Real estate lawyers in Utah are no strangers to complex and sometimes messy title transfers and urban Salt Lake City sees more involvement in real estate law than the rest of the state combined. The recent Flower Patch controversy is a prime example. Located at 500 S. State Street in Salt Lake City, the parcel adjacent to the Grand America Hotel has been in a legal real estate battle for years. The property owners fought the original declaration that listed the area as blighted and dilapidated, which could have resulted in forceable sale. However, in an effort to spruce up the area, Sinclair Oil constructed the Grand America Hotel, much to the dismay of Flower Patch owner Mac Livingston who could only watched while the large hotel was built next to his property.
Lawyers For Foreclosures
Salt Lake City real estate attorneys have been engaged in the struggle over this acreage since 1995, representing both Livingston and interested buyer Grand America Hotels & Resort. An original price for the blighted property of $266,000 apparently made way for the “fairer” proposal offered this week, but Livingston has been absorbed in a real estate legal struggle for some time, fighting off the Salt Lake City Council and acquiring the land through eminent domain after the area was condemned.
REAL ESTATE LAWYERS IN UTAH GEAR UP FOR REAL ESTATE GROWTH
A real estate lawyers in Utah are familiar with property battles. The state has a high percentage of resort, timeshare and fractional ownership properties, as well as second homes, hunting land, and other unique legal real estate situations. As a result, the realtor industry is growing. Utah has over ten real estate schools, with live and online course offerings. Professional specialties in Utah real estate include law, appraisal, brokering, financing and development of rural land, retail, industrial, leisure/recreation, and others across the state. In 2011, there were more than 13,000 licensed realtors in the state and that count is consistently growing.
The housing market in Salt Lake City has fluctuated in the years since the Great Recession, but has grown healthier and steadily improved, with foreclosure rates falling in 2013. The winter tourist industry in the Wasatch Mountains brings skiers looking for vacation or second home ownership each year too, and development in rural areas of the state is growing as well.
A burgeoning employment rate means a boost in Utah real estate. Analysts anticipate an increase in jobs and decrease in unemployment for 2014, mostly in the private sector economy – technology and information, leisure and hospitality and the financial services industries. While some challenges (Kennecott Utah Copper’s Bingham Canyon Mine and its lost production) remain, redevelopment efforts in the Salt Lake Airport and additions at Hill Air Force Base promise notable projects in the upcoming months. However, The SLC metropolitan area continues to grow, and while real estate agents may outnumber Salt Lake City real estate lawyers, one thing is for sure: the property ownership market in Utah is a feisty one, full of opportunity.
TITLE ISSUES ARISING DURING FORECLOSURE
In almost all real estate transactions, there are title issues that must be cleared up in order to transfer ownership of the home from the seller to the buyer. Does the seller have the legal right to sell the property? Is the home’s title free of “clouds” or “defects” such as judgments, liens or bankruptcies that would prevent the seller from transferring “clear” or “marketable” title to the buyer? How can you be sure? Specific laws, which vary from state to state, dictate how a mechanic’s lien must be filed, processed and/or acted upon. Whether it will take precedence over other liens on the property will also be specific to the jurisdiction where the work was performed. Problems arise when the contractor fails to file a “satisfaction” of the lien and it remains on the property’s title, or when the lien is contested. The title company must determine whether the lien was filed properly and recorded in the public records, and whether notice was given in accordance with state law. Most mechanics’ liens do not have an indefinite lifespan and will expire if not acted upon in the prescribed amount of time. Mechanic’s liens usually are able to be resolved, but the process can be time-consuming — for example, if the contractor has left the area or cannot be found and could cause the closing to be delayed. Bankruptcies are another source for potential title issues. For example, a seller could have bought a house while single, and then married someone with a recent bankruptcy. The title company would need to be sure not only that the new spouse had signed off on the deed, but that the bankruptcy case had been discharged.
