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H.B. 243 Enrolled

             1     

FORECLOSURE PROCESSES ON

             2     
RESIDENTIAL RENTAL PROPERTIES

             3     
2010 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Wayne A. Harper

             6     
Senate Sponsor: Ross I. Romero

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies provisions relating to the foreclosure of residential rental property.
             11      Highlighted Provisions:
             12          This bill:
             13          .    modifies requirements for notices of trustee's sale if the property to be sold is
             14      residential rental property;
             15          .    modifies unlawful detainer provisions relating to foreclosed residential rental
             16      property;
             17          .    enacts a provision requiring a notice to a tenant of property that is subject to a
             18      mortgage foreclosure proceeding;
             19          .    provides a sunset for provisions enacted in this bill; and
             20          .    makes technical changes.
             21      Monies Appropriated in this Bill:
             22          None
             23      Other Special Clauses:
             24          None
             25      Utah Code Sections Affected:
             26      AMENDS:
             27          57-1-25, as last amended by Laws of Utah 2009, Chapter 388
             28          63I-1-278, as last amended by Laws of Utah 2009, Chapters 161 and 334
             29          78B-6-802, as last amended by Laws of Utah 2009, Chapter 146


             30      ENACTS:
             31          63I-1-257, Utah Code Annotated 1953
             32          78B-6-901.5, Utah Code Annotated 1953
             33     
             34      Be it enacted by the Legislature of the state of Utah:
             35          Section 1. Section 57-1-25 is amended to read:
             36           57-1-25. Notice of trustee's sale -- Description of property -- Time and place of
             37      sale.
             38          (1) The trustee shall give written notice of the time and place of sale particularly
             39      describing the property to be sold:
             40          (a) by publication of the notice:
             41          (i) (A) at least three times;
             42          (B) once a week for three consecutive weeks;
             43          (C) the last publication to be at least 10 days but not more than 30 days before the date
             44      the sale is scheduled; and
             45          (D) in a newspaper having a general circulation in each county in which the property
             46      to be sold, or some part of the property to be sold, is situated; and
             47          (ii) in accordance with Section 45-1-101 for 30 days before the date the sale is
             48      scheduled; [and]
             49          (b) by posting the notice:
             50          (i) at least 20 days before the date the sale is scheduled; and
             51          (ii) (A) in some conspicuous place on the property to be sold; and
             52          (B) at the office of the county recorder of each county in which the trust property, or
             53      some part of it, is located[.]; and
             54          (c) if the stated purpose of the obligation for which the trust deed was given as
             55      security is to finance residential rental property:
             56          (i) by posting the notice, including the statement required under Subsection (3)(b):
             57          (A) on the primary door of each dwelling unit on the property to be sold, if the


             58      property to be sold has fewer than nine dwelling units; or
             59          (B) in at least two conspicuous places on the property to be sold, in addition to the
             60      posting required under Subsection (1)(b)(ii)(A), if the property to be sold has nine or more
             61      dwelling units; or
             62          (ii) by mailing the notice, including the statement required under Subsection (3)(b), to
             63      the occupant of each dwelling unit on the property to be sold.
             64          (2) (a) The sale shall be held at the time and place designated in the notice of sale.
             65          (b) The time of sale shall be between the hours of 8 a.m. and 5 p.m.
             66          (c) The place of sale shall be clearly identified in the notice of sale under Subsection
             67      (1) and shall be at a courthouse serving the county in which the property to be sold, or some
             68      part of the property to be sold, is located.
             69          (3) (a) The notice of sale shall be in substantially the following form:
             70     
Notice of Trustee's Sale

             71          The following described property will be sold at public auction to the highest bidder,
             72      payable in lawful money of the United States at the time of sale, at (insert location of sale)
             73      ________________on __________(month\day\year), at __.m. of said day, for the purpose of
             74      foreclosing a trust deed originally executed by ____ (and ____, his wife,) as trustors, in favor
             75      of ____, covering real property located at ____, and more particularly described as:
             76     
(Insert legal description)

             77          The current beneficiary of the trust deed is ______________________ and the record
             78      owners of the property as of the recording of the notice of default are _________________
             79      and ____________________.
             80      Dated __________(month\day\year).
_______________

             81     
Trustee

             82          (b) If the stated purpose of the obligation for which the trust deed was given as
             83      security is to finance residential rental property, the notice required under Subsection (1)(c)
             84      shall include a statement, in at least 14-point font, substantially as follows:
             85          "Notice to Tenant


