1     
NON-JUDICIAL FORECLOSURE AMENDMENTS

2     
2016 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Wayne A. Harper

5     
House Sponsor: R. Curt Webb

6     

7     LONG TITLE
8     General Description:
9          This bill amends, enacts, and repeals provisions related to non-judicial foreclosure.
10     Highlighted Provisions:
11          This bill:
12          ▸     amends provisions related to the appointment or resignation of a trustee;
13          ▸     enacts provisions related to joinder of a trustee in a legal action against a beneficiary
14     that does not involve the obligations of the trustee under the law or the trust deed;
15          ▸     amends provisions related to notice of default;
16          ▸     provides that a trustee in a trustee's sale may require a successful bidder to make a
17     deposit;
18          ▸     provides that a successful bidder in a trustee's sale who fails to pay the bid amount
19     forfeits the bidder's deposit;
20          ▸     provides that a trustee shall provide an unrecorded copy of a signed trustee's deed to
21     a purchaser upon the purchaser's request;
22          ▸     amends a provision limiting the time within which a person may bring a
23     non-judicial foreclosure action;
24          ▸     amends a provision related to notice of a foreclosure proceeding on a reverse
25     mortgage; and
26          ▸     repeals a provision related to notice to a trustor of intent not to defer notice of sale.
27     Money Appropriated in this Bill:
28          None
29     Other Special Clauses:
30          None
31     Utah Code Sections Affected:
32     AMENDS:
33          57-1-22, as last amended by Laws of Utah 2013, Chapter 395
34          57-1-26, as last amended by Laws of Utah 2002, Chapter 209
35          57-1-27, as last amended by Laws of Utah 2001, Chapter 236
36          57-1-28, as last amended by Laws of Utah 2010, Chapter 381
37          57-1-34, as enacted by Laws of Utah 1961, Chapter 181
38          57-28-304, as enacted by Laws of Utah 2015, Chapter 290
39     ENACTS:
40          57-1-22.1, Utah Code Annotated 1953
41     REPEALS:
42          57-1-24.5, as enacted by Laws of Utah 2011, Chapter 228
43     

44     Be it enacted by the Legislature of the state of Utah:
45          Section 1. Section 57-1-22 is amended to read:
46          57-1-22. Successor trustees -- Appointment by beneficiary -- Effect -- Substitution
47     of trustee -- Recording -- Form.
48          (1) (a) The beneficiary may appoint a successor trustee at any time by filing an
49     appointment of trustee or a substitution of trustee for record in the office of the county recorder
50     of each county in which the trust property or [some] a part of the trust property is [situated, a
51     substitution of trustee] located.
52          (b) The [new] trustee [shall succeed to all the] appointed under Subsection (1)(a) has
53     the power, duties, authority, and title [of the trustee named] described in the deed of trust [and
54     of any successor trustee].
55          (c) The beneficiary may, by express provision in the appointment of trustee or
56     substitution of trustee, ratify and confirm an action taken on the beneficiary's behalf by the new
57     trustee prior to the recording of the substitution of trustee.
58          (2) [A] An appointment of trustee or a substitution of trustee shall:
59          (a) identify the trust deed by stating:
60          (i) the names of the original parties to the trust deed;
61          (ii) the date of recordation; and
62          (iii) (A) the book and page where the trust deed is recorded; or
63          (B) the entry number;
64          (b) include the legal description of the trust property;
65          (c) state the name and address of the new trustee; and
66          (d) be executed and acknowledged by all of the beneficiaries under the trust deed or
67     their successors in interest.
68          (3) (a) If not previously recorded at the time of recording a notice of default, the
69     successor trustee shall file for record, in the office of the county recorder of each county in
70     which the trust property or some part of it is situated, the appointment of trustee or substitution
71     of trustee.
72          (b) A copy of the appointment of trustee or the substitution of trustee shall be sent in
73     the manner provided in Subsection 57-1-26(2) to any:
74          (i) person who requests a copy of any notice of default or notice of sale under
75     Subsection 57-1-26(1)(a); and
76          (ii) person who is a party to the trust deed to whom a copy of a notice of default would
77     be required to be mailed by Subsection 57-1-26(3).
78          (4) [A] An appointment of trustee or a substitution of trustee shall be in substantially
79     the following form:
80     
[Substitution of Trustee]

