Category Archives: Real Estate Law

Real Estate Lawyer Morgan Utah

Real Estate Lawyer Morgan Utah

In any construction contract, it is important to have a provision for termination of the contract. An experienced Morgan Utah real estate lawyer can draft a customized construction contract for you incorporating the termination provision.

Contract Termination Provision

While the purpose of a contract is to obligate people and firms to perform in certain ways, the tightness of the bonds of mutual obligation can be set by the parties themselves–even to the point of nearly eliminating the obligation itself. Both contract suspension and contract termination provisions act in this way to allow one or both parties to breach the contract without substantial penalty. Termination clauses are typically written so as to allow the buyer to get out of the contract on certain terms, but they will occasionally be written so as to allow the seller to escape from their contractual duties as well. Contract termination clauses are sometimes open-ended to allow termination at the whim of one or more of the parties. However, such termination provisions can result in the contractor requiring a premium on the normal contract price to cover the risk of termination. More complex termination provisions are usually written in such a way as to balance the need for protection against the cost of this protection. Such provisions will often outline

• The conditions under which termination is an option (e.g., bankruptcy, failure to reach certain scheduled milestones or progress levels, behavior indicating incapacity or inability to complete the work as ordered in the contract, etc.).

• The time frame in which the termination will be initiated and completed. For example, the contract may call for the parties to be given notice of termination within two months prior to the new fiscal year, with the termination itself to be completed three months following notice.

• The payments to be made as part of the termination for startup costs, rental costs, loss of value of assets that are specific to a job, settlement expenses, subcontractor claims, inventory and warehousing costs, final audit costs, and so on. For large contracts, it may be prudent to specify what costs will be allowed as part of a settlement and what costs will be disallowed. For example, while a contractor may want to receive payment for materials still in inventory that have been purchased for a job, a more reasonable basis for payment would be reimbursement for items that could not be resold or be used on other jobs within a reasonable time period.

• The party or parties who are authorized to invoke a termination or a decision-making mechanism through which the termination provision is to be invoked.

Conflict Resolution Provisions

Conflict resolution provisions can be divided into two basic types: prevention provisions and resolution processes. Prevention provision take many forms depending on the kind of conflict that one can anticipate. A common prevention provision is one that specifies which documents will take precedence over others.

There are basically three methods for resolving conflicts: negotiation, mediation, and arbitration.

Negotiation essentially involve the parties in dispute discussing the conflict with each other with an eye toward trying to find a mutually satisfactory resolution to the conflict. As a conflict resolution strategy, negotiation is most effective when all the parties in conflict have good communication skills, good intentions, and a general willingness to compromise.

Mediation is like negotiation in that the outcome is one that is voluntary. What mediation adds is the expertise of a skilled mediator who helps the parties to identify their interests, generate multiple solutions, and discover the solution(s) that provides the best chance of mutual satisfaction and of avoiding further conflict, and insures that the parties’ rights are respected and that the agreement is fair and “tight” in all respects. Mediation is typically successful with all the persons who could negotiate a solution on their own, but is additionally successful with a large proportion of people who could not come to a satisfactory resolution without some assistance. If all else is equal, mediation could be described as being a bit more expensive than negotiation because the services of a mediator must be purchased. Studies of the effectiveness of mediation suggest, however, that the expertise of a skilled mediator can often mean the difference between a “band-aid” resolution that quickly falls apart and a resolution that is effective for the long term. This is the case because mediators are trained to (1) probe for and address hidden issues, including issues related to respect and psychological satisfaction, that if not addressed tend to generate additional conflict; and (2) identify and test for potential weaknesses in mediated agreements. That is, mediators work to insure that parties in conflict do not simply paper over the conflict or reach unrealistic or ineffective resolutions.

Arbitration is the third conflict resolution method. This method essentially involves the parties presenting their case to a neutral third party and having this third party, the arbitrator, judge the merits of each side’s case. In binding arbitration, the parties agree to submit to the judgment and remedies specified by the arbitrator. Arbitration can resemble, and even mimic, the legal processes (e.g., rules of evidence for civil suits, etc.) that would be engaged if the conflict cannot be resolved, or it can be customized to meet the needs and styles of the parties. If arbitration is to be used as a conflict resolution mechanism, however, it is probably best that the form and procedures to be used in the arbitration are specified in the initial contract or at some time before a conflict actually occurs. Otherwise, it is quite possible that the parties will waste resources strategizing and arguing over the rules to be used in arbitratng the conflict. In developing the rules to guide arbitration, contract negotiators can consider some of the following options:

Either–or judgments. Either–or judgments require the arbitrator to choose either the solution suggested by Party A or the solution suggested by Party B. It does not allow the arbitrator to fashion a compromise solution. The idea behind either–or judgments is to get the conflicting parties to develop options that include a high degree of compromise. The party choosing not to develop a compromise option will tend to lose out under this condition.

Unrestricted/restricted rules of evidence. Restricting evidence to that which would be allowed in court has the advantage of making the arbitration outcome more closely approximate the outcome that would be achieved if the parties went to court. Keeping the rules of evidence unrestricted, however, is more likely to allow issues to surface that, if left unaddressed, would lead to further conflict in the future.

Formal/informal method of argumentation. Again, whereas formal presentations of arguments will result in a better approximation of legal-system outcomes, informal presentations, appropriately referred, might do more to further interparty communications in the long term.

Restrictions on levels of judgment and types of remedies. The contract negotiators may want to restrict the value of the judgment that an arbitrator can assess (e.g., assessments under $200,000) or restrict the remedies to a particular type (e.g., remedies that involve repair of defective workmanship by the contractor but not remedies that involve hiring a different contractor to replace the work).

Typically, in contracts where there is some expectation of conflict, contract negotiators will attempt to structure a range of conflict resolution mechanisms and to require the parties in conflict to attempt to resolve their conflict using one method (e.g., negotiation or mediation) before going on to use another method (e.g., mediation or arbitration).

Building the trust relationship

Contracts of various types are entered into for different reasons. Some contracts are let out simply because it appears that costs can be saved, others are let out because the property owner does not have time to gear up to provide the service in-house, and still others are entered into because of the lack of in- house expertise.

Building trust or positive interdependence in contract relationships must begin with trust-enhancing measures on both sides. However, the government’s contract manager must take the lead in making this effort a meaningful one, as it is the usually the inactivity on the part of the government that allows a contractor to wander into a state of non- or poor performance. Key behaviors and steps that contract managers can initiate so as to increase the chances that a trust relationship will be established include

Developing key one-on-one personal relationships between the property owner’s and the contractor’s staff. These relations should involve a mix of formal and informal settings and conditions. Special efforts should be made to establish a relationship between individuals on each side who are designated as the single point of contact for their respective organizations

Establishing benchmarks and coordination and communication standards for such things as response time to queries and payment due communications; use of particular software, network protocols, and procurement processes; and clear expectations regarding shipping schedules, warehousing processes, inventory tracking, lead times, and so forth. When the property owner and the contractor attend to developing such standards, they prevent unnecessary deterioration of the relationship. Common procedures for fostering such communications include periodic report cards, regular meetings, and joint planning sessions.

When is a contractor’s relationship

The contractor’s relationship with the government must not have the attributes of an employer-employee relationship. Hence, even if a government enters into a contract for services, if the services are effectively rendered in a manner that suggests an employer-employee relationship, the Internal Revenue Service will require the government to pay the taxes it was attempting to avoid through the contract. A number of factors go into determining whether such an employer- employee relationship exists, including the nature of the work. If there is an employee who provides a similar service or type of work to the government, or if the person is responsible for a function of government or can exercise judgment on behalf of the government, this suggests that an employer-employee relationship exists. Also, an employer employee relationship exists if the government has control (or even the right to exert such control) over a person. Such control can relate to

• When, where, and how the work is done.

• The expectation that a person attend or receive training.

• The expectation that a person’s work be integrated with the operations and administrative routines of the government.

• The expectation that work be performed personally.

• Situations where the government hires, supervises, and pays other workers on the same job.

• The length of the relationship (e.g., steady long-term activity suggests an employer employee relationship).

• The expectation that a person work certain hours.

• The expectation that a person work full time on the government’s project or refrain from work on other projects.

• The expectation that the work be performed in the government’s facilities, especially when it could logically be done elsewhere.

• The expectation that work be performed in a preset order when it could potentially be performed in a different order.

• The requirement of frequent oral or written reports of activities.

• Payment that is by the hour, week, month, or other set interval rather than based on the job or on a straight commission.

• Payment of business expenses (which indicates an employer employee relationship).

• Furnishing tools and materials.

• The contractor’s investment in facilities, tools, and equipment (which indicates contractor independence).

• Realization of a profit or loss (which indicates contractor independence).

• Working for a number of people (which indicates contractor independence).

• Availability of services to the public (which indicates contractor independence).

• Right to discharge (if the government can threaten dismissal that is not based on nonperformance of contractual obligations, an employer employee relationship is suggested).

• Right to quit (if a person can quit without incurring a liability, this indicates an employer employee relationship, as a contractor who quits will typically be liable for nonperformance).

There should be a statement in the contract that indicates the contractor is independent. Unfortunately, while it is appropriate to include such language in the contract, the determining factor from the perspective of the Internal Revenue Service is the nature of the actual relationship. An experienced Morgan Utah real estate lawyer can draft a construction contract with appropriate language to ensure that the contractor is treated as an independent contractor.

Morgan Utah Real Estate Lawyer Free Consultation

When you need a real estate attorney for a matter in Morgan Utah, please call Ascent Law LLC (801) 676-5506 for your Free Consultation. We can help you with Quiet Title Actions. Evictions For Landlords. Boundary Disputes. Opinion Letters on Title Issues. Partition Lawsuits. And Much More. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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Real Estate Lawyer Lindon Utah

Real Estate Lawyer Lindon Utah

The Fifth Amendment states that private property can only be taken for a “public use.” If the government or other condemnors may take private property only for valid public uses, how do we determine if the taking is for a public or private use? The “public use” doctrine can be described as an “essentially contested concept.” This suggests that its meaning has been subject to debate over time. Various courts and legislatures have defined “public use” either from a narrow or a broad perspective. A narrow reading of “public use” indicates “used by the public.” Under this definition, uses such as for bridges, highways, and schools qualify as valid public uses because the public, or at least some segment of it, can actually physically use the property. Critical here is that more than one person benefits and uses the property.

A second, broader definition of “public use” equates the meaning to include the “public advantage,” “promoting the public welfare,” the “public good,” and “public necessity.” Here it is not essential that the public actually use the property so long as they benefit from the taking in some way. Again, more than one person must benefit from use of eminent domain. This meaning suggests that almost any project can be construed as a public use, as long as it is shown that it furthers economic development, public welfare, or a better use of local resources. If your property is being taken away by the state or city for public use, contact an experienced Lindon Utah real estate lawyer.

What is critical to any conception of seeking to determine what constitutes a valid public use is what the term does not permit. The Takings clause does not permit employment of eminent domain for a private use. Efforts to distinguish between a public use and a private benefit have produced various tests. They range, as noted above, from insisting that the public have a right to use the property taken, or that everyone must benefit from the project for the condemnation to be considered valid, to a private acquisition being one where the private benefits are primary and not secondary to the public benefits.

Despite these tests, it remains difficult to differentiate between a public and a private use for a few reasons.

The most important factor affecting the meaning of public use is that local customs and conditions have significantly influenced the meaning in both the United States and individual state constitutions. Irrigation of private property in a dry climate, given local weather conditions, the state of the economy, and patterns of land ownership may be considered a valid public use in one community; such irrigation in a wet climate may not be considered a valid public use, but may instead be seen as simply favoring a private interest. Legislatures are clearly influenced by local conditions when determining eminent domain policy, and local courts pay great respect to local determinations of public use. The law on what constituted a valid “public use” was constructed from the bottom up, with local jurisdictions basing determinations upon local conditions and needs.

