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S.B. 205 Enrolled

             1     

REAL PROPERTY - PARTIAL RELEASE OR

             2     
PARTIAL RECONVEYANCE

             3     
2006 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Thomas V. Hatch

             6     
House Sponsor: J. Stuart Adams

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill addresses partial releases and reconveyances of real property.
             11      Highlighted Provisions:
             12          This bill:
             13          .    expands the definition of "delivery" applicable to reconveyances and releases of real
             14      property;
             15          .    eliminates the need to record a copy of a release or reconveyance of a mortgage or
             16      trust deed;
             17          .    outlines the method of partially reconveying or partially releasing real property
             18      subject to a trust deed or mortgage;
             19          .    provides forms for certain documents required to partially reconvey or partially
             20      release real property subject to a trust deed or mortgage; and
             21          .    makes technical changes.
             22      Monies Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          None
             26      Utah Code Sections Affected:
             27      AMENDS:
             28          57-1-39, as last amended by Chapter 298, Laws of Utah 2003
             29          57-1-40, as last amended by Chapter 40, Laws of Utah 2002


             30      ENACTS:
             31          57-1-40.5, Utah Code Annotated 1953
             32     
             33      Be it enacted by the Legislature of the state of Utah:
             34          Section 1. Section 57-1-39 is amended to read:
             35           57-1-39. Definitions.
             36          As used in Sections 57-1-40 and 57-1-44 :
             37          (1) "Beneficiary" means the record owner of the beneficiary's interest under a trust
             38      deed, including successors in interest.
             39          (2) "Deliver" or "delivered" means by:
             40          (a) [by] overnight delivery by a reputable carrier; [or]
             41          (b) [by] United States certified mail or express mail[.];
             42          (c) hand delivery with receipt acknowledged in writing; or
             43          (d) facsimile or electronic mail belonging to the beneficiary, mortgagee, or servicer.
             44          (3) "Mortgage" is as described in Section 57-1-14 .
             45          (4) "Mortgagee" means the record owner of the mortgagee's interest under a mortgage,
             46      including a successor in interest.
             47          (5) "Satisfactory evidence of the full payment of the obligation secured by a trust deed
             48      or mortgage" means written information adequate, in the opinion of a title insurer or title agent,
             49      to establish that the obligation secured by the trust deed or mortgage has been paid in full.
             50          (6) "Servicer" means a person or entity that collects loan payments on behalf of a
             51      beneficiary or mortgagee.
             52          (7) "Title agent" means a title insurance producer licensed as an organization under
             53      Title 31A, Chapter 23a, Part 2, Producers and Consultants.
             54          (8) "Title insurer" means a title insurer authorized to conduct business in the state
             55      under Title 31A, Chapter 23a, Part 2, Producers and Consultants.
             56          (9) "Trust deed" is as defined in Subsection 57-1-19 (3).
             57          Section 2. Section 57-1-40 is amended to read:


             58           57-1-40. Reconveyance of trust deed or release of mortgage -- Procedures --
             59      Forms.
             60          (1) A title insurer or title agent may reconvey a trust deed or release a mortgage in
             61      accordance with the provisions of Subsections (2) through (6) if:
             62          (a) the obligation secured by the trust deed or mortgage has been fully paid by the title
             63      insurer or title agent; or
             64          (b) the title insurer or title agent possesses satisfactory evidence of the full payment of
             65      the obligation secured by a trust deed or mortgage.
             66          (2) A title insurer or title agent may reconvey a trust deed or release a mortgage under
             67      Subsection (1) regardless of whether the title insurer or title agent is named as a trustee under a
             68      trust deed or has the authority to release a mortgage.
             69          (3) At the time the obligation secured by the trust deed or mortgage is paid in full, or at
             70      any time thereafter, the title insurer or title agent shall deliver a notice of intent to release or
             71      reconvey [and a copy of the release or reconveyance to be recorded], as described in Subsection
             72      (4), to the beneficiary, mortgagee, or servicer at:
             73          (a) the address specified in the trust deed or mortgage;
             74          (b) any address for the beneficiary or mortgagee specified in the last recorded
             75      assignment of the trust deed or mortgage;
             76          (c) any address for the beneficiary, mortgagee, or servicer specified in a request for
             77      notice recorded under Section 57-1-26 ; or
             78          (d) the address shown on any payoff statement received by the title insurer or agent
             79      from the beneficiary, mortgagee, or servicer.
             80          (4) The notice of intent to release or reconvey shall contain the name of the beneficiary
             81      or mortgagee and the servicer if loan payments on the trust deed or mortgage are collected by a
             82      servicer, the name of the title insurer or title agent, the date, and be substantially in the
             83      following form:
             84     
NOTICE OF INTENT TO RELEASE OR RECONVEY

