect of an erroneously recorded reconveyance of a trust deed. The act also
13 makes technical corrections.
14 This act affects sections of Utah Code Annotated 1953 as follows:
15 AMENDS:
16 57-1-20, as enacted by Chapter 181, Laws of Utah 1961
17 57-1-21, as last amended by Chapter 182, Laws of Utah 1996
18 57-1-22, as last amended by Chapter 75, Laws of Utah 2000
19 57-1-23, as enacted by Chapter 181, Laws of Utah 1961
20 57-1-24, as last amended by Chapter 88, Laws of Utah 1989
21 57-1-25, as last amended by Chapter 75, Laws of Utah 2000
22 57-1-26, as last amended by Chapter 75, Laws of Utah 2000
23 57-1-27, as last amended by Chapter 82, Laws of Utah 1988
24 57-1-28, as last amended by Chapter 68, Laws of Utah 1985
25 57-1-29, as last amended by Chapter 215, Laws of Utah 1997
26 57-1-31, as last amended by Chapter 75, Laws of Utah 2000
27 57-1-32, as last amended by Chapter 68, Laws of Utah 1985
28 57-1-33.1, as enacted by Chapter 185, Laws of Utah 1995
29 ENACTS:
30 57-1-21.5, Utah Code Annotated 1953
31 Be it enacted by the Legislature of the state of Utah:
32 Section 1. Section 57-1-20 is amended to read:
33 57-1-20. Transfers in trust of real property -- Purposes -- Effect.
34 Transfers in trust of real property may be made to secure the performance of an obligation
35 of the trustor or any other person named in the trust deed to a beneficiary. All right, title, interest
36 and claim in and to the trust property acquired by the trustor, or [
37 interest, subsequent to the execution of the trust deed, shall inure to the trustee as security for the
38 obligation or obligations for which the trust property is conveyed [
39 before execution of the trust deed.
40 Section 2. Section 57-1-21 is amended to read:
41 57-1-21. Trustees of trust deeds -- Qualifications.
42 (1) (a) The trustee of a trust deed shall be:
43 (i) any active member of the Utah State Bar residing in Utah;
44 (ii) any depository institution as defined in Section 7-1-103 , or insurance company
45 authorized to do business and actually doing business in Utah under the laws of Utah or the United
46 States;
47 (iii) any corporation authorized to conduct a trust business and actually conducting a trust
48 business in Utah under the laws of Utah or the United States;
49 (iv) any title insurance or abstract company authorized to do business and actually doing
50 business in Utah under the laws of Utah;
51 (v) any agency of the United States government; or
52 (vi) any association or corporation [
53 Farm Credit Administration or its successor.
54 (b) Subsection (1) is not applicable to a trustee of a trust deed existing prior to the effective
55 date of this chapter, nor to any agreement that is supplemental to that trust deed.
56 (2) The trustee of a trust deed may not be the beneficiary of the trust deed, unless the
57 beneficiary is qualified to be a trustee under Subsection (1) (a)(ii), (iii), (v), or (vi).
58 (3) The power of sale conferred by Section 57-1-23 may only be exercised by the trustee
59 of a trust deed if the trustee is qualified under Subsection (1)(a)(i).
60 (4) A trust deed with an unqualified trustee or without a trustee shall be effective to create
61 a lien on the trust property, but the power of sale and other trustee powers under the trust deed may
62 be exercised only if, prior to the exercise of those powers, the beneficiary has appointed a qualified
63 successor trustee under Section 57-1-22 .
64 Section 3. Section 57-1-21.5 is enacted to read:
65 57-1-21.5. Trustees of trust deeds -- Duties.
66 (1) The following duties of the trustee may not be delegated:
67 (a) the preparation and execution of:
68 (i) the notice of default and election to sell;
69 (ii) the cancellation of notice of default and election to sell;
70 (iii) the notice of sale;
71 (iv) the trustee's deed; and
72 (v) the deed of reconveyance;
73 (b) the notification of foreclosure through publication, posting, and certified or registered
74 mail;
75 (c) the receiving and responding to requests for reinstatement or payoff requirements; and
76 (d) the handling of reinstatement or payoff funds.
77 (2) Nothing in this section is intended to prevent the trustee from using clerical or office
78 staff under the trustee's direct and immediate supervision to assist in the duties described in
79 Subsection (1) or from using the services of others for publication and posting.
80 Section 4. Section 57-1-22 is amended to read:
81 57-1-22. Successor trustees -- Appointment by beneficiary -- Effect -- Substitution
82 of trustee -- Recording -- Form.