The government has broad authority to take private property valid public use so long as just compensation is paid to the owner. The question of why a specific piece of property should be acquired is a question about planning. It is about whether there is an alternative way to accomplish the same project without taking a specific piece of land or property. One of the ugly legacies of the 1950s and 1960s was that many highways and economic redevelopment projects appeared to target low-income neighborhoods and communities populated by people of color. These projects often split neighborhoods in two, relocated scores of individuals, or otherwise devised plans that either seemed blind to the impact it was having upon these populations or, even worse, were purposely directed toward them. In either case, asking why a specific piece of property needed to be taken raises some questions about the planning process, the potential political motives, and perhaps a host of other issues and that questioned the reasoning for the taking.

what legal process must be followed for the government to take property? Clearly it is the case, first, that not just anyone can use eminent domain to take property. In most cases, a private person who tries to take the property of someone else would be committing theft or stealing. Thus, the person taking the property, a condemnor, must be legally empowered to use eminent domain. In most cases, the condemnor is the government. This could be the federal government, or it could be a state or local government such as a city. But a government condemnor could also be its agent. It might be a department of transportation, or perhaps a parks department. In addition, the condemnor could also be an economic development agency of a state or local government. It could also be an airport, or any of a score of other governmental or quasi-governmental units giving the power of eminent domain. While states have inherent authority to condemn, these other units of government do not have the authority to use eminent domain unless given authority by a state government. This means that, lacking statutory authorization, a city or town cannot take property.

But the government is not the only possible condemnor. Governments can also designate private corporations or individuals to be condemnors. In many situations, governments have given eminent-domain authority to public utilities, such as power companies, so that they can build transmission lines for electricity or gas. Railroads, as noted earlier, have been given the power of eminent domain, as have telecommunications companies. All of them have been given this authority so that they can provide functions or services that elected officials have decided are in the public good to provide. However, in some cases, governments may even give eminent-domain authority to private individuals for the same reasons that it may be given to a corporation. Thus, while a condemnor is usually a governmental entity, it need not always be so.

Imagine that a condemnor wants to use eminent domain to acquire property. In particular, imagine that someone wants to condemn or take your home or business with eminent domain. If that were to occur, what must the government (or any condemnor) do in order to take your property? Contrary to what many might think, the decision to take property is not a big surprise to most owners and the process is not usually arbitrary. Instead, several steps must usually be followed or complied with before the government can actually take title to property.

Roughly, there are three basic processes for using eminent domain. The most basic is when the government actually uses eminent domain to take private property. The second invokes what are called “quick-take laws” to expedite the taking process. Quick-take laws allow for property to be condemned even if all the issues surrounding the taking, such as the price for the property, have not been resolved. The third is when an owner either alleges a regulatory taking or when the government has allegedly taken property and the owner sues to seek compensation. This is called an inverse condemnation action.

Normal Taking

The first and most basic process is when the government intends to acquire specific property for the purposes of some project, such as the building of a highway or perhaps a new shopping center. This type of condemnation project will be referred to as a “normal taking.” A normal taking just does not occur out of nowhere. It is rare that the government just decides at the spur of the moment and without notice to use its eminent-domain power to acquire property for the purposes of building a road or a shopping center. While it is possible that in a real emergency, such as a natural disaster, eminent domain might be deployed rather suddenly, this would definitely be a rare exception to what happens with a normal taking. In most emergency situations, the law already allows the government to enter or seize property and that is not considered an act of eminent domain. For example, if one’s house caught on fire and firefighters entered the property to extinguish the blaze, owners could not sue for trespass or claim that a taking had occurred.

Moreover, if in nonemergency situations the government did act without notice to the owner to take property, that would be a violation of the law and the owner would have sufficient remedies and defenses to challenge such an action. In brief, the way the government acted here probably would have violated the Due Process clause of the Fourteenth Amendment .While many might think that the decision to take property is a sudden or perhaps an unexpected or quick decision, the reality is that, by the time the government has decided to use eminent domain to acquire property, numerous actions have already taken place. The actual use of eminent domain is generally a last resort or last step in a process the government uses when it wishes to undertake a public project.

In the case of a normal taking, there are several steps in the condemnation process:

• Government develops a comprehensive plan for development

• Public hearings held on the comprehensive plan

• Specific plan for development is created

• Hearings on the specific plan is held

• Properties needed for the project are identified

• Properties are appraised

• Condemnor/developer begin efforts with property owners to purchase property

• Relocation assistance for tenants, owners

• If owners sell, then condemnors take title of property

• Government passes resolution/hearing to initiate condemnation process

• Hearing held on public use and condemnation resolution

• Owner notified of intent to condemn and served with papers

• Court hearing for condemnation scheduled

• Pretrial motions, hearings scheduled

• Court hearing and trial

• Court judgment

• Appeals, if any

• Enforcement of judgment

• Government takes title

Generally, the first step in any condemnation process takes place years earlier, before the government actually moves to acquire a piece of property, at the planning stage. There are two types of plans that a government might undertake as part of planning a project. The first is a comprehensive plan, and the second is a plan for a specific project. A comprehensive plan is the most basic type of plan that a government can create when it comes to land use within its borders. Many states have laws that comprehensive plans have to be developed and rewritten every so many years, such as once per decade following the census. A comprehensive plan first performs a survey of how property is currently used in an area. It examines, among other things, the current zoning code, for example. It compares how all the parcels of land in a city are zoned to how they are actually used.

Another task of a comprehensive plan is to look at the current demographics of a community. These demographics include information we would want to know about the ages, size of families, birth and death rates, and immigration and emigration patterns. This information is useful in terms of trying to know if the population is increasing or decreasing, where people are moving to, and how living patterns may be changing.

Yet another task of a comprehensive plan is to understand the current state of business in a community—what types of business, commerce, and so on, is taking place. Again, it is useful to inventory this information so that one can learn something about the services available in an area, asking if the community has sufficient grocery stores or other services it may need or want. Finally, the comprehensive plan might also look at other issues such as roads and highways, mass transit and transportation routes, the quality and availability of local government services, health care needs and delivery, the tax base, crime, and perhaps a host of other factors. In a nutshell, the comprehensive plan seeks to take a picture of a community in an effort to understand its strengths and weaknesses.

If your property has been included in a comprehensive plan, consult an experienced Lindon Utah real estate lawyer. It is important that you make your objections heard.

Lindon Utah Real Estate Attorney

When you need help with real estate law in Lindon Utah, please call Ascent Law LLC (801) 676-5506 for your Free Consultation. We do evictions, foreclosures, quiet titles, easements, boundary distupes, and all types of real estate law. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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4.9 stars – based on 67 reviews

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How Much Does It Cost To Stop Foreclosure?

How Much Does It Cost To Stop Foreclosure?

How Much Does It Cost To Stop Foreclosure

One of the considerations in deciding whether or not you should hire a lawyer to help you fight your foreclosure is the cost. It’s important to understand how legal fees work to make sure that you don’t end up paying more than you can afford.

Foreclosure Defense

Most foreclosure defense attorneys structure their fee agreements with homeowners in one of three ways:
• by charging the homeowner an hourly rate
• collecting a flat fee from the homeowner, or
• Charging a monthly rate.

Fees and Costs

Defaulting homeowners usually are charged late fees on every missed mortgage payment right up until their home’s foreclosure sale. Depending on the size of the mortgage loan, accumulated late fees for missed payments can add hundreds of dollars to a borrower’s mortgage bill. While properties in default move toward foreclosure, lenders may add charges for default-related services. During the foreclosure period, lenders’ attorney fees, property title searches, and costs for serving homeowners with foreclosure notices also accumulate.

What Factors cause Foreclosure Costs to Vary?

How much a lawyer charges will certainly be a factor in the cost of a foreclosure? However, there are many other considerations ultimately determine how expensive the process will be. Below is a general lay out of the costs typically associated with home foreclosure.

• Type of Foreclosure – The cost of a foreclosure can vary largely on whether the mortgage loan has just recently fallen into default and the homeowners are willing to surrender the property, or if they are going to attempt to reinstate the home loan or otherwise defend against the foreclosure process.

• Costs – It is not uncommon for a loan servicer to assess additional charges against a borrower in default. Default-related fees include:

o Property inspection and preservation costs

o Foreclosure costs and fees, including: Filing fees notice and certified mailing costs, where a loan is reinstated, and potentially the lender’s attorney’s fees.

o Corporate advances

• Attorney’s Fees – Generally, each party will be responsible for their own costs. However, there are some instances where the lender may seek to have the borrower pay for a portion or all of their foreclosure fees. Moreover, these fees may vary depending on how complicated the defense will be and how long the foreclosure will take.

What Goes into Determining a Lawyer’s Fees?

The primary reasons for the large disparity in the cost of a foreclosure are:

• The type of foreclosure defense strategy

• The lawyer’s fee structure

Generally, foreclosure lawyers either bill through a flat fee or by the hour. If a lawyer charges a flat fee, expect to pay $1,000-$4,000. There is a common misconception that a lower fee may indicate a low quality legal representation; however nothing could be further from the truth. A lower fee is simply an assessment of what work the lawyer expects to do with respect to the difficulty of the case.

Thus, if a foreclosure is going to be quick and relatively straight forward, a lawyer will likely charge a lower flat fee. By contrast, if the borrower is adamant about continuing to live in the house, or is otherwise putting forth difficult foreclosure defenses, the fee will likely be higher.

Hourly Rate

Some foreclosure defense attorneys charge an hourly rate for their services. The rate can range from around $100 per hour to several hundred dollars per hour. With this type of fee arrangement, the lawyer generally collects an initial retainer—an advance payment to the attorney before he or she starts to work on your case—of several thousand dollars. The retainer amount and hourly rate varies widely, depending on the attorney’s experience and the customary rates in the area.

How an hourly rate works. Say you give your foreclosure defense attorney a $2,000 retainer. She charges $200 per hour. First, she reviews all of the documents in your case. Then, she prepares and files an answer and affirmative defenses to the foreclosure action. All of this takes five hours. The attorney also spends time preparing for and attending a foreclosure mediation with you. You’ll also get billed for the time it takes to make phone calls and emails related to your case. This too adds up to five hours. The retainer is now gone and the attorney hasn’t even attended any foreclosure hearings yet. Because the attorney must do more work, you’ll have to make further payments.

Pros and cons. The benefit to this type of fee arrangement is you’ll only pay the attorney for the amount of time he or she actually works on your case. The downside is that while the attorney will probably be able to give you a likely range of what you’ll pay in total, you won’t get an exact price as far as what the total cost of the foreclosure defense will be—and hourly fees can add up quickly.

Flat Fee

Some attorneys charge a flat fee to represent homeowners in a foreclosure. Generally speaking, the fee can range from $1,500 to $4,000 depending on the complexity of the case.

Pros and cons. The benefit to paying a flat fee is that you know ahead of time exactly what the total cost of your foreclosure defense will be. Whether it takes five months or two years to dismiss the foreclosure—or for the lender to complete the process—you know that this is all you’ll pay. The downside is that not all foreclosure attorneys offer this option and you’ll have to pay the fee upfront, which is difficult for many distressed homeowners.

Some foreclosure attorneys charge an upfront retainer ranging from several hundred to several thousand dollars, and then a monthly fee (like $500) for each month that the foreclosure is pending. In addition, attorneys have been known to charge an extra fee on top of this—called a contingent fee—if the case is dismissed as a result of the firm’s efforts.

