First Substitute S.B. 42

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House Floor Amendments 3-6-2012 je/rhr This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Thu, Feb 9, 2012 at 12:23 PM by cmillar. --> This document includes Senate 3rd Reading Floor Amendments incorporated into the bill on Tue, Feb 14, 2012 at 12:20 PM by khelgesen. --> This document includes House Floor Amendments incorporated into the bill on Tue, Mar 6, 2012 at 9:35 AM by jeyring. --> Senator Wayne L. Niederhauser proposes the following substitute bill:

1 LIMITATION ON ACTION TO RECOVER DEFICIENCY
2 FOLLOWING SHORT SALE
3 2012 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Wayne L. Niederhauser
6 House Sponsor: Daniel McCay
7
8 LONG TITLE
9 General Description:
10 This bill enacts a provision establishing a time limit for an action to recover a
11 deficiency following a specified sale of residential real property.
12 Highlighted Provisions:
13 This bill:
14 . bars an action to recover a deficiency following a short sale of single-family
15 residential property unless the action is commenced no later than three months after
16 the short sale.
17 Money Appropriated in this Bill:
18 None
19 Other Special Clauses:
20 H. [ None ] This bill provides an immediate effective date. .H
21 Utah Code Sections Affected:
22 ENACTS:
23 78B-2-313, Utah Code Annotated 1953
24
25 Be it enacted by the Legislature of the state of Utah:

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- 2 - House Floor Amendments 3-6-2012 je/rhr

Corrected Senate 3rd Reading Amendments 2-9-2012 cm/rhr 26

Section 1. Section 78B-2-313 is enacted to read:
27 78B-2-313. Action to recover deficiency after short sale.
28 (1) As used in this section:
29 (a) "Deficiency" means the balance owed to a secured lender under a secured loan after
30 completion of a short sale of the secured property.
31 (b) "Obligor" means the person or persons obligated to pay a secured loan.
32 (c) "Secured lender" means the person or persons to whom the obligation under a
33 secured loan is owed.
34 (d) "Secured loan" means S. [ an obligation evidenced by a note and ] a loan or
34a other credit for personal, family, or household purposes .S secured by a mortgage
35 or trust deed on secured property.
36 (e) "Secured property" means single-family, residential real property located in the
37 state that is the subject of a mortgage or trust deed to secure a secured loan.
38 (f) "Short sale" means a sale:
39 (i) of secured property;
40 (ii) by the owner of the secured property;
41 (iii) that results in the secured lender being paid less than the balance owing under the
42 secured loan; and
43 (iv) made with the secured lender's consent and resulting in the secured lender
44 releasing the mortgage or reconveying the trust deed on the secured property.
45 (2) An action to recover a deficiency is barred unless it is commenced no more than
46 three months after the date of recording of a release of mortgage or reconveyance of trust deed
47 with respect to secured property and resulting from a short sale of that property.
48 (3) Subsection (2) does not apply if the obligor S. [ has ] or owner .S engaged in fraud in
48a connection with
49 the short sale.
50 (4) S. [ The limitation under ] .S Subsection (2) does not apply to S. [ an obligation
50a evidenced by ] .S an
51 agreement that:
52 S. [ (a) is separate from the secured loan; ] .S
53 S. [ (b) ] (a) .S is executed S. :
53a (i) .S between S. [ an obligor ] one or more obligors under a secure loan .S and
53b S. [ a ] the .S secured lender S. ; and
53c (ii) .S in connection with a short sale;
54 and
55 S. [ (c) ] (b) .S obligates S. [ the ] an .S obligor to pay some or all of a deficiency.
55a H. Section 2. Effective date.

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House Floor Amendments 3-6-2012 je/rhr 55b

If approved by two-thirds of all the members elected to each house, this bill takes effect
55c upon approval by the governor, or the day following the constitutional time limit of Utah
55d Constitution Article VII, Section 8, without the governor's signature, or in the case of a veto,
55e the date of veto override. .H