83 (1) The beneficiary may appoint a successor trustee at any time by filing for record in the
84 office of the county recorder of each county in which the trust property or some part [
85 the trust property is situated, a substitution of trustee. [
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87 named in the deed of trust and of any successor trustee. The beneficiary may, by express provision
88 in the substitution of trustee, ratify and confirm action taken on the beneficiary's behalf by the new
89 trustee prior to the recording of the substitution of trustee.
90 (2) The substitution shall:
91 (a) identify the trust deed by stating the names of the original parties [
92 deed, the date of recordation, and the book and page where the same is recorded or the entry
93 number;
94 (b) include the legal description of the trust property;
95 (c) state the name of the new trustee; and
96 (d) be executed and acknowledged by all of the beneficiaries under the trust deed or their
97 successors in interest.
98 (3) If not previously recorded, at the time of recording [
99 successor trustee shall file for record, in the office of the county recorder of each county in which
100 the trust property or some part of it is situated, the substitution of trustee[
101 of the substitution of trustee shall be sent in the manner provided in [
102 57-1-26 (2) to all persons to whom a copy of [
103 mailed by [
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105 (4) A substitution of trustee shall be sufficient if made in substantially the following form:
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107
108 is hereby appointed successor trustee under the trust deed executed by ____ as
109 trustor, in which ____ is named beneficiary and ____ as trustee, and filed for record
110 __________(month\day\year), and recorded in Book ____, Page ____, Records of ____ County,
111 (or filed for record __________(month\day\year), with recorder's entry No. ____, ____ County),
112 Utah.
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115 Section 5. Section 57-1-23 is amended to read:
116 57-1-23. Sale of trust property -- Power of trustee -- Foreclosure of trust deed.
117 [
118 Subsection 57-1-21 (1)(a)(i) is given the power of sale by which the trustee may exercise and
119 [
120 Sections 57-1-24 and 57-1-27 , after a breach of an obligation for which the trust property is
121 conveyed as security; or, at the option of the beneficiary, a trust deed may be foreclosed in the
122 manner provided by law for the foreclosure of mortgages on real property. The power of sale may
123 be exercised by the trustee without express provision [
124 Section 6. Section 57-1-24 is amended to read:
125 57-1-24. Sale of trust property by trustee -- Notice of default.
126 The power of sale conferred upon the trustee who is qualified under Subsection
127 57-1-21 (1)(a)(i) may not be exercised until:
128 (1) the trustee first files for record, in the office of the recorder of each county where the
129 trust property or some part or parcel [
130 identifying the trust deed by stating the name of the trustor named [
131 giving the book and page, or the recorder's entry number, where the trust deed is recorded and a
132 legal description of the trust property, and containing a statement that a breach of an obligation for
133 which the trust property was conveyed as security has occurred, and setting forth the nature of that
134 breach and of [
135 obligation;
136 (2) not less than three months has [
137 record under Subsection (1); and
138 (3) after the lapse of at least three months the trustee shall give notice of sale as provided
139 in [
140 Section 7. Section 57-1-25 is amended to read:
141 57-1-25. Notice of trustee's sale -- Description of property -- Time and place of sale.
142 (1) The trustee shall give written notice of the time and place of sale particularly describing
143 the property to be sold:
144 (a) by publication of the notice, at least three times, once a week for three consecutive
145 weeks, the last publication to be at least ten days but not more than 30 days prior to the sale, in
146 [
147 or some part [
148 daily publication; and
149 (b) by posting the notice, at least 20 days before the date of sale, in some conspicuous
150 place on the property to be sold and also [
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152 of each county in which the trust property, or some part of it, is located.
153 (2) (a) The sale shall be held at the time and place designated in the notice of sale [
154 (b) The time of sale shall be between the hours of [
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156 (c) The place of sale, as designated in the notice of sale under Subsection (1), shall be one
157 of the following:
158 (i) at the property to be sold; or
159 (ii) at a courthouse serving the county in which the property to be sold, or some part of the
160 property to be sold, is located.