You Must Also Pay Costs

Foreclosure defense attorneys will also charge for costs, like mailing, travel expenses, and court costs, on top of their fee.

When the financial crisis occurred, it became difficult for many people, including attorneys, to find work. As a result, many attorneys became foreclosure defense “experts” overnight marketing their services to homeowners in distress. In some cases, the fees that attorneys charge for services related to foreclosure are not reasonable. This means you need to be careful and do your research when hiring an attorney to fight your foreclosure. Ultimately, when trying to decide if a foreclosure defense fee is reasonable, ask yourself whether the attorney is charging a fair amount considering the services provided or is he or she trying to get a windfall from your situation.

Be aware, as well, that many scammers prey upon homeowners in foreclosure. Take steps to avoid foreclosure rescue scams.

An overview of total fees

The cost of preventing a foreclosure is not easily categorized. We assume that it includes the staff costs of talking to the borrower, collecting financial documents (a task we have noted seems unreasonably difficult for the borrower) reviewing the documents, ordering and reviewing the appraisal, the cost of that appraisal (more likely to be a less expensive brokers price opinion or BPO) and the preparation of a justification to decision makers for any workout plan.

We have seen figures from non-profits that the cost of averting a foreclosure through the use of credit counseling from a non-profit agency approved by the Department of Housing and Urban Development can range from a bit under $1,000 to $14,000 and we don’t quite know what to do with that large and disparate range. We do know that counseling programs vary greatly and we assume that those on the high side include programs that provide emergency funds to homeowners to bring loans current while those on the low side are primarily advising and educating their clients.

But the ,293 cost to foreclosure figure seems fairly easy to document and, compared to others that are widely bandied about ‘ from ,000 to 30 percent of the pre-foreclosure value of the house ‘ seems reasonable.
First of all, the cost does not accrue totally to the lender. The homeowner has a typical loss of $7,200 which includes loss of equity in the property, moving expenses, and perhaps some legal fees.

Those neighbors living in close proximity to the foreclosed house suffer $1,508 in losses from the decrease in the value of their own home as the neighborhood begins to deteriorate.

The local government loses $19,227 through diminished taxes and fees and a shrinking tax base as home prices decrease. This is a hard number to justify. First of all, only a portion of the declining tax base is due to foreclosures. A big chunk of it is based on falling prices community wide. And we’ll bet that even as we talk about it local governments are busy adjusting assessments and mill-levies to keep total revenues close to pre-housing crisis levels. This means that the neighbor’s share of the costs should be higher as they absorb increased tax levels.

Also, while the cities and towns are permanently losing some income from fees such as trash pick-up and water and sewer charges, if and when the house is sold they will collect back property taxes or, if they remain unpaid, they will become the owners of the property through tax title. (That opens a whole new area of concern, but one for discussion on a different day.)

That leaves us with total costs of $50,000 for the lender under the numbers produced by the Joint Economic Committee of Congress. The Committee does not break out these figures but a new study from Standard & Poor’s (S&P) does. While there is not a total match between the two sets of data, they are close enough.

The Committee includes the following in its list of pre-and post-foreclosure expenses:

Loss on property/loan

Property maintenance


Legal fees

lost revenue




And S&P breaks them down as follows:

The largest component of the $50,000 is cash loss on the property. S&P pegs this number at $40,000 for a typical loan of $210,000. Investors who buy short sales tell us that the big lenders are unwilling to sell property or take payoffs for more than a 15 to 20 percent discount so these numbers are closely in sync. S&P however includes only the actual decline in property values in that 19 percent loss figure.

S&P assigns a staggering 26 percent of the loan amount for the costs of foreclosure. This category wraps up the remainder of the list above and include paying property taxes (3 percent, although many ignore this obligation, hoping to pass accrued taxes on to the eventual buyer), maintaining hazard insurance, legal fees (1 percent), an appraisal (although most lenders are choosing the far less expensive alternative of a brokers price opinion or windshield appraisal,) lost revenue (an estimated 13.6 percent of the loan amount) 6 percent marketing fees (broker’s commission) and 3 percent spent on home maintenance.

There is a figure that is usually not taken into account ‘ cash reserves. Bank regulations require that lenders put aside a percentage of their capital to cover potential losses. That amount, whether $100,000 or $500,000 is that much less that the bank has to loan to others and means more lost revenue.

It is obvious that no one is a winner in the foreclosure game. But we wonder if lenders and their real estate agents are not exacerbating the situation for all involved through their property management and marketing policies. A look at that later in the week.

The best fee structure is the one that best suit your needs, and foreclosure lawyers understand that. It is always a good practice to learn more about what you are paying for, and having a better idea of what a foreclosure will cost you when you go in for an initial consultation will better situate you to start a dialogue with your lawyer about their fee structure and why they use the one they do.

Foreclosure Attorney Free Consultation

When you need legal help to stop a foreclosure, call Ascent Law LLC (801) 676-5506 for your Free Consultation. We regularly work on real estate law cases that involve foreclosure. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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Real Estate Lawyer Riverton Utah

When you are buying real estate for development, you need to structure the purchase. The first thing that you need to have in place for the purchase is the funds. An experienced Riverton Utah real estate lawyer can help you structure your real estate purchase.

Traditionally, the purchaser of the single-family home supplies equity funds from his own resources. Since the individual home is most frequently purchased for use and occupancy, it is unusual to find more than one individual (or family) contributing equity funds. In practice, the purchaser, however, does not always provide these funds from his own resources. In transactions involving the purchase, for investment, of long term interests in land and improvements, the purchase price is usually so large that equity funds assume considerable proportions. Since the required amount may be beyond the resources of most individuals, a number of ways have been devised to pool individual resources. The most common is the organization of a corporation and the sale of stock. Where building operations are involved, the stock is frequently taken by architects, real estate brokers, contractors, and, in some instances, by those who supply part of the borrowed funds.

Other forms of association such as partnerships, syndicates, and trusts are also employed. A syndicate has been frequently used in sub division or allotment operations, as well as in dealings in acreage or accommodation land.

One type is represented by the organization of a trust. Title, in fee, to the land and improvements is taken by a trustee in accordance with the terms of a trust agreement. The trustee issues certificates of beneficial interest to participants, each of which carries rights to the occupancy and use of a specified apartment. The certificates of interest and the trust agreement also contain provision for payments by the holders to meet operating costs, taxes, and debt service and to cover other contingencies. Ordinarily, provision is made for a board of advisers, selected from the certificate holders, to advise the trustee, although final authority usually rests in him. Among the contingencies provided for are dissolution of the trust, and transfer of the certificate and its privileges. Operating rules are also included. This organization is complex and is used less than the more familiar corporate form, which has tax advantages in a number of states.

When the corporate form is employed, the corporation (instead of a trustee) holds title to the land and improvements in fee. Stock, in an agreed amount, is issued and made transferable only in blocks, each block representing a part of the equity proportionate to the value of the use of a particular apartment. Each block of stock carries with it the right to a proprietary lease of an assigned apartment. The conditions of the lease and the charter and by-laws of the corporation govern its operation and stipulate the rights and privileges of proprietary leaseholders as well as of stockholders. Assessments are made against lease-stockholders to meet the cost of operation, taxes, and debt service, and the stock stands as security for the payment of these assessments. Other provisions in the lease and by-laws cover the same contingencies as does the trust form of organization.

Mortgage Law

The practice of pledging property as security, essential in the acquisition of rights in land and improvements through borrowing, is as old and as ubiquitous as property itself.8 In its simplest form a pledge is signified by the pawn ticket; in real estate financing it has become elaborate, formal, and rigid.

The most common instrument to pledge an interest in land and improvements is known as a “mortgage.” In its earliest form in Anglo-Saxon communities, the mortgage was a deed, that is, it transferred to the creditor both title and possession or occupancy. This deed, however, contained a clause which provided that if the debtor faithfully and punctually performed his obligations, the title, possession, and occupancy pledged would revert to him and the entire transfer would be null and void. If the pledge was redeemed, the transaction was dead, and the debtor recovered his rights.
Today, the mortgage is essentially unchanged in form, but its content and effect have been radically modified. Now, as a result of legislation and court decision, any instrument the purpose of which, either expressed or reasonably implied, is to pledge rights in land and improvements as security for the performance of obligations, is a mortgage; and “once a mortgage, always a mortgage.” Even though the defeasance clause be purposely omitted, if the intent of the parties can reasonably be interpreted as that of pledging rights as security, the instrument and its effect are as though the defeasance clause were included.

In addition, the transaction no longer transfers use and occupancy. In effect, after the transaction, the debtor remains in possession the same as before; and the rights of the creditor become enforceable only upon the debtor’s default in meeting the obligations. In other words, the mortgage gives the creditor a lien against the rights of the debtor, enforceable only after default.

Through the years, the rights of the creditor have become further modified. He no longer comes into full possession of the rights of the debtor, even after default. Instead, he has only the right to demand that the pledged property be offered for sale to satisfy the obligation. If at the sale the obligation is satisfied, the creditor has no further interest. Unless he becomes the purchaser at the foreclosure sale, the interest of the creditor in the pledged property becomes extinguished with foreclosure and sale. He may have other recourse on a bond or note which the mortgage secures, but his rights under the mortgage are exhausted.

It must be emphasized that the interest of the creditor in the property pledged by the mortgage can be enforced only in the future; so long as the obligations of the debtor, under the terms of the agreement, are discharged, the latter has possession and use of the pledged property, free of any interference by the creditor, unless the agreement provides otherwise. Because of his interest, however, the creditor does have an equitable right which enables him to prevent dissipation of the pledged property; otherwise, its management remains in the hands of the debtor until he has defaulted.

Within the framework of such general rules of law or equity, so firmly established as accompaniments of the relationship of mortgagor and mortgagee that they cannot be waived even by agreement, the provisions of the mortgage instrument establish and determine the obligations of the debtor. They may also limit or enlarge the powers and privileges of the mortgagee. In general, any provision may be included by agreement which does not forfeit in advance basic rights of the mortgagor. These are protected as a matter of public policy because the debtor is sometimes a necessitous borrower. As such, he is protected against forfeiture in advance of the right to reclaim his pledge and against the extortion of an unconscionable rate of interest. The term of the loan (the time or times, place, and manner of its repayment), the rate of interest within the maximum, with reasonable penalties for not meeting payments on the due date, or allowances for payments made in advance of their due date, and readjustments or changes in the scheduled payments which may come into effect in certain specified contingencies, these and many other details may be provided for in an agreement embodied in the mortgage instrument.
Within the limitations of law, then, there is ample opportunity for adapting the mortgage instrument to the circumstances peculiar to each transaction. Once executed, its provisions can be changed only by mutual consent, but in its preparation the mortgage instrument is susceptible of great adaptability. Much of its rigidity is the unnecessary result of custom or the routine use of standardized provisions.

Straight-term mortgages

Provisions covering the term of the loan and the manner of repayment illustrate both the potential flexibility of the mortgage instrument and the persistence of customary practice. Traditionally, a term is fixed by agreement, at the end of which the whole loan falls due; accrued interest is payable at stated intervals during the term or in toto at the end. A mortgage containing these provisions is called a “straight-term” or a “straight” mortgage and is well adapted for a debtor who expects to pay the debt on or before its due date and for a lender who wishes to lend for a period approximately equal to the term agreed upon and to recover the whole sum at the end of that period.

Yet the straight-term mortgage is frequently used in transactions in which both the borrower and the lender recognize that the borrower is not likely to be able to pay the debt at the end of the term. Sometimes an agreement to extend the mortgage is part of such a straight-term mortgage. This agreement, however, is commonly tacit or verbal and is not enforceable at law. Thus, its use leaves some uncertainty or creates an advantage for one of the parties. Notwithstanding its inappropriateness, the use of the straight-term mortgage persists.