             85          Notice is hereby given to you as follows:


             86          1. This notice concerns the (trust deed or mortgage) described as follows:
             87          (Trustor or Mortgagor):____________________________________________
             88          (Beneficiary or Mortgagee):________________________________________
             89          Recording information:____________________________________________
             90          Entry Number:___________________________________________________
             91          Book Number:_______________________________________________
             92          Page Number:_______________________________________________
             93          2. The undersigned claims to have paid in full or possesses satisfactory evidence of the
             94      full payment of the obligation secured by the trust deed or mortgage described above.
             95          3. The undersigned will fully release the mortgage or reconvey the trust deed described
             96      in this notice unless, within 60 days from the date stated on this notice, the undersigned has
             97      received by certified mail a notice stating that the obligation secured by the trust deed or
             98      mortgage has not been paid in full or that you otherwise object to the release of the mortgage or
             99      the reconveyance of the trust deed. Notice shall be mailed to the address stated on this form.
             100          [4. A copy of the (release of mortgage or reconveyance of trust deed) is enclosed with
             101      this notice.]
             102     
(Signature of title insurer or title agent)

             103     
(Address of title insurer or title agent)

             104          (5) (a) If, within 60 days from the day on which the title insurer or title agent delivered
             105      the notice of intent to release or reconvey in accordance with Subsections (3) and (4), a
             106      reconveyance of trust deed or release of mortgage is not recorded, and the beneficiary,
             107      mortgagee, or servicer does not send by certified mail to the title insurer or title agent a notice
             108      that the obligation secured by the trust deed or mortgage has not been paid in full or that the
             109      beneficiary, mortgagee, or servicer objects to the release of the mortgage or reconveyance of
             110      the trust deed, the title insurer or title agent may execute, acknowledge, and record a
             111      reconveyance of a trust deed or release of a mortgage.
             112          (b) A reconveyance of a trust deed under Subsection (5)(a) shall be in substantially the
             113      following form:


             114     
RECONVEYANCE OF TRUST DEED

             115          (Name of title insurer or title agent), a (title insurer or title agent) authorized to conduct
             116      business in the state does hereby reconvey, without warranty, the following trust property
             117      located in (name of county) County, state of Utah, that is covered by a trust deed naming (name
             118      of trustor) as trustor, and (name of beneficiary) as beneficiary and was recorded on (date) in
             119      Book ________ at Page _________ as Entry Number _________: (insert a description of the
             120      trust property.)
             121          The undersigned title insurer or title agent certifies as follows:
             122          1. The undersigned title insurer or title agent has fully paid the obligation secured by
             123      the trust deed or possesses satisfactory evidence of the full payment of the obligation secured
             124      by the trust deed.
             125          2. In accordance with the requirements of Utah Code Annotated Subsections 57-1-40 (3)
             126      and (4), the title insurer or title agent delivered to the beneficiary or servicer, a notice of intent
             127      to release or reconvey and a copy of the reconveyance.
             128          3. The trust deed has not been reconveyed and the title insurer or title agent did not
             129      receive, within 60 days from the day on which the title insurer or title agent delivered the notice
             130      of intent to release or reconvey, a notice from the beneficiary or servicer sent by certified mail
             131      that the obligation secured by the trust deed has not been paid in full or that the beneficiary or
             132      servicer objects to the reconveyance of the trust deed.
             133      ___________________________________        __________________________________
             134      (Notarization)
(Signature of title insurer or title agent)