161 (3) The notice of sale shall be sufficient if made in substantially the following form:
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163 The following described property will be sold at public auction to the highest bidder,
164 payable in lawful money of the United States at the time of sale, at [
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166 __.m. of said day, for the purpose of foreclosing a trust deed originally executed by ____ (and
167 ____, his wife,) as trustors, in favor of ____, covering real property located at ____, and more
168 particularly described as:
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171 The current beneficiary of the trust deed is ______________________ and the record
172 owners of the property as of the recording of the notice of default are _________________ and
173 ____________________.
174 Dated __________(month\day\year).
_______________
175
Trustee
176 Section 8. Section 57-1-26 is amended to read:
177 57-1-26. Requests for copies of notice of default and notice of sale -- Mailing by
178 trustee or beneficiary -- Publication of notice of default.
179 (1) (a) Any person desiring a copy of any notice of default and of any notice of sale under
180 any trust deed [
181 to the filing for record of a notice of default [
182 office of the county recorder of any county in which [
183 any part of the trust property, is situated, a duly acknowledged request for a copy of any notice of
184 default and notice of sale. [
185 included in any other recorded instrument. The request shall set forth the name and address of the
186 [
187 stating the names of the original parties [
188 [
189 recorder's entry number, and the legal description of the trust property. The request shall be in
190 substantially the following form:
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192 [
193 a copy of notice of sale under the trust deed filed for record __________(month\day\year), and
194 recorded in Book ____, Page ____, Records of ____ County, (or filed for record
195 __________(month\day\year), with recorder's entry number ____, _______ County), Utah,
196 executed by ____ and _________________ as [
197 beneficiary and ____ as trustee, be mailed to ____ (insert name) ____ at ____ (insert address)
198 __________
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Signature ____________________
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202 (b) Upon filing for record of a request for notice, the recorder shall index the request in
203 the mortgagor's index, mortgagee's index, and abstract record. Except as provided in [
204 Subsection (3), the trustee under any [
205 or notice of sale to any person not filing a request for notice as described [
206 (1)(a).
207 (2) Not later than ten days after recordation of a notice of default, the trustee or beneficiary
208 shall mail, by certified or registered mail, with postage prepaid, a copy of [
209 default with the recording date shown [
210 are set forth in a request [
211 notice of default, directed to the address designated in the request. At least 20 days before the date
212 of sale, the trustee shall mail, by certified or registered mail, return receipt requested with postage
213 prepaid, a copy of the notice of the time and place of sale, addressed to each person whose name
214 and address are set forth in a request [
215 record of the notice of default, directed to the address designated in the request.
216 (3) Any trust deed may contain a request that a copy of any notice of default and a copy
217 of any notice of sale [
218 [
219 A copy of any notice of default and of any notice of sale shall be mailed to [
220 requesting the notice who is a party to the trust deed at the same time and in the same manner
221 required in Subsection (2) as though a separate request [
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223 (4) If no address of the trustor is set forth in the trust deed and if no request for notice by
224 the trustor has been recorded as provided in this section, a copy of the notice of default shall, no
225 later than 15 days after the filing for record of the notice of default, either be:
226 (a) mailed to the address of the property described in the notice of default; or
227 (b) posted on the property.
228 [
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235 (5) No request for a copy of any notice filed for record [
236 Subsections (1) and (3), nor any statement or allegation in any [
237 any record [
238 to any person that any person requesting copies of notice of default or of notice of sale has or
239 claims any right, title or interest in, or lien or claim upon, the trust property.
240 Section 9. Section 57-1-27 is amended to read:
241 57-1-27. Sale of trust property by public auction -- Postponement of sale.
242 (1) (a) On the date and at the time and place designated in the notice of sale, the trustee
243 or the attorney for the trustee shall sell the property at public auction to the highest bidder. The
244 trustee, or the attorney for the trustee, may conduct the sale and act as the auctioneer. The trustor,
245 or [
246 trust property shall be sold, if the property consists of several known lots or parcels which can be
247 sold [
248 Any person, including the beneficiary or trustee, may bid at the sale. The trustee may bid for the
249 beneficiary, but not for the trustee. Each bid is considered an irrevocable offer[
250 [
251 property [
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253 (i) renotice the sale in the same manner as notice of the original sale is required to be
254 given; or
255 (ii) sell the property to the next highest bidder.
256 (b) A bidder refusing to pay the bid price is liable for any loss occasioned by the refusal,
257 including interest, costs, and trustee's and reasonable attorneys' fees. The trustee or the attorney for
258 the trustee may thereafter reject any other bid of that person for the property.