Partial-payment mortgages

The partial-payment mortgage, which is a variation of the straight term mortgage, provides that at specified intervals during the term a partial payment shall be made to reduce the debt. These payments usually fall due on annual, semi-annual, or quarterly dates, when interest is also due. Under the partial payment play, the sum of the payments on principal is less than the original debt, and a balance, called a “balloon payment,” becomes due at the end of the term.

This arrangement is appropriate when the borrower anticipates receipt of income corresponding to payments scheduled during the term and of a sum sufficient to meet the balloon payment at the end of the term, and where the lender, instead of keeping the original amount of funds outstanding for the entire term, prefers to recover a portion of them at stated intervals and the remainder at the end of the term. In practice, these conditions are seldom found. The balloon payment is usually considered by both parties to represent a sum which the borrower will not have provided and which the lender will not demand, or does not expect to receive, when the term expires. Both parties usually anticipate that this sum will be “refinanced.” Many lenders cling to the practice because it gives them the right at the end of the term to negotiate a different form of agreement for repayment of the balance or to demand its entire liquidation. Borrowers, on the other hand, may use this type of mortgage to borrow funds for other purposes and to have the use of a sizable proportion of the funds for the whole period of the loan.

Fully amortized mortgages

Another type of agreement, the amortized mortgage, is used more and more frequently in mortgage loans on homes. The most common terms embodied in this type of home mortgage provide for full reduction of the debt at maturity by fixed monthly payments. Payments are credited first to interest accumulated for the month at the agreed rate and the balance toward reduction of principal. Other terms provide for the payment of a fixed amount per month on principal and in addition the interest accrued for the month. There are also variations of these two basic types of full amortization agreements.

The monthly amortized mortgage is appropriate where the borrower receives his principal income monthly and where the repayment of the principal in small monthly sums will not result in dispersion of the lender’s principal or cause a loss because of waiting to recapture sufficient principal for further investment. Although not appropriate, therefore, for many individual lenders, it is especially suited to institutional lending. It gives a calculable liquidity expectation to the investment and some turnover of investment which facilitates adjustments of the portfolio to changes in the money market; it also maintains contact between borrower and lender, providing prompt notice of default or other stresses affecting the quality of the investment.

When you are raising money for a real estate purchase, never sign any document without having your Riverton Utah real estate lawyer review them.

Riverton Utah Real Estate Attorney Free Consultation

When you need help with a real estate law in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We can help with evictions, quiet title actions, partition actions, and other real property litigation. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

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Do I Need A Lawyer For A Foreclosure?

Do I Need A Lawyer For A Foreclosure

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

Formally, a mortgage lender (mortgagee), or other lien holder, obtains a termination of a mortgage borrower (mortgagor)’s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure).

Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, it is a cloud on title and the lender cannot be sure that they can repossess the property.

Therefore, through the process of foreclosure, the lender seeks to immediately terminate the equitable right of redemption and take both legal and equitable title to the property in fee simple. Other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue homeowner association dues or assessments.

Do I Need a Foreclosure Attorney?

If you’re a struggling homeowner facing foreclosure, you’ll need to decide not only if it’s worth your time to fight the foreclosure, but also if it’s worth paying an attorney to help you. In some cases—say you have a valid defense to the foreclosure and want to keep your home—you’ll need a lawyer to assist you. In other instances, such as if your goal is to stay in the home through the foreclosure process or just to gain some additional time before the bank completes the foreclosure, it often makes sense to go at it alone. (Read about when you might not need to hire a foreclosure attorney.)

When You Should Hire a Foreclosure Attorney

Below are some situations where you should consider hiring or at least consulting with, an attorney.

You Have a Defense and Want to Keep Your Home

If you believe you have a defense to the foreclosure, and you want to keep your home, you likely will need a skilled attorney to help. In most cases, you’ll have to raise the defense in court, either by filing your own lawsuit (if the foreclosure is no judicial) or responding to the lender’s lawsuit (if the foreclosure is judicial).

Each foreclosure case is different and has complicated nuances that can ultimately make or break the case. In view of this, it’s unlikely that a homeowner could mount a successful defense to foreclosure without an attorney. For example, some defenses that probably require the assistance of an attorney include:

• The foreclosing party didn’t follow proper foreclosure procedures. In a foreclosure, the foreclosing party must strictly follow state-specific procedures, with few exceptions. A foreclosure attorney familiar with your state’s particular foreclosure requirements can inform you if a procedural mistake is significant enough to warrant a dismissal of the case.

• The foreclosing party can’t prove it owns your loan. If the foreclosing party can’t prove it owns your loan, then it doesn’t have standing (the legal right) to foreclose. For example, if your mortgage loan was bundled and securitized, determining if the foreclosing party actually owns the loan can be a challenge to say the least. An attorney can help you figure out if you have a defense based on the fact that the foreclosing party can’t prove that it owns your loan. (Learn more about the securitization process.)

• Your loan servicer made a serious error with your account. Loan servicers—the companies that manage loan accounts—often make serious errors when it comes to managing homeowners’ accounts like misapplying funds, failing to credit payments to the account, or charging unreasonable and no allowable fees. An attorney who is familiar with reviewing servicer payment histories, which can be difficult to interpret, can help you figure out if the servicer made a serious error with your account that amounts to a foreclosure defense.

Military Foreclosure

Active military service members have some special protections against foreclosure and have certain rights under the Service members Civil Relief Act (SCRA). Among other things, if you took out your mortgage before going on active duty, the servicer cannot foreclose unless it gets a court order or a waiver from you. (To learn more, see Foreclosure Protections & the Military: When a Service member gets a Mortgage before Active Duty.)
The SCRA is extensive and complex. If you’re on active duty and facing foreclosure, an attorney can inform you about all of your rights under the SCRA and help ensure that the servicer complies with this law. (See our article on Legal Protections for America’s Military: The Service members’ Civil Relief Act for more details.)
• You need help With a Loan Modification Because the Bank is Stalling or Dual Tracking

An attorney can help you with the loan modification process if the bank is stalling or “dual tracking” your loan (pursuing a foreclosure and a loan modification at the same time) in violation of federal and, in some cases, state laws. (Learn more about laws that prohibit dual tracking.)

Because it is very difficult to get your home back after a bank completes a foreclosure, you want to deal with this type of legal violation before the sale. Having an attorney on your side gives you a better chance of getting results before the sale takes place.

You Want To Learn about Foreclosure Laws in Your State and You’re Rights during the Foreclosure Process

It’s a good idea to learn each step in the foreclosure process so you aren’t caught off guard at any point. If you’ve done your homework on the topic, but still have questions, an attorney is a good resource. (Learn more about the general foreclosure laws and procedures in your state our Foreclosure laws area.)

Also, an attorney can tell you about about federal laws and state laws that can protect you while you’re in foreclosure.

How Can an Attorney Help?

The foreclosure process is difficult to understand and master, even for an attorney. For example, court procedures vary from state to state, and even from court to court. Also, no judicial foreclosure procedures are vastly different in different states.

If you want to fight the foreclosure, you’ll need to understand how to file documents with the court, rules of evidence, and more. An experienced and skilled foreclosure attorney can help you navigate the rules and advise you about your various options. For example, a lawyer can help you avoid foreclosure altogether by working out a “loss mitigation” option (like a loan modification), represent you during the foreclosure action, or help you save your home in a Chapter 13 bankruptcy.

An Attorney Can Work With Your Lender to Avoid Foreclosure

If given enough time, a lawyer might be able to work out a deal with the bank to avoid foreclosure. Here are examples of ways an attorney can help that don’t involve going to court.

Help you modify your loan. A loan modification is an agreement between the borrower and the lender that changes the original terms of the loan. An attorney can assist you in the loan modification process. Note that some states, like California, don’t allow an attorney to accept payment until after the attorney has fully performed each and every service related to a modification that he or she was contracted to perform or represented that he or she would perform. A modification might lower the interest rate or extend the amortization term. An attorney can also review the conditions of any modification that the lender offers you. He or she will examine the documents to make sure there are no illegal charges—like improper fees or advances—added to the total balance, and that the modification is in your best interest.

Inform you about loss mitigation options. Certain types of loans, like Fair Housing Administration (FHA) loans, have special loss mitigation options that allow you to bring your balance into good standing. For example, you might qualify for a “partial claim,” which is a particular type of loan that will bring you current on the payments. However, not all lenders will let you know about every alternative that might be available to you. Your attorney can advise you about the available options.

Ensure that the lender follows the rules. Lenders aren’t always helpful when it comes to processing loan modification applications, even though federal law (and sometimes state law) has strict requirements that the lender must follow. An attorney can ensure that the lender follows all of the relevant laws and processes your application promptly. For example, under federal law, if you submit a complete loss mitigation application more than 37 days before a foreclosure sale, the servicer must consider the application and give you time to respond to a proposed option before it can ask the court for a foreclosure judgment or order of sale, or conduct a foreclosure sale. Your attorney will let you know if the lender violates any relevant laws, and can help you enforce your rights.

Represent you in foreclosure mediation. Some states offer foreclosure mediation, where the homeowner and the lender come together to try to work out an alternative to foreclosure. An attorney can represent you in the negotiation process to ensure that the bank treats you fairly.

Defenses a Lawyer Can Raise in Court

An attorney might be able to raise certain defenses or point out errors that the bank has made in the foreclosure process. Potential arguments include:

• the lender or mortgage servicer (on behalf of the lender) breached the loan contract by, for example, failing to accept your payment (read about common servicer errors)

• the foreclosing party can’t prove that it owns the mortgage debt

• you’re an active military member entitled to protection against foreclosure under the federal Service members Civil Relief Act, or

• The lender failed to follow proper foreclosure procedures under state law.

If your attorney raises a legitimate defense and the court agrees with the argument, the lender might consider a settlement or the court might dismiss the foreclosure.

When You Might Not Need a Foreclosure Attorney

You might not need to talk with an attorney if your goal is simply to live in the property throughout the foreclosure process. You legally own your home up until the new owner who buys it at the foreclosure sale gets title to the property. (Learn when you have to leave the property in a foreclosure.)

In some states, you might be able to stay in the home even longer if state law provides a post-sale redemption period and gives foreclosed borrowers the right to live there during this time. Or you might have the right to stay in the home until some other action, like ratification of the sale, happens. To find out exactly how long you can legally stay in the home, research your state’s laws. If you aren’t able to find the answer on your own, then you might want to consider talking to a foreclosure attorney. (To learn more about what happens following a foreclosure sale, see Your Options after the Foreclosure Sale.)

When You Might Need to Hire a Lawyer

While you probably don’t need a lawyer to help you stay in the property during the foreclosure, you might have to hire a lawyer if the bank or servicer prematurely changes the locks or removes your personal property from the home in the name of “property preservation.”

While you have the right to occupy the home during foreclosure, if you abandon the home before the process ends, most mortgages and deeds of trust give the bank the right to “preserve” the property. This means, for example, the servicer (on behalf of the bank) can change the locks or clean up items you’ve left behind. But servicers and their agents have been known to lock borrowers out and remove their belongings—even when the home is still occupied. If this happens to you, you’ll probably need an attorney’s help to get back into the property or retrieve your belongings. There are some Deceptive Foreclosure Practices: When Banks Treat Occupied Homes as Vacant that you can learn about from our office.

You Want to Get Some Extra Time to Live in the Home

If your primary goal is to get a little more time to live in the home before the servicer completes a foreclosure—perhaps so you can come up with the funds to reinstate the loan, refinance, or pay for a new place to live—you can submit a loss mitigation application to the servicer. Federal law and some state laws prevent the servicer from foreclosing on a borrower while a loss mitigation application is pending.