             135          (c) A release of a mortgage under Subsection (5)(a) shall be in substantially the
             136      following form:
             137     
RELEASE OF MORTGAGE

             138          (Name of title insurer or title agent), a (title insurer or title agent) authorized to conduct
             139      business in the state does hereby release the mortgage on the following property located in
             140      (name of county) County, state of Utah, that is covered by a mortgage naming (name of
             141      mortgagor) as mortgagor, and (name of mortgagee) as mortgagee and was recorded on (date) in


             142      Book ________ at Page _________ as Entry Number _________: (insert a description of the
             143      trust property.)
             144          The undersigned title insurer or title agent certifies as follows:
             145          1. The undersigned title insurer or title agent has fully paid the obligation secured by
             146      the mortgage or possesses satisfactory evidence of the full payment of the obligation secured by
             147      the mortgage.
             148          2. In accordance with the requirements of Utah Code Annotated Subsections 57-1-40 (3)
             149      and (4), the title insurer or title agent delivered to the mortgagee or servicer a notice of intent to
             150      release or reconvey [and a copy of the release].
             151          3. The mortgage has not been released and the title insurer or title agent did not
             152      receive, within 60 days from the day on which the title insurer or title agent delivered the notice
             153      of intent to release or reconvey, a notice from the mortgagee or servicer sent by certified mail
             154      that the obligation secured by the mortgage has not been paid in full or that the mortgagee or
             155      servicer objects to the release of the mortgage.
             156      ___________________________________        __________________________________
             157      (Notarization)
(Signature of title insurer or title agent)

             158          (d) (i) A release of mortgage or reconveyance of trust deed that is executed and
             159      notarized in accordance with Subsection (5)(b) or (c) is entitled to recordation.
             160          (ii) (A) Except as provided in Subsection (5)(d)(ii)(B), a reconveyance of a trust deed
             161      or release of a mortgage that is recorded under Subsection (5)(d)(i) is valid regardless of any
             162      deficiency in the release or reconveyance procedure not disclosed in the release of mortgage or
             163      reconveyance of trust deed.
             164          (B) If the title insurer's or title agent's signature on a release of mortgage or
             165      reconveyance of trust deed recorded under Subsection (5)(d)(ii)(A) is forged, the release of
             166      mortgage or reconveyance of trust deed is void.
             167          (6) A release of mortgage or reconveyance of trust deed under this section does not, by
             168      itself, discharge any promissory note or other obligation that was secured by the trust deed or
             169      mortgage at the time the trust deed was reconveyed or the mortgage was released.


             170          Section 3. Section 57-1-40.5 is enacted to read:
             171          57-1-40.5. Partial reconveyance of trust deed or release of mortgage -- Procedures
             172      -- Forms.
             173          (1) (a) If a trustor or mortgagor pledges more than one parcel of real property as
             174      collateral under a trust deed or mortgage, the beneficiary, mortgagee, or servicer may agree for
             175      a sum certain to release a portion of the real property pledged on the trust deed or mortgage
             176      when a sum certain is paid.
             177          (b) When the sum certain is paid, a title insurer or title agent may partially convey a
             178      trust deed or partially release a mortgage in accordance with the provisions of Subsections (2)
             179      through (6) if:
             180          (i) the sum certain that is part of the obligation secured by the trust deed or mortgage
             181      has been paid by the title insurer or title agent to release or reconvey a portion of the real
             182      property pledged as collateral; or
             183          (ii) the title insurer or title agent possesses satisfactory evidence of the payment of the
             184      sum certain thus authorizing release or reconveyance of a portion of the real property pledged.
             185          (2) A title insurer or title agent may partially reconvey a trust deed or partially release a
             186      mortgage under Subsection (1) regardless of whether the title insurer or title agent is named as
             187      a trustee under a trust deed or has the authority to release a mortgage.
             188          (3) At the time the obligation secured by the trust deed or mortgage is paid as required
             189      by Subsection (1), or at any later time, the title insurer or title agent shall deliver a notice of
             190      intent to partially release or partially reconvey, and a copy of the partial release or partial
             191      reconveyance that is to be recorded, as described in Subsection (4), to the beneficiary,
             192      mortgagee, or servicer at:
             193          (a) the address specified in the trust deed or mortgage;
             194          (b) any address for the beneficiary or mortgagee specified in the last recorded
             195      assignment of the trust deed or mortgage;
             196          (c) any address for the beneficiary, mortgagee, or servicer specified in a request for
             197      notice recorded under Section 57-1-26 ; or