259 (2) The person conducting the sale may, for any cause he considers expedient, postpone
260 the sale [
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263 give notice of the postponement by public declaration, by written notice or oral postponement, at
264 the time and place last appointed for the sale. No other notice of the postponed sale is required[
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268 Section 10. Section 57-1-28 is amended to read:
269 57-1-28. Sale of trust property by trustee -- Payment of bid -- Trustee's deed
270 delivered to purchaser -- Recitals -- Effect.
271 (1) The purchaser at the sale shall pay the price bid as directed by the trustee [
272 The beneficiary shall receive a credit on the beneficiary's bid for the amount representing the
273 unpaid principal owed, accrued interest as of the date of the sale, advances for the payment of
274 taxes, insurance, and maintenance and protection of the trust property and the beneficiary's lien on
275 the trust property, and costs of sale, including reasonable trustee's and attorney's fees. Upon receipt
276 of payment, the trustee shall execute and deliver [
277 The trustee's deed may contain recitals of compliance with the requirements of Sections 57-1-19
278 through 57-1-36 relating to the exercise of the power of sale and sale of the property described
279 [
280 publication of the notice of default, any mailing and the publication and posting of the notice of
281 sale, and the conduct of sale. These recitals constitute prima facie evidence of [
282 with Sections 57-1-19 through 57-1-36 , and are conclusive evidence in favor of bona fide
283 purchasers and encumbrancers for value and without notice.
284 (2) The trustee's deed shall operate to convey to the purchaser, without right of redemption,
285 the trustee's title and all right, title, interest, and claim of the trustor and [
286 successors in interest and of all persons claiming by, through, or under them, in and to the property
287 sold, including all [
288 the trustor or [
289 which conveyance shall be considered effective and relate back to the time of the sale.
290 Section 11. Section 57-1-29 is amended to read:
291 57-1-29. Proceeds of trustee's sale -- Disposition.
292 (1) The trustee shall apply the proceeds of the trustee's sale, first, to the costs and expenses
293 of exercising the power of sale and of the sale, including the payment of the trustee's and attorney's
294 fees actually incurred not to exceed the amount which may be provided for in the trust deed,
295 second, to payment of the obligation secured by the trust deed, and the balance, if any, to the
296 person or persons legally entitled to the proceeds, or the trustee, in [
297 may deposit the balance of the proceeds with the clerk of the district court of the county in which
298 the sale took place. If the proceeds are deposited with the clerk of the district court, the trustee
299 shall file an affidavit with the clerk setting forth the facts of the deposit and a list of all known
300 claimants, including known addresses. Upon depositing the balance and filing the affidavit, the
301 trustee shall be discharged from all further responsibility and the clerk shall deposit the proceeds
302 with the state treasurer subject to the order of the district court.
303 (2) The clerk shall give notice of the deposited funds to all claimants listed in the trustee's
304 affidavits within 15 days of receiving the affidavit of deposit from the trustee.
305 (3) Any claimant may file a petition for adjudication of priority to the funds. The
306 petitioner requesting the funds shall give notice of the petition to all claimants listed in the trustee's
307 affidavit and to any other claimants known to the petitioner. The petitioner's notice must specify
308 that all claimants have 20 days to contest the petition by affidavit or counter-petition. If no
309 affidavit or counter-petition is filed within 20 days, the court shall enter an order directing the clerk
310 of the court or the county treasurer to disburse the funds to the petitioner according to the petition.
311 (4) If a petition for adjudication is contested by affidavit or counter-petition, the district
312 court shall conduct a hearing to establish the priorities of the parties to the deposited funds and
313 give notice to all known claimants of the date and time of the hearing. At the hearing, the court
314 will establish the priorities of the parties to the deposited funds and enter an order directing the
315 clerk of the court or county treasurer to disburse the funds according to the court's determination.
316 (5) All persons having or claiming to have an interest in the disposition of funds deposited
317 with the court under Subsection (1) who fail to appear and assert their claims are barred from any
318 claim to the funds after the entry of the court's order under Subsection (4).