Not only will applying for loss mitigation generally you buy you some time, but the servicer might offer you a modification that lowers your monthly mortgage payment that makes your home more affordable. As a result, you might decide to stay in the home. Even if the servicer denies your application, in most cases, you’ll also get some time to appeal the decision.

Be aware that if the servicer already evaluated you for a loan modification or other loss mitigation option, you can’t submit another application just to stall the foreclosure. But under federal law, if you’ve brought your loan current at any time since submitting a complete loss mitigation application—and the servicer reviewed that application—the servicer has to perform another review if you apply for loss mitigation again. (12 C.F.R. § 1024.41(I).)

You Don’t Have Any Defenses to the Foreclosure

If you don’t have a valid defense to the foreclosure—say you stopped making your payments, have no intention of resuming them, and think your servicer has treated you fairly—then there’s probably no reason to hire or consult with an attorney.

You Can’t Afford Your Home and You Don’t Want to Keep It

Likewise, if you can’t afford your house payments and don’t want to keep your home, it might be a waste of time, effort, and money to fight or try to stall the foreclosure. In this situation, you don’t want to throw away money hiring a foreclosure attorney. Instead, you can put that money towards finding somewhere else to live.

When picking an attorney to represent you, you should speak to several different lawyers to get more than one perspective and learn about all of the options available to you. Below are a few questions you should ask an attorney you’re considering hiring.

• What course of action do you recommend?

• How much experience do you have representing homeowners facing a foreclosure in court (or in filing bankruptcy, or in getting a loan modification, etc.)?

• Have you taken any continuing legal education courses about laws and strategies in handling foreclosure matters?

• How much will it cost to hire you?

Foreclosure Lawyer Free Consultation

When you need legal help with a Foreclosure in Utah, please call Ascent Law LLC (801) 676-5506 for your Free Consultation. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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Real Estate Lawyer Heber City Utah

Construction contracts are complex. Never attempt to prepare a construction contract without the services of an experienced Heber City Utah real estate lawyer or sign one for that matter. You could get into a big mess. Always use Utah Real Estate Lawyers when it comes to real estate in Utah.

Bonds in general involve a payment by the contractor to a third party who is able to guarantee certain behavior or performance by the contractor. In the event the contractor fails to perform in the way specified, the bonding agent or surety is obligated to pay the party outsourcing for the service a set payment. Bonds are essentially forms of insurance. As with all insurance, there is a potential for abuse. For example, if a contractor has purchased a performance bond, there may be an increased tendency on the part of the property owner to reject the work or products produced under the contract for less than valid reasons. In cases where the value of the bond is greater than the value of the final product, this temptation is particularly strong. This situation is most likely to happen in cases where there is a good likelihood that the product or service being provided may be quickly outdated. In a situation where the product is no longer serviceable by the time it is delivered, the property owner may look for an excuse to find fault with the performance of the contractor and invoke the protection provided by the bond. Specific types of bonds include (1) performance bonds that require the contractor to perform as specified in the contract, (2) bid bonds which insure that the contractor accepts the contract that has been bid upon, and (3) payment bonds that insure payment for services rendered or goods delivered. If you are a construction contractor and you have been asked to sign a contract, consult an experienced Heber City Utah real estate lawyer.

Liquidated damages provisions require the supplier or service provider to pay the property owner (buyer) a specific amount for the failure to provide a level or quality of service that is specified in the contract and that results in some level of damage to the property owner. Liquidated damages can be assessed for each day beyond the delivery date that the supplier fails to deliver on the contracted product or service, for unusable goods or services, and for services that have been judged unacceptable by an agreed upon measure of service quality.

Liquidated damages in many cases can be assessed against or deducted from the payments that the property owner would make to the contractor. Property owners need to be careful in crafting liquidated damages clauses. The courts generally do not allow liquidated damages provisions to be used as a means to penalize contractors. Instead, such provisions are designed to compensate the property owner for actual damages and must therefore meet a standard of being reasonably connected to actual damages experienced. For example, imagine that a liquidated damages clause in a construction contract required that the contractor provide a financial report by the first of each month or, alternatively, pay the property owner $15,000 (or have the property owner’s payment to the contractor reduced by $15,000). One month the contractor fails to provide the report by the first of the month, but does deliver the required report by the fifteenth of the month. In this case, unless the property owner could prove that the delay of the report actually caused approximately $15,000 worth of damage, the courts would probably rule that the amount of the claim was out of proportion to the extent of the contractor’s performance failure and not allow a liquidated damages claim. One potential consequence of the court ruling that a liquidated damage clause is unreasonable is the complete setting aside of the clause. In such a case, the property owner could be left without the ability to be compensated for the contractor’s poor performance. Because reasonableness is the standard for judging the validity of a liquidated damages clause, property owners need to develop methods for assessing damages in proportion to the whole value of the contract or contract payment.

No damages for delay terms essentially excuse the property owner or buyer from responsibilities for delays that the property owner itself causes. If the work to be done requires a high level of contribution from the property owner or a substantial amount of coordination between the property owner and the contractor, the no damages for delay clause represents a major shift in risk from the property owner to the contractor. Contractors, for the most part, are unwilling to assume such a risk without the potential for higher-than-normal levels of compensation. No damages for delay clauses are probably only appropriate when the property owner must be sure that the work will be completed on time even if the property owner’s own personnel are unable to facilitate the work in the expected manner. Property owners who find themselves requesting this type of clause could perhaps make a larger contribution to property owner efficiency by notifying responsible officials that improvements need to be made in operations.

Clauses related to consequential damages control for substantial unforeseen and undesirable results of using a product or service. For example, the property owner may want to purchase some new water valves at a substantially lower cost than normal. The valves themselves may only cost a few hundred dollars, but the failure of a single valve could result in water damages in the millions of dollars. In reading the sales contract the property owner is likely to notice that the valve’s manufacturer has included a clause that requires the purchaser to forego suing for consequential damages or the damages that result from the failure of the part. In technologies that are subject to the potential for large consequential damages, such clauses can explain large differences in price that are otherwise unexplainable. Because the Uniform Commercial Code generally allows for consequential damages, the typical contract language in this area will be a disclaimer of such damages.

Assignment clauses are used to control for the possibility of a contractor winning the contract award and then assigning the work to another service provider.

Force majeure is a legal doctrine that excuses contractors or the property owner from performing their contracted duties because of conditions beyond the control of the respective parties (e.g, bad weather, vehicle breakdown, civil disturbances, etc.). Force majeure clauses are typically included as a boilerplate in most contracts. In some cases, however, property owners need to be careful not to include such clauses. When the point of the contract is to provide for emergency services (e.g, to back up service providers who have failed to deliver because of conditions beyond their control), force majeure clauses should either not be included or should be qualified so as to exclude conditions that the service provider is expected to overcome.

Clauses related to being an independent contractor are often included in contracts as a means of establishing that the contractor cannot claim benefits (e.g., overtime, etc.) to which property owner’s employees are entitled.

Requirements contracts clauses specify that the property owner is only contracting for services as required, that the payments or contract value is only estimated, and that the property owner does not guarantee the amount of work or requirements over the course of the contract. These clauses are commonly used in conjunction with services, such as snow removal, vehicle repair, tree removal, emergency response services, and facilities renovation work, for which a service level cannot be easily estimated.

Risk-related clauses are those that attempt to appropriate the risk levels to be borne by the parties to the contract. Not every contract involves every type of risk. Good contract management calls for a close fit between the type and level of risk involved in the contract and the type and degree of risk-management contract terms that one intends to require.
Assessing the potential for risk is not always easy, but experience suggests that a number of conditions are related to risk, including such factors as the length of the preexisting contractual relationship, the reputation of the contractor, the complexity of the work, the reliability of the subcontractors, and so on.

While it may be relatively easy to assess the potential for higher-than- average risk in a contract, it is often more difficult to decide how to manage this risk. This is the case because each of the risk-management clauses outlined has a cost. The cost is rarely explicit or itemized. Instead, it is usually included as part of the overall contract payment cost. Theoretically speaking, the contractor could lower the contract price for every risk-management clause or behavior that the property owner decides not to require. Sometimes the theory is evident in real contract situations. For example, if the property owner decides not to require a performance bond, companies that bid on the contract should be able to lower their price by the cost of the performance bond. While this may be the case in uncomplicated bidding situations (e.g., where all the bidders are not already bonded and where all performance bonds are nearly equal in price), the risk-for-cost tradeoff is more likely to occur in an indirect, rather than direct, manner. For example, the property owner may decide that a performance bond that is regularly needed in a particular type of work will not be required in a particular instance of the work being contracted.
Payment Terms or Provisions. These clauses would outline the payment type (e.g., fixed, reimbursement, etc.), the schedule of payments, and the maximum and minimum payment amounts.

Contract Change Provisions

Most contracts will specify a method by which the parties agree to make needed changes to the contract. Sometimes change clauses are as simple as a statement that the parties can change the contract by mutual agreement. At other times, it may be more efficient to allow one party to unilaterally make specific changes or a certain number of changes within a certain time frame. For example, in complex building projects, the project manager may be given authority to change certain material specifications as long as they are of equivalent or better quality.

Contract Suspension Provisions. There may be times when the property owner would want to have a right to suspend the work that has been contracted. For example, if the property owner plans to pay for a project out of expected sales receipts, a situation may occur where the property owner fails to collect the expected level of sales receipts according to schedule. If this schedule is closely tied to the project itself and the property owner has not allocated any other resources to the project, it may be necessary to suspend the contract until the necessary funds are collected. Contract suspension, however, is usually not a cost-free activity unless this is clearly specified. Without provisions for the orderly suspension of work, the cost of suspension to the contractor (e.g., in terms of lost work, funds expended on subcontractors and materials, warehousing costs, etc.) can form the basis for a claim against the property owner. Contract suspension provisions typically include a limit on the amount of time in which the contract can be suspended, as well as specification of some compensation to the contractor for the suspension costs incurred.

Contract Renewal Provisions. Contract renewal provisions are important in keeping the cost of property owner contracting down. Contract renewal provisions allow the property owner the option of renewing the contract at the current price without having to bear the cost of rebidding the contract. It is often the case, however, that because of inflation a contractor will not be interested in the renewal offer at the same price. If this is likely to be the case and the property owner wants to keep the renewal option alive, the contract will need to include a price adjustment or escalator that will allow the contract value to be maintained in the face of price or wage inflation.

Speak to an experienced Heber City Utah real estate lawyer. The lawyer can prepare a customized construction contract for you.

Heber City Utah Real Estate Lawyer Free Consultation

When you need legal help regarding real estate law in Utah, including purchase and sale agreements (REPC) or a commercial real estate deal, real property litigation, real estate partition actions, evictions for landlords, or other real estate cases, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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Real Estate Lawyer Provo Utah

Real Estate Lawyer Provo Utah

When you are buying land for development, you should seek the assistance of an experienced Provo Utah real estate lawyer.

Finding a suitable site involves establishing a set of criteria by which alternative locations can be identified and assessed. These would broadly relate to market, physical, legal and administrative conditions and constraints. Once a shortlist of say three or four options has been drawn up, a preliminary appraisal will be conducted in order to determine the most suitable choice. This is the proverbial “back of the envelope” analysis, which combines an objective assessment of likely cost against value with a more subjective judgement based upon experience and feel for the market. Ideally, of course, the right site looking for the right use meets the right use looking for the right site. But there is no magic formula.