81     
[(insert name and address of new trustee)]

82     
"Appointment or Substitution of Trustee

83     
_________________________(name and address of appointed or substituted trustee)

84               is hereby appointed [successor] trustee under the trust deed executed by ____ as
85     trustor, in which ____ is named beneficiary and ____ as trustee, and filed for record
86     __________(month\day\year), and recorded in Book ____, Page ____, Records of ____
87     County, (Utah or filed for record __________(month\day\year), with recorder's entry No. ____,
88     ____ County), Utah.
89     
(Insert legal description)

90     Signature_____________________________
91     
(Certificate of Acknowledgment)"

92          (5) (a) A trustee of a trust deed may, in accordance with this Subsection (5), resign as
93     trustee by filing for record in the office of the recorder of each county in which the trust
94     property is located, a resignation of trustee.
95          (b) A trustee's resignation under this Subsection (5) takes effect upon the recording of a
96     resignation of trustee.
97          (c) A resignation of trustee shall be in substantially the following form:
98          "Resignation of Trustee
99          _________________________([Insert] insert name and address of resigned trustee)
100     hereby resigns as trustee under the trust deed executed by (insert name of trustor) as trustor, in
101     which (insert name of the beneficiary) is named beneficiary and (insert name of trustee) as
102     trustee, and filed for record (insert the month, day, and year the trust deed was recorded), and
103     recorded in Book ___, Page ___, Records of ______________ County, [(]Utah or with
104     recorder's entry no.____, ______________ County[)], Utah.
105     (Insert legal description)
106     Signature ________________________
107     (Certificate of acknowledgment)"
108          (d) (i) Within three days after the day on which a trustee resigns under this Subsection
109     (5), the trustee shall [deliver] provide written notice of the trustee's resignation to each party in
110     any legal action pending against the trustee that is related to or arises from the trustee's
111     performance of a duty of a trustee.
112          (ii) Except as provided in Subsection (5)(d)(iv), within 10 days after the day on which
113     a party [receives] is provided a notice described in Subsection (5)(d)(i), the party may move the
114     court to substitute the beneficiary of the trust deed as defendant in the action in the place of the
115     trustee until a successor trustee is appointed. [When a successor trustee is appointed, the
116     successor trustee shall be substituted as defendant in place of the beneficiary.]
117          (iii) Except as provided in Subsection (5)(d)(iv), if, after the expiration of the time
118     described in Subsection (5)(d)(ii), a party does not move the court to substitute the beneficiary
119     or the successor trustee in place of the trustee as defendant, the court shall dismiss with
120     prejudice all claims against the withdrawn trustee.
121          (iv) Subsection (5)(d)(ii) and (5)(d)(iii) do not apply to a cause of action against a
122     trustee that alleges negligent or intentional misconduct by the withdrawn trustee.
123          (e) (i) The withdrawal of a trustee of a trust deed under this section does not affect the
124     validity or the priority of the trust deed.
125          (ii) After a trustee withdraws under this part, only a qualified successor trustee
126     appointed by the beneficiary under Section 57-1-22 may exercise trustee powers, including the
127     power of sale.
128          Section 2. Section 57-1-22.1 is enacted to read:
129          57-1-22.1. Effect on trustee of a legal action involving a trust.
130          (1) A party in a legal action that involves a trust deed is not required to join the trustee
131     as a party in the action unless the legal action pertains to a breach of the trustee's obligations
132     under this chapter or under the trust deed.
133          (2) A trustee of a trust deed is required to act pursuant to a court order against the trust
134     deed beneficiary to the extent the order requires an action that the trustee is authorized to take
135     under this chapter or under the trust deed.
136          (3) If a party in a legal action that involves a trust deed joins the trustee in an action
137     that does not pertain to the trustee's obligations under this chapter or under the trust deed, the
138     court shall dismiss the action against the trustee and award the trustee reasonable attorney fees
139     arising from the trustee being joined in the legal action.
140          Section 3. Section 57-1-26 is amended to read:
141          57-1-26. Requests for copies of notice of default and notice of sale -- Mailing by
142     trustee or beneficiary -- Publication of notice of default -- Notice to parties of trust deed.
143          (1) (a) Any person desiring a copy of any notice of default and of any notice of sale
144     under any trust deed shall file for record a duly acknowledged request for a copy of any notice
145     of default and notice of sale:
146          (i) in the office of the county recorder of any county in which the trust property or any
147     part of the trust property is situated; and
148          (ii) at any time:
149          (A) subsequent to the filing for record of the trust deed; and
150          (B) prior to the filing for record of a notice of default.
151          (b) Except as provided in Subsection (3), the request described in Subsection (1)(a)
152     may not be included in any other recorded instrument.
153          (c) The request described in Subsection (1)(a) shall:
154          (i) set forth the name and address of the one or more persons requesting copies of the
155     notice of default and the notice of sale; and
156          (ii) identify the trust deed by stating:
157          (A) the names of the original parties to the trust deed;
158          (B) the date of filing for record of the trust deed;
159          (C) (I) the book and page where the trust deed is recorded; or
160          (II) the recorder's entry number; and
161          (D) the legal description of the trust property.
162          (d) The request described in Subsection (1)(a) shall be in substantially the following
163     form:
164     
"REQUEST FOR NOTICE