If not, it would be necessary to petition the court to release the property from the bankruptcy process. Another common type of lien occurs when a divorced spouse either forgets or doesn’t remove a lien for child support even though the debt may have been resolved decades ago. A child could inherit his father’s house and decide to sell the property. A lien placed by his mother years ago but since resolved could show up in the title search and prevent the sale. The child would have to get his surviving parent to sign a “release of judgment” that states that the debt has been paid in full in order to have clear title. Liens for past-due spousal support or delinquent taxes are also common. The American Land Title Association recently found that fraud and forgery issues between spouses have become more prevalent over the past several years and must be dealt with before a property can change hands. A typical spousal fraud issue could be that a spouse signs the signature of the other spouse on a document or deed without telling them to either eliminate an interest or add someone else to the title. It’s similar to when a spouse signs a joint tax return for both spouses and one spouse is not aware of what he or she is now responsible for. If the seller is not aware that a lien or other encumbrance is attached to the property, it can take days or weeks to resolve the problem. The seller may have inherited the property from a trust and be unaware that one of the beneficiaries or co-owners now lives overseas and cannot be found. The co-owner’s signature would be necessary to transfer the title, and if the owner can’t be located the legal steps to remedy the problem could take months. There could have been forgeries, claims from the use of an “alias” or fictitious name, a deed given under duress or fraud, deeds affecting property of a deceased person, a deed following administration of an estate of a missing person who later appears, an undisclosed but recorded federal or state tax lien, errors in the legal description, a right of access wiped out by foreclosure on a neighbouring land, and many others. You may find an unreleased mortgage that the lender did not report as paid in full or a lien from someone you have never heard of. A title insurance policy will be your best protection against those and many other title problems that may become known after you close on your transaction. The cost for the policy is a one-time fee, and the policy will remain in effect for as long as you own the property. Foreclosure sales can be a great find. The mortgage holder, usually a bank, doesn’t want to take the time to go through the normal property sale process. And they will commonly accept less than the property’s face value. However, with these cost savings come potential headaches. Another lender, the original borrower, or even the government can make the process of removing foreclosure title defects difficult. With the right preparation, many of these hidden foreclosure title defects can be erased relatively easily or avoided all together. But, many buyers of foreclosure properties fail to take the precautions necessary to avoid many of these common problems. As a result, what was originally a great deal turns into a stressful situation. Essentially, a party that has filed a lien against a property attempts to recover the balance owed to the party. They do this by forcing the sale of the property. After a foreclosure complaint has been filed, the owner has 20 days to respond to the foreclosure. They must show why the property should not be foreclosed on. Once a judgment of foreclosure is rendered, the Court orders a sale of the property. After all the lien holders are paid, any remaining funds from the sale go to the property owner. To fully take advantage of a foreclosure sale, the buyer needs to make sure the title is clear. Also, they need to be sure there are no unknown defects to title. First, it is imperative that anyone purchasing a foreclosure property makes sure they are not purchasing an interest which is subordinate to another lien. A foreclosure sale eliminates the foreclosing lien and any inferior liens. But it does not eliminate a superior lien. For example, let’s say a homeowner’s association initiates a foreclosure proceeding. However, there is still an outstanding mortgage from a bank.
In this case, the buyer of the property is buying an interest which is subordinate to the bank’s mortgage on the property. However, the buyer purchased the property before a bank could file their own foreclosure complaint. The bank then foreclosed on the property. As the Peeler case demonstrates, third party purchasers do not have a strong leg to stand on if their foreclosure sale is subordinate to another lien. However, even if the purchased property does not have a superior mortgage, there are other less common and unexpected title defects that can arise when a third party seeks to purchase a foreclosed property. Many foreclosures are the result of the owner dying before a lien is paid off. Unless probate proceedings are initiated, the deceased’s estate is classified as an indispensable party. Essentially, unless the decedent transferred his interest in the property before death, failure to include the decedent’s estate in the foreclosure proceeding can result in a dismissal of the action. The Administrator Ad Litem is there to represent the interests of the unnamed parties. Without one, the lender must start the foreclosure process over again before the purchaser can officially buy the property. The foreclosing plaintiff’s failure to appoint an Administrator Ad Litem or follow the proper notice procedures are common mistakes that can drag out the foreclosure process and thus prolong a purchaser’s receipt of title for the property. Also, this process of representing the interests of unnamed parties would further assist in any quiet title action to further eliminate anyone else’s claim to the property What if the IRS or other Federal agencies hold a lien or judgment against a borrower? Then the plaintiff lender must name the relevant government lien holder in the foreclosure action. Similar to failing to name the decedent’s estate, failure to name a government agency that has a lien against the property render the action dismissible or subject to the lien encumbrance. However, different from the previously mentioned indispensable party, the federal agencies have a longer time to exercise its right to redemption. For example, the Internal Revenue Service has 120 days from the time of the Certificate of Title issued to exercise its right to Redemption. Some federal liens have redemption rights for up to a year. If the property has any of these liens, title for any purchaser in a foreclosure action cannot be secure until these time periods have elapsed. A public records search using the borrower’s name (or preferably social security number if available to avoid any overlap with similar names) should show any outstanding federal liens and allow a purchaser to dodge a major headache. While the deck may be slightly stacked against a third party purchaser, all is not lost. For example, if the borrower filed bankruptcy AFTER the sale of the foreclosed upon property, the automatic stay would not affect the sale of the property. But, if bankruptcy was properly filed before the sale of the property was completed, the purchaser would only be entitled to receiving whatever funds were given prior to the declaration of bankruptcy. Regardless, a person interested in purchasing a foreclosed upon property would be wise to include the possibility of prolonged litigation while doing their cost/benefit analysis of whether to invest in the property. Before purchasing a foreclosed property, make sure you have the full chain of title in front of you.
