Real Estate Foreclosures in Utah
The real estate foreclosures process is long and complicated. The documents used in real estate loans are standard across the nation, but the process is governed by state law, making the process unique to each state.
This is an in depth look at real estate foreclosures in Utah. Keep in mind each state has differences.
Foreclosure starts when a default occurs. A default occurs due to the action or inaction of the borrower or property owner. The most common default is failure to make payments, but is not the only default.
Breaking any agreement in the closing documents constitutes a default. These include not paying property taxes, not maintaining property insurance, destroying the property, etc. This is the start of a real estate foreclosure.
Foreclosure auctions, or Trustees Sales as they are more correctly termed, are conducted by a Trustee who handles all phases of the foreclosure process. Trustees must be a attorney, title company, lending institution or certain government agencies.
Regardless of who is the original Trustee on the Trust Deed, it is usually changed to an attorney or title company when a default occurs.
Notice of Default
When a default occurs a Notice of Default is recorded at the county recorder’s office. A certified copy is also sent to the owner no later than 10 days after recording. The Notice of Default states what the default was. The lender must then wait 3 months before taking further action. During this three month period, the Borrower is allowed to correct the default.
Correcting the default would include paying the overdue payments including interest and penalties, paying the taxing, obtaining insurance or correcting whatever default occurred.
Notice of Trustee’s Sale
As the name implies a Notice of Trustee’s Sale is a public notice that a default has occurred and was not cured within the three month period.
If the default is not cured in the three months, the Trustee publishes a Notice of Trustee’s sale. This notice must be posted in at least three conspicuous places in the city or county where the property is located. It must also be posted on the property. It is then published in a local newspaper, once a week, for 3 consecutive weeks. The last publication must be at least 10 days, but not more than 30 days before the sale date.
During this period the borrower has the right to payoff the property but the lender is not required to accept just delinquent payments as during the Notice of Default phase.
If the default is not cured by the time of sale the Trustee holds the sale at the published location and time. The first bid is automatically placed in behalf of the lender and is usually the amount of the loan payoff plus interest, penalties and foreclosure fees. Anyone can bid at the Trustee’s sale as it is held as a public auction.
Funds to Purchase
To place a bid at a foreclosure auction or trustee’s sale, bidders are usually required to have certified funds for a set amount (often $5,000) and must pay the remaining bid price within 24 hours. The amount needed at the auction will be listed in the newspaper in the Notice of Trustee’s Sale.
After the auction is completed a Trustee’s Deed will be issued by the Trustee to the successful bidder. This deed conveys all interest of the Lender but may not convey all the property interest.
The real estate foreclosure process is painful for homeowners. For those looking for a great investment it is worth a look.