165          The undersigned requests that a copy of any notice of default and a copy of notice of
166     sale under the trust deed filed for record __________(month\day\year), and recorded in Book
167     ____, Page ____, Records of ____ County, (or filed for record __________(month\day\year),
168     with recorder's entry number ____, _______ County), Utah, executed by ____ and
169     _________________ as trustors, in which ____ is named as beneficiary and ____ as trustee, be
170     mailed to ____ (insert name) ____ at ____ (insert address) __________.
171     
(Insert legal description)

172     
Signature ____________________

173     
(Certificate of Acknowledgement)"

174          (e) If a request for a copy of a notice of default and notice of sale is filed for record
175     under this section, the recorder shall index the request in:
176          (i) the mortgagor's index;
177          (ii) mortgagee's index; and
178          (iii) abstract record.
179          (f) Except as provided in Subsection (3), the trustee under any deed of trust is not
180     required to send notice of default or notice of sale to any person not filing a request for notice
181     as described in this Subsection (1).
182          (2) (a) Not later than 10 days after [recordation of] the day on which a notice of default
183     is recorded, the trustee or beneficiary shall mail a signed copy of the notice of default:
184          (i) by certified or registered mail, return receipt requested, with postage prepaid;
185          (ii) with the recording date shown;
186          (iii) addressed to each person whose name and address are set forth in a request that
187     has been recorded prior to the filing for record of the notice of default; and
188          (iv) directed to the address designated in the request.
189          (b) At least 20 days before the date of sale, the trustee shall mail a signed copy of the
190     notice of the time and place of sale:
191          (i) by certified or registered mail, return receipt requested, with postage prepaid;
192          (ii) addressed to each person whose name and address are set forth in a request that has
193     been recorded prior to the filing for record of the notice of default; and
194          (iii) directed to the address designated in the request.
195          (3) (a) Any trust deed may contain a request that a copy of any notice of default and a
196     copy of any notice of sale under the trust deed be mailed to any person who is a party to the
197     trust deed at the address of the person set forth in the trust deed.
198          (b) A copy of any notice of default and of any notice of sale shall be mailed to any
199     person requesting the notice who is a party to the trust deed at the same time and in the same
200     manner required in Subsection (2) as though a separate request had been filed by each person
201     as provided in Subsection (1) except that a trustee shall include with a signed copy of a notice
202     of default and the signed copy of a notice of sale the following information current as of the
203     time the notice of default and the notice of sale is provided:
204          (i) the name of the trustee;
205          (ii) the mailing address of the trustee;
206          (iii) if the trustee maintains a bona fide office in the state meeting the requirements of
207     Subsection 57-1-21(1)(b), the address of a bona fide office of the trustee meeting the
208     requirements of Subsection 57-1-21(1)(b);
209          (iv) the hours during which the trustee can be contacted regarding the notice of default
210     and notice of sale, which hours shall include the period during regular business hours in a
211     regular business day; and
212          (v) a telephone number that the person may use to contact the trustee during the hours
213     described in Subsection (3)(b)(iv).
214          (4) If no address of the trustor is set forth in the trust deed and if no request for notice
215     by the trustor has been recorded as provided in this section, no later than 15 days after the filing
216     for record of the notice of default, a copy of the notice of default shall be:
217          (a) mailed to the address of the property described in the notice of default; or