             198          (d) the address shown on any payoff statement received by the title insurer or agent
             199      from the beneficiary, mortgagee, or servicer.
             200          (4) The notice of intent to partially release or partially reconvey shall:
             201          (a) contain the name of:
             202          (i) the beneficiary or mortgagee;
             203          (ii) the servicer, if any;
             204          (iii) the title insurer or title agent;
             205          (b) contain the date; and
             206          (c) be substantially in the following form:
             207     
NOTICE OF INTENT TO PARTIALLY RELEASE OR PARTIALLY RECONVEY

             208          Notice is hereby given to you as follows:
             209          1. This notice concerns the (trust deed or mortgage) described as follows:
             210          (Trustor or Mortgagor):___________________________________________________
             211          (Beneficiary or Mortgagee):_______________________________________________
             212          Recording Information:___________________________________________________
             213          Entry Number:__________________________________________________________
             214          Book Number:__________________________________________________________
             215          Page Number:__________________________________________________________
             216          2. To release only a portion of the real property pledged as collateral, the undersigned
             217      claims to have paid or possess satisfactory evidence of the payment of a sum certain necessary
             218      to release or reconvey a specific portion of the real property pledged as collateral under the
             219      mortgage or trust deed.
             220          3. Within 60 days after the date stated on this notice, the undersigned will partially
             221      release the mortgage or partially reconvey the trust deed described in this notice unless the
             222      undersigned receives by certified mail a notice stating that the sum certain that is part of the
             223      obligation secured by the trust deed or mortgage has not been paid or that you otherwise object
             224      to the partial release of the mortgage or the partial reconveyance of the trust deed. Notice shall
             225      be mailed to the address stated on this form.


             226          4. A copy of the partial release of mortgage or partial reconveyance of trust deed is
             227      enclosed with this Notice.
             228                                   (Signature of title insurer or title agent)
             229                                   (Address of title insurer or title agent)
             230          (5) (a) If, within 60 days after the day on which the title insurer or title agent delivered
             231      the notice of intent to partially release or partially reconvey in accordance with Subsections (3)
             232      and (4), a partial reconveyance of trust deed or partial release of mortgage is not recorded, and
             233      the beneficiary, mortgagee, or servicer does not send by certified mail to the title insurer or title
             234      agent a notice that the obligation secured by the trust deed or mortgage has not been paid or
             235      that the beneficiary, mortgagee, or servicer objects to the partial release of the mortgage or
             236      partial reconveyance of the trust deed, the title insurer or title agent may execute, acknowledge,
             237      and record a partial reconveyance of a trust deed or partial release of a mortgage.
             238          (b) A partial reconveyance of a trust deed under Subsection (5)(a) shall be in
             239      substantially the following form:
             240     
PARTIAL RECONVEYANCE OF TRUST DEED