319 Section 12. Section 57-1-31 is amended to read:
320 57-1-31. Trust deeds -- Default in performance of obligations secured --
321 Reinstatement -- Cancellation of recorded notice of default.
322 (1) Whenever all or a portion of the principal sum of any obligation secured by a trust deed
323 has, prior to the maturity date fixed in the obligation, become due or been declared due by reason
324 of a breach or default in the performance of any obligation secured by the trust deed, including a
325 default in the payment of interest or of any installment of principal, or by reason of failure of the
326 trustor to pay, in accordance with the terms of the trust deed, taxes, assessments, premiums for
327 insurance, or advances made by the beneficiary in accordance with terms of the obligation or of
328 the trust deed, the trustor or [
329 [
330 record [
331 within three months of the filing for record of notice of default under the trust deed, if the power
332 of sale is to be exercised, may pay to the beneficiary or [
333 the entire amount then due under the terms of the trust deed (including costs and expenses actually
334 incurred in enforcing the terms of the obligation, or trust deed, and the trustee's and attorney's fees
335 actually incurred) other than that portion of the principal as would not then be due had no default
336 occurred, and thereby cure the existing default [
337
338 beneficiary's successor in interest has been paid and the default cured, the obligation and trust deed
339 shall be reinstated [
340 acceleration had occurred.
341 (2) If the default is cured and the trust deed reinstated in the manner provided in
342 Subsection (1), [
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344 cancellation, including the cost of recording the cancellation of notice of default, the trustee [
345 shall execute, acknowledge, and deliver a cancellation of the recorded notice of default under the
346 trust deed; and any [
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348 cancellation within 30 days is liable to the person [
349 all actual damages resulting from this refusal. A [
350 [
351 of default. Otherwise, a cancellation of a recorded notice of default under a trust deed is, when
352 acknowledged, entitled to be recorded and is sufficient if made and executed by the trustee in
353 substantially the following form:
354
355 The undersigned hereby cancels the notice of default filed for record
356 __________(month\day\year), and recorded in Book ____, Page ____, Records of ____ County,
357 (or filed of record __________(month\day\year), with recorder's entry No. ____, ____ County),
358 Utah, which notice of default refers to the trust deed executed by ____ and ___________ as
359 [
360 __________(month\day\year), and recorded in Book ____, Page ____, Records of ____ County,
361 (or filed of record __________(month\day\year), with recorder's entry No. ____, ____ County),
362 Utah.
363
364
Signature of Trustee ______________________________________________________
365 Section 13. Section 57-1-32 is amended to read:
366 57-1-32. Sale of trust property by trustee -- Action to recover balance due upon
367 obligation for which trust deed was given as security -- Collection of costs and attorney's
368 fees.
369 At any time within three months after any sale of property under a trust deed[
370 [
371 to recover the balance due upon the obligation for which the trust deed was given as security[
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375 of the property at the date of sale [
376 amount for which the property was sold shall be determinative of the value. If other evidence is
377 considered in determining the value, the court shall take into account the marketing period, holding
378 costs, and anticipated costs of sale for the plaintiff. The court may not render judgment for more
379 than the amount by which the amount of the indebtedness with interest, costs, and expenses of sale,
380 including trustee's and attorney's fees, exceeds the [
381 of the sale. In any action brought under this section, the prevailing party shall be entitled to collect
382 its costs and reasonable attorney fees incurred [
383 Section 14. Section 57-1-33.1 is amended to read:
384 57-1-33.1. Reconveyance of a trust deed -- Erroneous reconveyance.
385 (1) (a) When an obligation secured by a trust deed has been satisfied, the trustee shall,
386 upon written request by the beneficiary, reconvey the trust property.
387 (b) At the time the beneficiary requests a reconveyance under Subsection (1)(a), the
388 beneficiary shall deliver to the trustee or the trustee's successor in interest the trust deed and the
389 note or other evidence that the obligation securing the trust deed has been satisfied.
390 (2) The reconveyance under Subsection (1) may designate the grantee as "the person or
391 persons entitled thereto."
392 (3) If a reconveyance is erroneously recorded by a beneficiary, the effect of the
393 reconveyance may be nullified and the trust deed reinstated by the recording of a corrective
394 affidavit or similar instrument describing the trust deed and setting forth the fact of the erroneous
395 reconveyance. Upon the recording of a corrective affidavit or similar instrument, the trust deed
396 has the same priority as it did prior to the erroneous reconveyance. However, any lien or interest
397 that was recorded or attached to the trust deed property between the time of the recording of the
398 erroneous reconveyance and the recording of the corrective affidavit or similar instrument has
399 priority over the reinstated trust deed, unless the lien or interest was recorded or attached with
400 actual knowledge that the trust deed had been reconveyed erroneously.
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