A simple public records request will show the current liens on the property. Also, it can help you know if the lender properly brought in all relevant parties in the foreclosure action. A purchaser should always confirm they are buying a marketable title to alleviate any issues with superiority from other liens. Always check to see if there are any delinquent taxes on the property. That’s because as the new owner, you would be responsible for them. Make sure that the proper borrowers are named defendants. Lastly, contact the local utility company to find out if anything is owed. Utilities are unrecorded liens that survive foreclosures and can impair your title. After doing the relevant research and diligence, purchasers can make informed decisions based on proper cost/benefit analysis rather than hoping for the best. There is money to be made in buying foreclosures, but only if you do it the right way. If the owner that had the mortgage becomes involved, there may be legal issues that need to be resolved. However, the person that buys a foreclosed property through auction may have few protections after the lending agency that sold the property is out of the picture. It may be important to seek the assistance of a real estate lawyer. Many find in the economically difficult times that purchasing foreclosed property to be a cheap and easier manner of obtaining affordable housing. This may occur before the foreclosure is completed or after all paperwork has finalized and the auction commences. Other instances include difficulties in paying property taxes, homeowners’’ association expenses and bills to contractors. There are often many stages that occur with foreclosure, and these usually take time. However, there are several opportunities in buying a property at certain points in these stages. Even though this is possible, it is still vital to look over all documentation and contact a real estate lawyer to ensure everything is valid, legal and legitimate. Because foreclosure is a complicated procedure that takes time, it is often better to purchase the home before any third-part entities are involved so that complications are reduced or eliminated. This would mean that the sale of the property is completed with the homeowner, and this may complete with cash out that is less than the value of the building. This then provides the person with money without any need to deal with the lending agency that supplied the mortgage. The new owner is able to take over the mortgage or start a new one with the same or different financial institution. If the foreclosed house has been empty for some time, there could be various problems such as crumbling foundation, walls ready to fall apart and deterioration. Additionally, other issues such as unpaid taxes, certain liens and other debts may be attached to the house or land. Many of these were attached after the house was placed in foreclosure status. One specific complication may arise through the previous owner acquiring the cash to exercise his or her right of redemption that is available in some states. This is possible during a certain period of time from the point of foreclosure, and it is governed entirely by state law.
The Internal Revenue Service has the ability to redeem the property within 120 days when back taxes are owed and have not been paid. There are other possible redemption laws applicable in the state where the property resides, and it is vital that a real estate lawyer is contacted to protect against seizure of a purchased house or land. This legal professional will attempt to protect the new owner from losing the home. Mortgage foreclosure is the process by which the bank takes your home for not paying your loan. It can be a long, difficult, and confusing process for many homeowners, and if you are facing a foreclosure you should contact a local, qualified attorney for advice on how to respond. The foreclosure process can take months too years, and during that time, your lender may attempt to contact you on numerous occasions. Talking to the bank can be embarrassing, you may want to avoid being scolded by bill collectors, or you may have other reasons for avoiding these calls, but ignoring the problem will not make it go away.
In fact, not talking to your lender may be the worst thing you can do. If you avoid contact with the lender, you may miss options to save your home, or you may cause your lender to expedite the foreclosure process against you. Many homeowners believe if they are unable to make their payments, foreclosure is inevitable. Lenders, however, usually want to avoid foreclosure. Remember, if they take title, they now have the burden of your property taxes, keeping up the property, and the loss of payments on your note. As a result, you may be able to restructure your loan, especially with the money available from economic bailouts, and save your home, or at least avoid or delay foreclosure. While restructuring a loan is one option, there are others. For example, if you declare Chapter 13 bankruptcy, that may stall the foreclosure process. You may even be able to keep your house by getting the bankruptcy court to restructure your payment plan with an eye toward meeting both your obligation under the mortgage and your other debts. When most people begin having problems paying their mortgage or see foreclosure on the horizon, they stop taking care of the property.
Utah Foreclosure Lawyers
If you need help with a foreclosure, call Ascent Law for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506