218          (b) posted on the property.
219          (5) The following shall not affect the title to trust property or be considered notice to
220     any person that any person requesting copies of notice of default or of notice of sale has or
221     claims any right, title or interest in, or lien or claim upon, the trust property:
222          (a) a request for a copy of any notice filed for record under Subsection (1) or (3);
223          (b) any statement or allegation in any request described in Subsection (5)(a); or
224          (c) any record of a request described in Subsection (5)(a).
225          Section 4. Section 57-1-27 is amended to read:
226          57-1-27. Sale of trust property by public auction -- Postponement of sale.
227          (1) (a) On the date and at the time and place designated in the notice of sale, the trustee
228     or the attorney for the trustee shall sell the property at public auction to the highest bidder.
229          (b) The trustee, or the attorney for the trustee, [may] shall conduct the sale and act as
230     the auctioneer.
231          (c) The trustor, or the trustor's successor in interest, if present at the sale, may direct the
232     order in which the trust property shall be sold, if the property consists of several known lots or
233     parcels which can be sold separately.
234          (d) The trustee or attorney for the trustee shall follow [these] the trustor's directions
235     described in Subsection (1)(c).
236          (e) Any person, including the beneficiary or trustee, may bid at the sale.
237          (f) The trustee may bid for the beneficiary. [Each]
238          (g) A bid is considered an irrevocable offer.
239          (h) The trustee may, in the trustee's discretion, require a successful bidder to make a
240     deposit in an amount set forth in the notice of trustee's sale described in Section 57-1-25.
241          (i) If the highest bidder refuses to pay the amount bid by the highest bidder for the
242     property, the trustee, or the attorney for the trustee, shall either:
243          (i) renotice the sale in the same manner as notice of the original sale is required to be
244     given; or
245          (ii) sell the property to the next highest bidder.
246          [(b) A bidder refusing] (j) If a bidder refuses to to pay the bid price:
247          (i) the bidder is liable for any loss occasioned by the refusal, including interest, costs,
248     and trustee's and reasonable [attorneys' fees. The] attorney fees;
249          (ii) the trustee or the attorney for the trustee may [thereafter], after the bidder's refusal,
250     reject any other bid of that person for the property[.];
251          (iii) the bidder forfeits the bidder's deposit; and
252          (iv) the bidder's deposit is treated as additional sale proceeds applied in accordance
253     with Section 57-1-29.
254          (2) (a) The person conducting the sale may, for any cause [he] that the person considers
255     expedient, postpone the sale.
256          (b) The person conducting the sale shall give notice of each postponement by public
257     declaration[, by written notice or oral postponement,] at the time and place last appointed for
258     the sale.
259          (c) No [other] notice of the postponed sale in addition to the notice described in
260     Subsection (2)(b) is required, unless the postponement [exceeds 45 days. In that event,] is for
261     longer than 45 days after the date designated in the original notice of sale.
262          (d) If the person conducting the sale postpones a sale for longer than the time period
263     described in Subsection (2)(c), the person conducting the sale shall [be renoticed] renotice the
264     sale in the same manner [as] required for the original notice of sale [is required to be given].
265          Section 5. Section 57-1-28 is amended to read:
266          57-1-28. Sale of trust property by trustee -- Payment of bid -- Trustee's deed
267     delivered to purchaser -- Recitals -- Effect.
268          (1) (a) The purchaser at the sale shall pay the price bid as directed by the trustee.
269          (b) The beneficiary shall receive a credit on the beneficiary's bid in an amount not to
