Utah Real Estate Code 57-1-1

Utah Real Estate Code 57-1-1

Utah Code Title 57 Real Estate 57-1-1: Definitions
As used in this title:

“(1) Certified copy” means a copy of a document certified by its custodian to be a true and correct copy of the document or the copy of the document maintained by the custodian, where the document or copy is maintained under the authority of the United States, the state of Utah or any of its political subdivisions, another state, a court of record, a foreign government, or an Indian tribe.

“ (2)Document” means every instrument in writing, including every conveyance, affecting, purporting to affect, describing, or otherwise concerning any right, title, or interest in real property, except wills and leases for a term not exceeding one year.

“ (3)Real property” or “real estate” means any right, title, estate, or interest in land, including all non-extracted minerals located in, on, or under the land, all buildings, fixtures and improvements on the land, and all water rights, rights-of-way, easements, rents, issues, profits, income, tenements, hereditaments, possessory rights, claims, including mining claims, privileges, and appurtenances belonging to, used, or enjoyed with the land or any part of the land.

“(4) Stigmatized” means: The site or suspected site of a homicide, other felony, or suicide;

(a)the dwelling place of a person infected, or suspected of being infected, with the Human Immunodeficiency Virus, or any other infectious disease that the Utah Department of Health determines cannot be transferred by occupancy of a dwelling place;  or

(b) property that has been found to be contaminated, and that the local health department has subsequently found to have been decontaminated in accordance with Title 19, Chapter 6, Part 9, Illegal Drug Operations Site Reporting and Decontamination Act.

How Do I Get a Copy of My Divorce Decree

If you’ve ever been married before and seek a green card based on your current marriage, you’ll need to provide to the U.S. government a divorce decree (also known as a “divorce certificate“), a certificate of annulment, or a death certificate for each prior marriage. If you already have these documents, you can move on to the next step of the marriage green card process.

Who must submit their divorce papers?

For each prior marriage, both the sponsoring spouse (the U.S. citizen or current green card holder) and the spouse seeking a green card must provide a photocopy or certified copy (with the issuing office’s seal or stamp) of their final divorce decree. You must also bring the original document or certified copy to your green card interview.

What if I was previously married but wasn’t divorced from that spouse?
If a previous marriage ended by your spouse’s death or by annulment, you must submit a photocopy of your spouse’s death certificate or your certificate of annulment. You must also bring the original or certified copy of these documents, whichever is applicable, to your green card interview.

Where to Get a Divorce Decree

If you filed for divorce in the United States, you generally can obtain a divorce decree from the court that issued the document. Alternatively, you can request an official copy from the office of vital records in the state where your divorce was finalized. The Centers for Disease Control and Prevention (CDC) website specifies the name and address of each vital records office, as well as the current fee for requesting the paperwork. If you filed for divorce abroad, you may find information about the issuing authority in your home country — including its name, the current fee, and procedures for obtaining an official copy — on the U.S. Department of State’s website. (On the left-hand side of the webpage, you will need to select the first letter of your country’s name, select your country, and click on the “Marriage, Divorce Certificates” tab to view more details.)

Alternative Documents

If you can’t find your marriage certificate or get an official copy, you must submit both of the following documents instead:
• A notarized personal affidavit (written explanation) in which you describe the facts of your marriage and the reason you’re unable to obtain an official copy of your marriage certificate
• A certified statement from the appropriate government agency explaining why your marriage certificate is not available
If you cannot obtain a certified statement from a government agency, you must instead provide an additional notarized personal affidavit (written statement) from one of your parents who is living or a close relative who is older than you. In the affidavit, they must attest to having personal knowledge of your marriage and describe the following:
• Their relationship to you
• How well they know you
• How they know about the information they are swearing to

Financial Documents

It will be more difficult for a court to get an accurate idea of your marital finances if he or she does not have the pertinent information. Keep in mind that these professionals are specifically trained to help you navigate a successful settlement and secure a stable financial future. Without all of the relevant data to review, you could miss out on your share of significant assets, investments, or accounts. You will need to keep in mind that documents should cover your long-term history, not just the most recent transactions. The gold standard is that your documentation should cover five years’ worth of data. Either way, three years’ worth of data should be sufficient to help your team assemble a settlement that you will be satisfied with.
The divorce financial checklist will give you the most thorough rundown of the most commonly requested items:
• Income Tax Returns
• Employment Records
• Financial Records (such as bank statements and loan information)
• Investment Account Statements
• Pension Plan Information
• Retirement Savings Accounts
• Children’s Bank Accounts
• Debt Records
• Wills and Trust Agreements
• Social Security Statements
Some spouses might be extremely secretive about their marital finances, and hide bank information and income statements. Their insistence on keeping you in the dark is bound to make it challenging for you to find copies of your income taxes, pay stubs, and other key information, which will be pertinent during your divorce. In these circumstances, the best thing you can do is create a ruse to pump your spouse for information. If your spouse does not know that a divorce is imminent, you might consider telling him or her that you want to plan for a health emergency. Sit down together, and go over all of your insurance information and finances to make a “plan” for handling the crisis. While this tactic might not give you copies of all the information, you can at least see where your marital finances stand.