Undertake a more refined appraisal of the viability of the proposed project, taking into account market trends and physical constraints
Decide to what extent will further inquiries, searches, surveys and tests have to be conducted, by whom and at what cost, so that there is sufficient information available in order to analyze the financial feasibility of a development proposal. This will normally entail a more detailed assessment of market demand and supply; a close examination of the changing character of the sector; projections of rents, values and yields; and estimations of costs and time. An initial consideration of the structural engineering design foundations and subsoil will also be undertaken. Having assembled all the data, a check should be conducted to ensure that the basic concept achieves the optimum use of the site or buildings and maximizes the amount of letting or operation space.

Consult with the planning authority and other statutory agencies with regard to the proposed development.

Apart from making sure that all the usual inquiries are made in respect of preparing and submitting applications for planning approval and building regulation consent, it is also essential for the developer to create a positive climate within which the development can progress. This means that the right people in all the various authorities and agencies concerned with accrediting the proposal must be carefully identified, and approaches to them properly planned and presented. First impressions are always important, and simple precautions can be taken, such as consulting with all the contributors to the project to compile all the preliminary inquiries together, to avoid duplication and dispatching them to the authorities and agencies in sufficient time to allow proper consideration and formulation of response. Among the principal factors the developer will seek to establish are the prospects of being expected to provide elements of planning gain by way of legal agreements and the likelihood of obtaining a consent, the possibility of having to go to appeal, the chances of success, and the consequent probable timescales and costs resulting. An experienced Provo Utah real estate lawyer can assist you deal with the planning authority and other statutory agencies.

Identify the likely response from other interested parties to the proposed development

The developer needs to have heightened understanding of how a particular scheme of development will be received by those likely to be affected by it, or have a voice in how, and if, it proceeds. This implies a knowledge of the distribution consequences of development and a comprehension of, say, urban renewal policy. They must, therefore, be able to predict who will oppose, why, how they might organize their opposition, what influence they exert, and how best to negotiate with them and reduce potential conflict.

Establish the availability of finance and the terms on which it might be provided.

Because the parameters set by a fund can influence and even determine the design and construction of a building, great care must be taken in selecting a suitable source of finance and in tailoring the terms to meet the aims of both parties to the agreement. This will involve an evaluation of alternative arrangements for financing the project in question, including an assessment of the financial, legal and managerial consequences of different ways of structuring the deal. In doing so, it will be necessary to determine very closely the absolute limits of financial maneuverability within the framework of the development plan and program, for, during the heat of negotiation, points may be conceded or matters overlooked, which could ultimately prejudice the success of the scheme. Different sources of finance will dictate different forms of control by the fund. The major financial institutions, for example, increasingly insist that some kind of development monitoring be undertaken by project management professionals on their behalf, whereas a construction firm might provide finance for development but demand more influence in the management of the building operation. The developer must be wary. Presentation of a case for funding is also a task deserving special attention, and any message should be designed to provoke a positive response. Subsequent to a loan being agreed in principle, it will be necessary for the developer, in conjunction with their experienced Provo Utah real estate lawyer and other relevant members of the professional team, to agree the various drawings and specification documents to be included in the finance agreement. These will normally comprise drawings showing floor layouts and cross sections of the entire project, together with drainage, site and floor-related levels, and outline heating and air conditioning proposals, as well as a performance specification clearly setting out the design, constructional and services standards to be met. The financial dimension to project management is critical, for a comparatively small change in the agreed take-out yield can completely outweigh a relatively large change in the building cost.

Decide the appointment of the professional team and determine the basis of appointment.

It is essential that the developer, or an appointed overall project manager, has a good grasp of building technology and construction methods, together with an appreciation of their effect upon the development process. To this must be added a perception of the decisions that have to be taken and an ability to devise appropriate management structures necessary to carry them out. In deciding such questions as whether to appoint a small or large firm, appoint on the basis of an individual or a firm, select professionals for the various disciplines from the same or from different firms, choose professionals who have worked together previously or who are new to each other, or opt for existing project teams or assemble one especially for the job in hand—the respective advantages and disadvantages must be explored and weighed most carefully.

The chemistry is all important, but the opportunity to take such a deliberate approach towards the assembly and integration of the professional team is one of the great advantages of property project management. In this context, however, it is essential that the contractor is seen to be a central member of the team, playing a full part in the design process and not somehow placed in a competitive position. Increasingly, moreover, a choice has to be made between different methods of producing building services, such as package deal, design and build, selective competitive tender, two-stage tender, serial tender, negotiated tender, management fee contract or separate trades contract. However, a true project management approach might be said to be superior to all other methods. The members of the team, once appointed, will usually be required to enter into collateral warranties as to their professional obligations and be prepared to produce reasonable evidence of the adequacy of their professional indemnity insurance. It may also be that the fund as well as the developer will expect similar undertakings and will insist that the conditions of engagement reflect this part of the financial agreement. Prepare a brief that outlines the basic proposals for design, budgeting, taxation, planning, marketing and disposal and sets out all the management and technical functions, together with the various boundaries of responsibility.

There are many issues involved in buying a piece of land and developing it into a residential or commercial real estate project. This involves dealing with various authorities and also entering into contracts with professionals. An experienced Provo Utah real estate lawyer can assist you with the entire process.

Construction Stage

Construction loans for real estate projects are secured by the future value of the completed property. Before a bank will make a loan, the developer must demonstrate this value by obtaining a specified number of purchase agreements or leases at or above projected prices to give the bank confidence that the project will sell out or lease up. The developer may turn to a bank with which she has a good relationship or she may shop around for the best loan terms. Before signing any construction loan document, consult an experienced Provo Utah real estate lawyer.

As soon as the developer has settled on terms with a bank and closed on the loan, she will acquire or “take down” the land and break ground, with the goal of completing construction as quickly as possible. Throughout the construction stage, the developer will be involved in a million little decisions from materials selections to construction details to the review of monthly construction payment applications. Until the building is finished she will be constantly re-balancing the project’s design, materials, systems, and costs.

Closing dates with tenants or buyers will drive the schedule. For large projects the developer may complete and sell or lease up a part of the project while the rest of the building is still under construction. High-rise residential and office towers are often completed and occupied from the top down, while horizontal developments like town homes and office parks lend themselves more easily to phasing that matches market demand and absorption. Whether the first condo unit or an entire building, the completion of construction signals the beginning of sales.

Sales Stage

Once construction is complete and the building is ready for occupancy, the developer’s objective is to sell or lease it up for the highest prices possible as quickly as possible. The developer must repay the construction loan with proceeds from sales. The longer it takes to sell out or lease up, the higher the interest costs on that borrowed money—the carrying costs—and the lower the developer’s profit. During this stage the developer’s attention will be focused on ensuring that buyers or tenants who have signed purchase agreements or leases remain satisfied and show up to close on those contracts.

The developer’s involvement will not end until the building is completely sold out or, in the case of a rental property, leased up and then refinanced or sold. Some developers build to “hold” over a longer time frame and they will have ongoing responsibility for property ownership from maintenance to periodic capital improvements. When the developer does finally sell or “dispose of the asset,” whether it is as soon as it has been leased up to a “stabilized” level of occupancy (for example 90 percent) or decades later, she will return all funds to lenders and make distributions of equity and profits to investors.

It sometimes helps to view development this way—as a series of stages and as a list of tasks—but it can also be viewed as a process that is punctuated by a small number of important milestones. These include property acquisition, preliminary approvals, final approvals, achieving a predetermined percentage of presales or signing a lease with an anchor tenant, closing on financing, completion of construction, stabilized occupancy, and sale. Each of these is a required step on the way to a completed project and each requires the careful management of myriad tasks through multiple stages. While these lists of stages and tasks are easy enough to comprehend in the abstract, they are more fluid and messier in practice. Because no two development projects unfold in the same way, managing uncertainty and the “unknown unknowns” is just one more part of the business. Real estate development is a complex type of product development with high stakes. Minor mistakes or omissions in any of the stages, tasks, or milestones can derail or stop a project and cost the developer most if not all of his or her financial resources. And just one bad project can wipe a developer out.

An experienced Provo Utah real estate lawyer can assist you prepare the sale and lease agreements once the construction is complete.

Provo Utah Real Estate Attorney Free Consultation

When you need a quiet title case to fix the title to real estate, or you need to do an eviction, or you need a partition action or some other type of real property help in Provo Utah, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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How To Stop Or Postpone A Foreclosure Sale Date

How To Stop Or Postpone A Foreclosure Sale Date

How To Stop Or Postpone A Foreclosure Sale Date

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

Formally, a mortgage lender (mortgagee), or other lien holder, obtains a termination of a mortgage borrower (mortgagor)’s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure).

Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, it is a cloud on title and the lender cannot be sure that they can repossess the property. Therefore, through the process of foreclosure, the lender seeks to immediately terminate the equitable right of redemption and take both legal and equitable title to the property in fee simple. Other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue homeowner association dues or assessments.

How Foreclosure Works

When you buy expensive property, such as a home, you might not have enough money to pay the entire purchase price up front. However, you can pay a portion of the price with a down payment, and borrow the rest of the money (to be repaid in future years).

Homes can cost hundreds of thousands of dollars, and most people don’t earn anywhere near that much annually. Why are lenders willing to offer such large loans? As part of the loan agreement, you agree that the property you’re buying will serve as collateral for the loan: if you stop making payments, the lender can take possession of the property in order to recover the funds they lent you.

To secure this right, the lender has a lien on your property, and to improve their chances of getting enough money, they (usually) only lend if you’ve got a good loan to value ratio.

How to Stop or Postpone a Foreclosure Sale Date

Many homeowners believe once they’ve received a letter saying their home is being foreclosed on, all hope is lost and they have no option to turn it around. Some people even make an effort to move out once the letter arrives because the foreclosure sale date has already been set. All it takes is to know how to postpone a foreclosure sale date to stop foreclosure.

Some folks are not aware of the fact that home foreclosure can actually be stopped or postponed. Experienced foreclosure attorneys know how to stop a foreclosure sale date and even postpone a foreclosure sale date if that works better for your life situation.

How to Stop Foreclosure Sale Date

When looking to stop a foreclosure sale date, the first course of action is to remain calm and realize there are many options available.

1. Contact lender for mortgage statements and ask for forbearance.

2. Decide if you want to pay the balance or refinance.

3. Challenge the foreclosure with a lawsuit.

4. File for bankruptcy.

5. Offer the house up for a short sale.

These are just a few approaches that obviously require more detail and activity to achieve the goal of stopping a foreclosure. However, it gives you an idea of the variety of possibilities available for keeping your home despite receiving a notice of default letter.

The best way to know what option is viable for your life situation is to consult with an experienced law firm with a previous track record of helping families save their home from foreclosure.

Our law firm is available to offer a Free Consultation. Call us at 8801-676-5506

There are options you can take to postpone foreclosure date. Homeowners can postpone their sale date multiple times. There are even some steps to stop a foreclosure sale date but the best tactic is to let the expert help you, hire a foreclosure attorney.

Options that can Postpone a Foreclosure Sale Date

♦ Simply ASK for a Postponement

This is a logical step to getting your sale date postponed. Call your mortgage company and ask them to postpone the sale date. Then make sure to keep in touch with them so the lines of communication remain open.
Many mortgage companies have websites that include assistance pages for those facing foreclosure. Visit these and see what steps are available for you with your particular mortgage company. It’s true that some mortgage holders are very cold and indifferent, but it’s also true that many of them are not. The smart ones understand how important ‘word of mouth’ advertising can be, and how effect compassionately helping out their customers is for earning trust and gaining future customers.