270     exceed the amount representing:
271          (i) the unpaid principal owed;
272          (ii) accrued interest as of the date of the sale;
273          (iii) advances for the payment of:
274          (A) taxes;
275          (B) insurance; and
276          (C) maintenance and protection of the trust property;
277          (iv) the beneficiary's lien on the trust property; and
278          (v) costs of sale, including reasonable trustee's and attorney's fees.
279          (2) (a) (i) Within [three] five business days of the day the trustee receives payment of
280     the price bid, the trustee shall [make the trustee's deed available to the purchaser.]:
281          (A) execute and submit the trustee's deed to the county recorder for recording; and
282          (B) upon the purchaser's request, provide an unrecorded copy of the signed trustee's
283     deed to the purchaser.
284          (ii) If the trustee does not comply with this Subsection (2)(a), the trustee is liable for
285     any loss incurred by the purchaser because of the trustee's failure to comply with this
286     Subsection (2)(a).
287          (b) The trustee's deed may contain recitals of compliance with the requirements of
288     Sections 57-1-19 through 57-1-36 relating to the exercise of the power of sale and sale of the
289     property described in the trustee's deed, including recitals concerning:
290          (i) any mailing, personal delivery, and publication of the notice of default;
291          (ii) any mailing and the publication and posting of the notice of sale; and
292          (iii) the conduct of sale.
293          (c) The recitals described in Subsection (2)(b):
294          (i) constitute prima facie evidence of compliance with Sections 57-1-19 through
295     57-1-36; and
296          (ii) are conclusive evidence in favor of bona fide purchasers and encumbrancers for
297     value and without notice.
298          (3) The trustee's deed shall operate to convey to the purchaser, without right of
299     redemption, the trustee's title and all right, title, interest, and claim of the trustor and the
300     trustor's successors in interest and of all persons claiming by, through, or under them, in and to
301     the property sold, including all right, title, interest, and claim in and to the property acquired by
302     the trustor or the trustor's successors in interest subsequent to the execution of the trust deed,
303     which trustee's deed shall be considered effective and relate back to the time of the sale.
304          (4) In accordance with Section 57-3-106, an interest of a purchaser in a trustee's deed
305     that is recorded with the county recorder may not be divested if a person records an affidavit or
306     other document purporting to rescind or cancel the trustee's deed.
307          Section 6. Section 57-1-34 is amended to read:
308          57-1-34. Sale of trust property by trustee -- Foreclosure of trust deed --
309     Limitation of actions.
310          [The trustee's sale of property under a trust deed shall be made, or an action to foreclose
311     a trust deed as provided by law for the foreclosure of mortgages on real property shall be
312     commenced,] A person shall, within the period prescribed by law for the commencement of an
313     action on [the] an obligation secured by [the] a trust deed[.]:
314          (1) commence an action to foreclose the trust deed; or
315          (2) file for record a notice of default under Section 57-1-24.
316          Section 7. Section 57-28-304 is amended to read:
317          57-28-304. Foreclosure.
318          Before a person initiates foreclosure proceedings on a reverse mortgage, the person
319     shall:
320          (1) [give] send the borrower, by certified mail, return receipt requested, written notice
321     that states the grounds for default and foreclosure; and
322          (2) provide the borrower at least 30 days after the day on which the [borrower receives]
323     person sends the notice described in Subsection (1) to cure the borrower's default.
324          Section 8. Repealer.
325          This bill repeals:
326          Section 57-1-24.5, Notice to trustor of intent not to defer notice of sale.