             86          As stated in the accompanying Notice of Trustee's Sale, this property is scheduled to be
             87      sold at public auction to the highest bidder unless the default in the obligation secured by this
             88      property is cured. If the property is sold, you may be allowed under federal law to continue to
             89      occupy your rental unit until your rental agreement expires, or until 90 days after the date you
             90      are served with a notice to vacate, whichever is later. If your rental or lease agreement expires
             91      after the 90-day period, you may need to provide a copy of your rental or lease agreement to
             92      the new owner to prove your right to remain on the property longer than 90 days after the sale
             93      of the property.
             94          You must continue to pay your rent and comply with other requirements of your rental
             95      or lease agreement or you will be subject to eviction for violating your rental or lease
             96      agreement.
             97          The new owner or the new owner's representative will probably contact you after the
             98      property is sold with directions about where to pay rent.
             99          The new owner of the property may or may not want to offer to enter into a new rental
             100      or lease agreement with you at the expiration of the period described above."
             101          (4) The failure to provide notice as required under Subsections (1)(c) and (3)(b) or a
             102      defect in that notice may not be the basis for challenging or invaliding a trustee's sale.
             103          Section 2. Section 63I-1-257 is enacted to read:
             104          63I-1-257. Repeal dates, Title 57.
             105          Subsections 57-1-25 (1)(c), (3)(b), and (4) are repealed December 31, 2012.
             106          Section 3. Section 63I-1-278 is amended to read:
             107           63I-1-278. Repeal dates, Title 78A and Title 78B.
             108          (1) The Office of the Court Administrator, created in Section 78A-2-105 , is repealed
             109      July 1, 2018.
             110          (2) The case management program coordinator in Subsection 78A-2-108 (4) is
             111      repealed July 1, 2009.
             112          (3) Section 78B-3-421 , regarding medical malpractice arbitration agreements, is
             113      repealed July 1, 2019.


             114          (4) Alternative Dispute Resolution Act, created in Title 78B, Chapter 6, Part 2, is
             115      repealed July 1, 2016.
             116          (5) The following are repealed December 31, 2012:
             117          (a) Subsection 78B-6-802 (1)(i);
             118          (b) the language in Subsection 78B-6-802 (1)(a) that states "except as provided in
             119      Subsection (1)(i)"; and
             120          (c) the language in Subsection 78B-6-802 (1)(b) that states "and except as provided in
             121      Subsection (1)(i)".
             122          (6) Section 78B-6-901.5 , regarding notice to tenants on residential rental property to
             123      be foreclosed, is repealed December 31, 2012.
             124          Section 4. Section 78B-6-802 is amended to read:
             125           78B-6-802. Unlawful detainer by tenant for a term less than life.
             126          (1) A tenant holding real property for a term less than life, is guilty of an unlawful
             127      detainer if the tenant:
             128          (a) except as provided in Subsection (1)(i), continues in possession, in person or by
             129      subtenant, of the property or any part of it, after the expiration of the specified term or period
             130      for which it is let to him, which specified term or period, whether established by express or
             131      implied contract, or whether written or parol, shall be terminated without notice at the
             132      expiration of the specified term or period;
             133          (b) having leased real property for an indefinite time with monthly or other periodic
             134      rent reserved and except as provided in Subsection (1)(i):
             135          (i) continues in possession of it in person or by subtenant after the end of any month
             136      or period, in cases where the owner, the owner's designated agent, or any successor in estate of
             137      the owner, 15 calendar days or more prior to the end of that month or period, has served notice
             138      requiring the tenant to quit the premises at the expiration of that month or period; or
             139          (ii) in cases of tenancies at will, remains in possession of the premises after the
             140      expiration of a notice of not less than five calendar days;
             141          (c) continues in possession, in person or by subtenant, after default in the payment of