Filing Bankruptcy

Bankruptcy stops foreclosure dead in its tracks. Once you file a bankruptcy petition, federal law prohibits any debt collectors, including your mortgage lender, from continuing collection activities. Foreclosure is considered a collection activity, and so the day your lender becomes aware that you have filed for bankruptcy, the foreclosure process will effectively be frozen. But here’s the rub; once you get to court, the bankruptcy trustee’s role is simply to play referee or mediator between you and your creditors. Bankruptcy really just buys you more time to replace your lost job or recover financially from a temporary disability; it doesn’t let you off the hook for your debts. The law requires your mortgage company and other creditors to work in good faith with you to formulate a reasonable repayment plan so you can get back on track. Consult with a bankruptcy attorney regarding whether filing for bankruptcy is a good strategy for you.

A Chapter 7 bankruptcy and Chapter 13 bankruptcy (one in which you are looking to discharge, as opposed to restructuring, debt) may buy you some time, but eventually, the foreclosure process will continue, seeks to discharge all debt. A Chapter 13 bankruptcy (BK-13), by contrast, seeks to establish a manageable debt repayment plan. Once a BK-13 has been filed, the foreclosure process automatically stops — immediately. Under a BK-13 plan, the homeowner must continue to make monthly mortgage payments to the lender, while paying any past due amounts to a court-appointed bankruptcy trustee.

♦ Litigation

If you choose to sue your lender, a judge may grant you a preliminary injunction. This will prevent the lender from foreclosing on your property while the lawsuit is ongoing. Should you fail to win, however, the foreclosure process will continue.

♦ Short Sale

If you owe more on your property than the current value of the property, a short sale may be an option. In a short sale, the lender agrees to take possession of the property and, in exchange, forgives all additional mortgage balances owed on the property. The borrower must be able to prove that they cannot afford to repay any additional loan balance. While a short sale is being negotiated, the foreclosure process will be postponed.

After your lender files an NOD but before they schedule an auction, if you get an offer from a buyer, you lender must consider it. If they foreclose on your home, the lender is going to simply turn around and try to resell it; if you present them with a reasonable short sale offer, they may see it as saving them the time, effort and trouble of finding a qualified buyer in a soft market. So, if your home is on the market, continue to aggressively seek a buyer for it, even after your lender initiates the foreclosure process. Read our guide on How to Sell Your Home Fast When Foreclosure Looms for action steps you can take to unload your home fast, then make your best pitch as to why your lender should agree to the short sale.

1. Deed in Lieu. A deed in lieu of foreclosure is exactly what it sounds like. The homeowner facing foreclosure signs the deed to the home back over to the bank — voluntarily. This sounds like it would be a great option, but actually has the same impact on a homeowner’s credit that foreclosure does. Lenders are very reluctant to agree to take a home back through a deed in lieu of foreclosure for a number of reasons: They fear the homeowner will sue later alleging they didn’t understand what was happening, the lender must pay any second or third mortgages or home equity lines of credit (HELOCs) off before executing a deed in lieu, and the lender wants to be certain that the borrower’s financial distress is real. Allowing the foreclosure process to proceed is one way the lender can be sure the borrower is not faking poverty.

As such, a deed in lieu of foreclosure is virtually never granted unless: foreclosure is imminent; the owner has had their home on the market for several months and been unable to sell it; there are few or no junior loans or liens the lender will have to pay off; the seller can document their financial hardship; and the seller initiates the process and documents the voluntary nature of their request for a deed in lieu. Even when all these factors are present, many lenders will not agree to a deed in lieu, but it is worth a try!

2. Assumption/Lease-Option. Most loans these days are no longer assumable. The average mortgage now contains a “due on sale” clause by which the borrower agrees to pay the loan off entirely if and when they transfer the property. However, if you are facing foreclosure, you might be able to persuade your lender to modify your loan, delete this clause and allow another buyer to assume your loan. The lender may want to assess the new buyer’s qualifications, but it can be a win-win-win option for all. You might be able to negotiate a down payment from the buyer which you can use to pay off your outstanding past due mortgage balance.

In a lease-option scenario, the buyer becomes your tenant, and you continue owning the property until the buyer has saved enough down payment money, improved their credit sufficiently or sold their other home. In some situations, the buyer will make a one-time, lump option payment upfront, paying you to obtain the option to purchase your home. You can apply the option payment to bringing your mortgage current. Then, the buyer will make lease payments monthly which you, the seller, then apply to your mortgage. To successfully use a lease-option to stop the foreclosure process, you must negotiate lease payments that cover most or all of your mortgage payment, property tax and insurance obligations — enough that you can make up any difference and still pay to live somewhere else.

Talk to an Attorney

If you’re facing an imminent foreclosure sale and considering any of the options discussed in this article, it is strongly recommended that you consult with a local foreclosure attorney or bankruptcy attorney immediately. To get information about different loss mitigation options, you should also consider talking to a HUD-approved housing counselor.

Consequences of Foreclosure

The main problem with going through foreclosure is, of course, the fact that you will be forced out of your home. You’ll need to find another place to live, and the process is stressful (among other things) for you and your family.

Foreclosure can also be expensive. As you stop making payments, your lender will charge penalties and legal fees, and you might pay legal fees out of pocket to fight foreclosure. Any fees added to your account will increase your debt to the lender, and you might still owe money after your home is taken and sold if the sales proceeds are not sufficient (known as a deficiency).

Foreclosure will also hurt your credit scores. Your credit reports will show the foreclosure, which credit scoring models will see as a negative signal. You’ll have a hard time borrowing to buy another home for several years (although you might be able to get certain government loans within one to two years), and you’ll also have more difficulty getting affordable loans of any kind. Your credit scores can also affect other areas of your life, such as (in limited cases) your ability to get a job or your insurance rates.

Foreclosure Lawyer Free Consultation

When you need to stop a foreclosure in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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What Happens To Equity In Foreclosure?

What Happens To Equity In Foreclosure

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

Formally, a mortgage lender (mortgagee), or other lien holder, obtains a termination of a mortgage borrower (mortgagor)’s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure).

Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, it is a cloud on title and the lender cannot be sure that they can repossess the property. Therefore, through the process of foreclosure, the lender seeks to immediately terminate the equitable right of redemption and take both legal and equitable title to the property in fee simple. Other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue homeowner association dues or assessments.

How Foreclosure Works

When you buy real estate (also called real property), such as a home, you might not have enough money to pay the entire purchase price up front. However, you can pay a portion of the price with a down payment, and borrow the rest of the money (to be repaid in future years).

Homes can cost hundreds of thousands of dollars, and most people don’t earn anywhere near that much annually. Why are lenders willing to offer such large loans? As part of the loan agreement, you agree that the property you’re buying will serve as collateral for the loan: if you stop making payments, the lender can take possession of the property in order to recover the funds they lent you.

To secure this right, the lender has a lien on your property, and to improve their chances of getting enough money, they (usually) only lend if you’ve got a good loan to value ratio.

First, the trustee’s fees and attorney’s fees are taken from the surplus fund. Included in the trustee’s fees are mailing costs, services rendered and filing fees. Next, the trustee distributes money to pay the obligations secured by the deed of trust, which is the remaining balance on the loan. After the lender is paid, the trustee distributes funds to any junior lien holders, such as home equity lines of credit. Finally, the homeowner may claim surplus funds from the equity in the property. You must notify the trustee within 30 days of the foreclosure auction to place a claim on the surplus funds.

What Happens to Equity During Foreclosure?

Home equity stays the property of a homeowner even in the event of a mortgage default and foreclosure on the home. But the foreclosure process can eat away at the equity. The following five points explain what home equity is, what happens to it during foreclosure and options to protect.

What Is Equity?

Equity is the difference between the current market value of your home and the amount you owe on it. It is the portion of your home’s value that you actually own. For example, if you purchased a $200,000 home with a 20 percent down payment of $40,000 and a mortgage loan of $160,000, the equity in your home is $40,000.

Equity is the value of the property minus any liens or amounts owed on it for mortgages and liens. When your mortgage loan balance drops below the appraised value of your property, you have equity in your home. Conversely, if you owe more on the mortgage than your home is worth, you have no equity. Unless you have significant equity in your property, you can expect to lose that money during the foreclosure process.

In Foreclosure, Equity Remains Yours if there is any to get

Foreclosure is a legal preceding that follows your being in default on your home loan. What constitutes default varies with each loan and with the laws of each state. But in every case, if you have not made a determined number of payments, the lender places your loan in default and can begin foreclosure.

If you cannot get new financing or sell the home, the lender can sell the home at auction for whatever price they choose. If the home does not sell at auction, the lender can sell the home through a real estate agent.

Remember that equity is what you own of your home’s value. In any of the above cases, if the house is sold and there is money left over after the loan and all fees and penalties are paid, that is equity and that is yours.

Fees Cut Into it

your equity is being reduced before foreclosure starts. For most home mortgages, there are late-payment penalties. So, if you are late on your loan and it goes into default, for example, after four months of missed payments, the late-payment penalties for those months are added to the total loan amount and will be subtracted from the proceeds of any sale. That reduces your equity.

Additionally, the lender can charge fees related to processing the late payments, the declaration of default, the foreclosure proceedings and expenses of the sale against your equity. This can amount to tens of thousands of dollars, which will be subtracted from anything owed you after a foreclosure sale.

Low Home Appraisals Reduce it

if your home goes into foreclosure, the lender will have the home appraised for an auction sale. Typically, a lender will accept an offer of 90 percent of the home’s appraised value. Lenders do not want to own your home, particularly if it is a time of declining home values. It is typical for the lenders to accept low home appraisal values so that the home will sell at auction and not have to be listed with an agent. That reduced appraisal value means a lower sales price that yields a lower amount of money left over after the loan and fees are paid.

When You Foreclose, You Still Get Your Money, If There Is Any

Alright, let’s talk through a scenario. You bought a house 15 years and got a 30-year mortgage. You lost your job 6 months ago and have fallen behind on your payments. You decide that foreclosure is the best option for you.

You have a bunch of equity on the home and the value of your home has slowly increased over the last 15 years. So, let’s say you bought it for $200,000, and now it values at $265,000. You have been a faithful mortgage payer for 15 years and only owe just over $120,000 on the home. Well, that means you have $145,000 in equity on the home.

Now that you are foreclosing though, don’t you think you should get that money back? It would only make sense.

Alright, first off, because you are so behind on your mortgage, you have late fees. Those end up affecting your equity. With those fees affecting the equity, your equity will start to decrease. So, if we use the above scenario, let’s say those late fees equated to $10,000. You now only have $135,000 in equity.

On top of those fees, the process of foreclosing actually costs money too. So, you start to lose more and more of your equity. This could be upwards of $20,000, leaving you with only $115,000 in equity.
The Home Appraisal

When a home goes up for foreclosure, the lender wills often the take the lowest appraised values. This way they can sell the home quickly. So, let’s say the lowest appraised value of your home ends up being $250,000 now. Well, that is a $15,000 decrease in your equity. You are looking now at $100,000 in equity.

On top of that, the lender usually will take an offer of only 90% of the appraised value so that they can sell the home quickly. So, the house then sells for $225,000. This would leave you with only $75,000 in equity.

Options to Consider

As you can see, you just lost half of your equity by going forward with your foreclosure. But, what if we told you there was another way? You can put your house on the market with a real estate agent and sell the house before the foreclosure sale. This would be best as you can protect and get your equity from your property. If you don’t want to sell, look at filing a bankruptcy case. You can file a chapter 7 or a chapter 13 bankruptcy case which will stop the foreclosure.

Before facing foreclosure, refinance your loan to an affordable payment if you can or take advantage of a loan modification program. If this is not possible, sell the home as soon as you can. By selling the home, you are reducing the fees and penalties you owe, setting the price yourself at which you want to sell and avoiding the legal costs of foreclosure. All of this can add to the equity you take out of your home.

Consequences of Foreclosure

The main problem with going through foreclosure is, of course, the fact that you will be forced out of your home. You’ll need to find another place to live, and the process is stressful (among other things) for you and your family.