             241          (Name of title insurer or title agent), a (title insurer or title agent) authorized to conduct
             242      business in the state reconveys, without warranty, only on the following trust property located
             243      in (name of county) County, state of Utah, that is covered by a trust deed naming (name of
             244      trustor) as trustor, and (name of beneficiary) as beneficiary and was recorded on (date) in Book
             245      __________ at Page _________ as Entry Number ________: (insert a description of the
             246      specific trust property to be reconveyed.)
             247          The undersigned title insurer or title agent certifies as follows:
             248          1. To release only this portion of the real property pledged as collateral, the
             249      undersigned has paid or possesses satisfactory evidence of the payment of a sum certain
             250      necessary to reconvey a specific portion of the real property pledged as collateral under the
             251      trust deed.
             252          2. In accordance with the requirements of Utah Code Subsections 57-1-40.5 (3) and (4),
             253      the title insurer or title agent delivered to the beneficiary or servicer, a notice of intent to


             254      partially release or partially reconvey and a copy of the partial reconveyance.
             255          3. The trust deed has not been reconveyed, as to this property, and the title insurer or
             256      title agent did not receive, within 60 days after the day the title insurer or title agent delivered
             257      the notice of intent to partially release or partially reconvey, a notice from the beneficiary or
             258      servicer sent by certified mail stating the sum certain necessary to reconvey a specific portion
             259      of the real property pledged as collateral under the trust deed or that the beneficiary or servicer
             260      objects to the partial reconveyance of the trust deed.
             261      __________________________            _______________________________
             262      (Notarization)                        (Signature of title insurer or title agent)
             263          (c) A release of a mortgage under Subsection (5)(a) shall be in substantially the
             264      following form:
             265     
PARTIAL RELEASE OF MORTGAGE

             266          (Name of title insurer or title agent), a (title insurer or title agent) authorized to conduct
             267      business in the state partially releases the mortgage only on the following property located in
             268      (name of county) County, state of Utah, that is covered by a mortgage naming (name of
             269      mortgagor) as mortgagor, and (name of mortgagee) as mortgagee and was recorded on (date) in
             270      Book _____ at Page ______ as Entry Number _______: (insert a description of the specific
             271      property.)
             272          The undersigned title insurer or title agent certifies as follows:
             273          1. To release only this portion of the real property pledged as collateral, the
             274      undersigned has paid or possesses satisfactory evidence of the payment of a sum certain
             275      necessary to release a specific portion of the real property pledged as collateral under the
             276      mortgage.
             277          2. In accordance with the requirements of Utah Code Subsections 57-1-40.5 (3) and (4),
             278      the title insurer or title agent delivered to the mortgagee or servicer, a notice of intent to
             279      partially release or partially reconvey and a copy of the partial release.
             280          3. The trust deed has not been released, as to this property, and the title insurer or title
             281      agent did not receive, within 60 days after the day the title insurer or title agent delivered the


             282      notice of intent to partially release or partially reconvey, a notice from the beneficiary or
             283      servicer sent by certified mail stating the sum certain necessary to release a specific portion of
             284      the real property pledged as collateral under the mortgage or that the mortgagee or servicer
             285      objects to the partial release of the mortgage.
             286      __________________________            _______________________________
             287      (Notarization)                        (Signature of title insurer or title agent)
             288          (d) (i) A partial release of mortgage or partial reconveyance of trust deed that is
             289      executed or notarized in accordance with Subsection (5)(b) or (c) is entitled to be recorded.
             290          (ii) (A) Except as provided in Subsection (5)(d)(ii)(B), a partial reconveyance of a trust
             291      deed or partial release of a mortgage that is recorded under Subsection (5)(d)(i) is valid
             292      regardless of any deficiency in the partial release or reconveyance procedure not disclosed in
             293      the partial release of mortgage or partial reconveyance of trust deed.
             294          (B) If the title insurer's or title agent's signature on a partial release of mortgage or
             295      partial reconveyance of trust deed recorded under Subsection (5)(d)(ii)(A) is forged, the partial
             296      release of the mortgage or partial reconveyance of trust deed is void.
             297          (6) A partial release of mortgage or partial reconveyance of trust deed under this
             298      section does not, by itself, discharge any promissory note or other obligation secured by the
             299      trust deed or mortgage at the time the trust deed is partially reconveyed or the mortgage is
             300      partially released.


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