             142      any rent or other amounts due and after a notice in writing requiring in the alternative the
             143      payment of the rent and other amounts due or the surrender of the detained premises, has
             144      remained uncomplied with for a period of three calendar days after service, which notice may
             145      be served at any time after the rent becomes due;
             146          (d) assigns or sublets the leased premises contrary to the covenants of the lease, or
             147      commits or permits waste on the premises after service of a three calendar days' notice to quit;
             148          (e) sets up or carries on any unlawful business on or in the premises after service of a
             149      three calendar days' notice to quit;
             150          (f) suffers, permits, or maintains on or about the premises any nuisance, including
             151      nuisance as defined in Section 78B-6-1107 after service of a three calendar days' notice to
             152      quit;
             153          (g) commits a criminal act on the premises and remains in possession after service of a
             154      three calendar days' notice to quit; [or]
             155          (h) continues in possession, in person or by subtenant, after a neglect or failure to
             156      perform any condition or covenant of the lease or agreement under which the property is held,
             157      other than those previously mentioned, and after notice in writing requiring in the alternative
             158      the performance of the conditions or covenant or the surrender of the property, served upon the
             159      tenant and upon any subtenant in actual occupation of the premises remains uncomplied with
             160      for three calendar days after service[.]; or
             161          (i) (i) is a tenant under a bona fide tenancy as provided in Section 702 of the
             162      Protecting Tenants at Foreclosure Act of 2009, Pub. L. 111-22; and
             163          (ii) continues in possession after the effective date of a notice to vacate given in
             164      accordance with Section 702 of the Protecting Tenants at Foreclosure Act of 2009, Pub. L.
             165      111-22.
             166          (2) Within three calendar days after the service of the notice, the tenant, any subtenant
             167      in actual occupation of the premises, any mortgagee of the term, or other person interested in
             168      its continuance may perform the condition or covenant and thereby save the lease from
             169      forfeiture, except that if the covenants and conditions of the lease violated by the lessee cannot


             170      afterwards be performed, or the violation cannot be brought into compliance, the notice
             171      provided for in Subsections (1)(d) through (g) may be given.
             172          (3) Unlawful detainer by an owner resident of a mobile home is determined under
             173      Title 57, Chapter 16, Mobile Home Park Residency Act.
             174          (4) The notice provisions for nuisance in Subsections (1)(d) through (g) do not apply
             175      to nuisance actions provided in Sections 78B-6-1107 through 78B-6-1114 .
             176          Section 5. Section 78B-6-901.5 is enacted to read:
             177          78B-6-901.5. Notice to tenant on residential property to be foreclosed.
             178          (1) As used in this section, "residential rental property" means property on which a
             179      mortgage was given to secure an obligation the stated purpose of which is to finance
             180      residential rental property.
             181          (2) Within 20 days after filing an action under this part to foreclose property that
             182      includes or constitutes residential rental property, the plaintiff in the action shall:
             183          (a) post a notice:
             184          (i) on the primary door of each dwelling unit on the property that is the subject of the
             185      foreclosure action, if the property has fewer than nine dwelling units; or
             186          (ii) in at least three conspicuous places on the property that is the subject of the
             187      foreclosure action, if the property to be sold has nine or more dwelling units; or
             188          (b) mail a notice to the occupant of each dwelling unit on the property that is the
             189      subject of the foreclosure action.
             190          (3) The notice required under Subsection (2) shall:
             191          (a) be in at least 14-point font;
             192          (b) include the name and address of:
             193          (i) the owner of the property;
             194          (ii) the trustor or mortgagor, as the case may be, on the instrument creating a security
             195      interest in the property;
             196          (iii) the trustee or mortgagee, as the case may be, on the instrument; and
             197          (iv) the beneficiary, if the instrument is a trust deed;


             198          (c) contain the legal description and address of the property; and
             199          (d) include a statement in substantially the following form:
             200          "Notice to Tenant
             201          An action to foreclose the property described in this notice has been filed. If the
             202      foreclosure action is pursued to its conclusion, the described property will be sold at public
             203      auction to the highest bidder unless the default in the obligation secured by this property is
             204      cured.
             205          If the property is sold, you may be allowed under federal law to continue to occupy
             206      your rental unit until your rental agreement expires, or until 90 days after the sale of the
             207      property at auction, whichever is later. If your rental or lease agreement expires after the
             208      90-day period, you may need to provide a copy of your rental or lease agreement to the new
             209      owner to prove your right to remain on the property longer than 90 days after the sale of the
             210      property.
             211          You must continue to pay your rent and comply with other requirements of your rental
             212      or lease agreement or you will be subject to eviction for violating your rental or lease
             213      agreement.
             214          The new owner or the new owner's representative will probably contact you after the
             215      property is sold with directions about where to pay rent.
             216          The new owner of the property may or may not want to offer to enter into a new rental
             217      or lease agreement with you at the expiration of the period described above."
             218          (4) The failure to provide notice as required under this section or a defect in that
             219      notice may not be the basis for challenging or defending a foreclosure action or for invaliding
             220      a sale of the property pursuant to a foreclosure action.


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