Foreclosure can also be expensive. As you stop making payments, your lender will charge penalties and legal fees, and you might pay legal fees out of pocket to fight foreclosure. Any fees added to your account will increase your debt to the lender, and you might still owe money after your home is taken and sold if the sales proceeds are not sufficient (known as a deficiency).

Foreclosure will also hurt your credit scores. Your credit reports will show the foreclosure, which credit scoring models will see as a negative signal. You’ll have a hard time borrowing to buy another home for several years (although you might be able to get certain government loans within one to two years), and you’ll also have more difficulty getting affordable loans of any kind. Your credit scores can also affect other areas of your life, such as (in limited cases) your ability to get a job or your insurance rates.

Let’s say you own a home currently valued at $500,000, that you owe $200,000 on it, and that you have a 6% loan. Now, for whatever reason, you can’t make the payments, and for whatever reason, you don’t sell while you have the opportunity before the trustee’s auction.

In California, you are going to be four months behind before the Notice of Default happens. So that is four payments of $1200. Furthermore, when you are fifteen days late you owe a 4% penalty, or $48, and when you are thirty days late, the missed payments start accruing interest. So at the point that the Notice of Default is possible, you owe $204,777.83.

From Notice of Default to Notice of Trustee’s Sale is another 60 days, but before that happens, the bank is going to hit you with $10,000 to $15,000 in administrative fees for going into default. Check your contract; it’s in there. Let’s say $12,000, and now you owe $216,777.

Add another two months of delinquent payments, and penalties as of 15 days after. So as of the time the Auction actually happens, you owe $219,447. Furthermore, to make the auction happen, they will charge you about another $15,000. This covers the expenses of making the auction happen, of which the most noteworthy is the appraisal. At this point, you owe $234,447.

The appraisal bears special mention. Not only is there zero pressure to get a good value, the bank wants that appraisal to come in nice and low. They want the property to sell at auction, and if maximize the chance of it selling at auction. Every once in a while questions about low appraisals at trustee sales hit the site. The short answer is Microsoft Standard: “It’s not a bug, it’s a feature!” and from the bank’s point of view, it is. So even though the property might sell for $500,000 in the normal course of things, the appraisal might come in at $440,000, meaning that someone has to bid $396,000 in order to buy the property at auction. The appraisal might be even lower, but let’s say $440,000.nobody bids 90% of the appraisal price, and then they own it and have to go through the rigmarole of hiring an agent and selling it. So that appraisal is going to come in as low as is reasonable.

Foreclosure Real Estate Attorney Free Consultation

When you need help with a foreclosure, quiet title case, eviction, boundary dispute, or other real estate law matter, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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As a property owner if you want to modify a construction contract, consult an experienced Midway Utah real estate lawyer.

A contract modification is any written alteration to the terms, conditions, or performance requirements of an existing contract, whether accomplished unilaterally or bilaterally.

The unilateral modification is signed only by the property owner. A unilateral modification may be used to make administrative changes in contract provisions, issue change orders when time or circumstances do not permit the negotiation of a full agreement as to the consequences of the change itself, make changes authorized by articles other than the Changes clause (i.e., Property clause, Suspension of Work clause, etc.), issue termination notices, or increase funding levels under the contract, in the form of a unilateral determination, when agreement cannot be reached as to a fair and reasonable price for the changed work.

The bilateral contract modification, frequently referred to as a supplemental agreement, is executed by both parties to the contract. It is essentially a wholly new agreement negotiated by the parties, which does not necessarily modify all parts of the original agreement. Bilateral agreements are used to make negotiated equitable adjustments resulting from the issuance of a change order, definitize letter contracts, and reflect other agreements of the parties modifying the terms of the contract. To be legally effective, however, the bilateral modification must demonstrate mutuality of consideration. Otherwise, it is a nullity.

The standard Changes clause permits the property owner to make changes only within the ‘general scope’ of the contract. Because of this phrase in particular, and the structure of the article in general, the courts have consistently ruled that such a change provision does not authorize a drastic modification beyond the scope of the contract. Rather, a fundamental alteration of this nature is a contract breach, or cardinal change as it is sometimes referred to, entitling the contractor to breach damages. Under established case law, a change outside the scope of the contract is a breach. It occurs when the property owner affects an alteration in the work so drastic that it effectively requires the contractor to perform duties materially different from those originally bargained for.

The issuance of change orders will, of course, have varying effects in different situations depending on the scope and location of the work required by the orders and the timing and manner of the issuance of such orders. The issuance of a large volume of change orders could adversely affect the contractor’s ability to efficiently perform the basic contract. Since such dislocation is a normal and natural consequence of the circumstances, a contractor would be entitled to recover a fair and reasonable amount for the additional costs it sustained.

Under certain circumstances a contractor could justifiably refuse to continue performance even though directed to do so by the property owner. This would be the case where such direction constituted a material breach of contract.

A contractor could properly refuse to perform upon a material breach by the property owner. As a result of a material breach, the contractor has a legal right of avoidance, thereby discharging his duty to perform and relieving him of a default termination and the consequences that flow there from. Whether the contractor has the right to refuse performance depends on the seriousness of the property owner’s breach and the impact on the contractor’s ability to perform. Short of commercial impossibility, a contractor is not entitled to refuse performance on the ground that performance would entail substantial expenses not taken into account in its bid price. Absent clear property owner direction to proceed with the manufacture of useless articles, the contractor is not obliged to do so. But the consequences of the property owner’s breach must be so severe as to provide the contractor with the right of avoidance.

Failure or unreasonable delay in making payment has also been held to constitute a material breach of contract, justifying abandonment by the contractor. In a contract that provides for periodic installment payments, a failure to make a payment at the time specified is a breach that justifies abandonment of work; whenever one party to a contract is guilty of such a breach, the other party may treat the contract as broken and may abandon it. A contractor has a right to assume from the inception of the contract that he would be paid according to the requirement of the contract, and the failure of the property owner to pay justified his refusing to proceed. Whatever might have been his faults up to the time payment was refused, the property owner, having permitted him to proceed, having accepted the performance of the contract, and having received the benefit of his labor, was not within its rights to withhold the pay in order that it might be secured against the consequences of a probable or possible failure.

Where the property owner’s failure to make progress payments impairs the contractor’s financial ability to continue performance, such failure excuses the contractor from continuing. The contractor does not have the burden of proving that he would have been able to perform but for the property owner’s breach.


The phrase “equitable adjustment” is a term of art used to describe the compensation to which a party may be entitled for a change within the general scope of the contract.

The making of an equitable adjustment cannot be reduced to the application of a mathematical formula. If the intended meaning was reasonable costs plus a fair profit, it would have been easy for the clause to have been so written. What constitutes an equitable adjustment depends in substantial part on the facts of the particular case. It cannot be said that as a matter of law an equitable adjustment must include a profit allowance in all cases. An equitable adjustment normally includes an allowance for overhead and profit, and this is true whether the equitable adjustment is upward or downward. The key is always to put the contractor in as good a position as he would have been in, but for the property owner’s action.
When the property owner makes a change, it should not alter the contractor’s position from making a profit to suffering a loss, but should merely compensate for the change made, leaving the contractor in the same relative position as before the change.


A repudiation will be found where it is evident that the contractor is totally unable to perform the contract. Repudiation will be found in those circumstances where a contractor makes an unequivocal statement that he will abandon the work. If the contractor fails to follow the instructions of the property owner to proceed with the work required by the contract, the courts, absent an adequate defense by the contractor, will view the property owner’s default termination favorably.

An improper omission of a cure notice and termination for default, based on acts that do not show that there has been an anticipatory repudiation of the contract, will not be upheld by the courts even though the contractor subsequently admits that he had abandoned all intention of performing the contract. The propriety of the default depends on what the property owner knew at the time of the termination. Although the property owner may reasonably infer that the contractor is not going to perform, inference s not enough. The issue of whether the contractor’s alleged repudiation was unequivocally manifested to the property owner is not determined by reasonable inferences or educated guesses even if the inferences or guesses prove to be correct. The issue of anticipatory repudiation is determined by what was actually manifested to and perceived by the property owner and whether such manifestation was capable of being understood in only one way. In this connection, the settled principle that the property owner has the burden of proving the propriety of its action in terminating a contract for default must not be overlooked. The property owner must shoulder the burden of proving that it perceived an unequivocal manifestation of the contractor’s alleged anticipatory repudiation. This burden, in the sense of the “risk of nonpersuasion,” is not satisfied merely by evidence of the reasonableness of inferences drawn by the property owner.

The term “abandonment” does not necessarily carry a pejorative connotation so as to equate it with “anticipatory repudiation” in all instances. A promisor may be justified in abandoning performance of its obligations when the other party has committed a material breach, such as by delaying performance or otherwise rendering performance commercially impossible. Similarly, failure or unreasonable delay in making payment has been held to constitute a material breach, justifying abandonment of performance by a contractor. Therefore, abandonment of performance does not in itself justify a default termination. Of course, an unjustified abandonment of performance, accompanied by manifestation to the promisee of the promisor’s unequivocal refusal to complete the contract, amounts to an anticipatory repudiation and gives rise to an immediate right of action.


The standard Default articles provide that the property owner may terminate a contract in whole or in part if the contractor fails to perform any other provision of the contract.


The property owner has the right to set off any claim it has against a contractor by refusing payment of funds that are otherwise due the contractor. The right to set-off has been held to be inherent in the United States and to be grounded in the common law right of every creditor to apply the monies of his debtor in his hands to the extinguishment of the amounts due him from the debtor.


Accord and satisfaction has been defined as the discharge of a contract, or of a disputed claim arising under or related to a contract, by the substitution and execution of a new agreement between the parties in satisfaction of such contract or disputed claim. Accord generally refers to the execution of a bilateral agreement requiring additional performance or payment, whereas satisfaction occurs when the additional performance or payment is accomplished.

As a general rule, the execution by a contractor of a release that is complete on its face reflects the contractor’s unqualified acceptance and agreement with its terms and is binding on both parties. It is well established that where a contractor has the right to reserve claims from the operation of a release, but fails to exercise that right, it is neither improper nor unfair, absent some vitiating or aggravated circumstance, to preclude the contractor from maintaining a suit based on events that occurred prior to the execution of the release.

Modifications to a contract after performance has been completed, which include general language releasing the property owner from further liability and which adjust the contract price, are generally held to be an accord and satisfaction. If the modification was executed as a bilateral agreement by the parties and, by its terms, increased the price of the contract to reimburse the contractor for additional costs incurred due to discrepancies and errors in drawings and changes in contract requirements, but contained no limitations, exceptions, qualifications, or reservations, it will be considered to be an unconditional settlement of the additional costs incurred in performing the contract. It has been consistently held that in the absence of any showing of fraud, collusion, or mutual mistake, an agreement is binding on both parties. Such an agreement should not thereafter be unilaterally disturbed.

The granting of a time extension, “with no increase in funds,’ to perform property owner-requested work does not preclude recovery of additional compensation for that work because the limiting clause does not constitute an accord and satisfaction releasing all claims or surrendering the contractor’s rights under the contract. In interpreting a change order as a release or an accord and satisfaction as to any claim not clearly included in the agreement, the intent of the parties as to the effect of the agreement and the matters included or excluded is a primary factor that must be resolved on the basis not only of the language of the agreement, but also of the circumstances surrounding the agreement, including negotiations between the parties and their actions and conduct with respect to the agreement.

Before making any modifications to an existing construction contract, speak to an experienced Midway Utah real estate lawyer. The modifications can affect your rights under the contract.

Midway Utah Real Estate Lawyer Free Consuultation

When you need legal help with a real estate matter in Midway Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews

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