Alternatively, you can take another route for accessing the information you need. Be certain to keep an eye on your mailbox, so you can get the mail first every time. If your name is on a joint checking account, you can even head to the bank to receive copies of your bank statement. Last but not least, pull your credit report and make sure you know about all of the debt that is registered in your name. This tactic will protect you from nasty surprises after the divorce is over, such as receiving bills for credit cards and loans that you were not aware of. This financial information is crucial to helping your CDFA and your divorce attorney, but it also comes in handy when you are creating a new budget. Then you can gain a clearer picture of what it costs to maintain your current lifestyle each month. This baseline can help you adequately prepare to move out and start downs your own path toward a single income.

Assets

One of the most important steps to take before getting a divorce is understanding what each person in the marriage brought to the union. To get an idea of the important documents you need to round up for your divorce attorney or court, take a look at this information below:
• Marital Home Information
• Information about Other Real Estate
• Vehicle Information
• Personal Property (including jewelry, artwork, collections, and antiques)

Be sure to specify which assets you personally brought into the marriage as individual property. You should be clearly identified on your list of assets, so that everyone will be clear about who should belong in the settlement.

Childcare Documents

For many couples, preparing a childcare plan is one of the most challenging aspects of a divorce. However, since caring for the children together requires financial cooperation, it is essential that you draft a potential plan at this stage. You should start by creating a list of the parenting items that are most important to you. The two of you will need to make decisions about visitation, custody, and insurance expenses. You will even need to decide which one of you will claim them as dependents on your taxes. Consider your priorities for their futures, especially their college expenses. Will you both contribute to a savings account, or will the children pay for their own tuitions? There is no right or wrong way to handle some of these issues, so you need time to think about what will work best for your family. These ideas are meant to be the catalysts for you and your spouse to start planning how you are going to handle everything after you split into two households. By taking a draft of this information to your divorce attorney now, you are giving him or her an opportunity to see if there is anything you left off that might still need to be considered. Therefore, you will have a bit more breathing room. That way, you can reflect on what will be best for the children, instead of selecting the easiest route in the heat of the moment.

Personal Documents

Remember, your financial information is not the only consideration that a financial planner will need to take into account.
You will also need pertinent information about the children, such as their:
• Birthdates
• Social Security numbers
• Bank Accounts
Personal data about you and your spouse can also help the planner draft an appropriate settlement that all parties will be satisfied with.
This data can include:
• The date of marriage
• Birthdates for you and your spouse
• Social security numbers for you and your spouse
• Information about previous marriages, including divorce decrees
• Prenuptial or postnuptial agreements
• Judgments and pleadings that involved either spouse
• Insurance policies
Other Pertinent Issues
If there are any extenuating circumstances that led up to your divorce, you will need to find documentation and proof. This documentation could factor into the final amounts of spousal support payments, and it could help make decisions about the custody of any children involved in the split.
Here are a few examples of situations when you might want to seek out proof that your spouse was involved in something illicit:
• Abuse
• Adultery
• Kidnapping
• Bullying
• Substance abuse
• Mental illness or instability
In addition, there might be other circumstances that can influence your divorce. Therefore, be sure to acquire any documentation you think might be pertinent to your case, so that the divorce attorney can review it.

Information that needs To be Changed

While you will not have to take this information to your divorce attorney, it is always a good idea to start planning ahead for things that need to be altered. You will not want your spouse’s name on documents that relate to your personal well-being, future finances, or healthcare directives.
You might be able to start changing some of the information on these items, even before you file for divorce:
• Life Insurance Policies
• Wills
• Powers of Attorney
• Advance Healthcare Directives
• Bank Accounts
• Credit Card Accounts
Before you consider heading to your divorce attorney to initiate the end of your marriage, it is critical to be prepared for what happens afterward. By following these steps before filing for divorce, you will gain some sense of control over an otherwise emotionally charged and draining situation. This divorce checklist will help you assemble documentation at your own pace. Then you will be ready for anything that your financial planner may need. In addition, gathering documents to prove and support the current financial situation in your marriage allows you to more adequately prepare for your future. It also gives you some space to reflect facts you consider some of the long-term issues that are bound to arise during a divorce settlement. By completing an accurate assessment of your lifestyle, income, and expenditures, a financial planner can help you prepare for your future as a newly single individual. Preparing a budget and evaluating your lifestyle is an essential part of establishing a firm financial future for yourself. If you utilize this financial checklist, you will be able to more clearly and accurately see what you could be entitled to during your divorce.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, 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

Ascent Law LLC

4.9 stars – based on 67 reviews


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What Is A Real Estate Offering Memorandum?

What Is A Real Estate Offering Memorandum

An offering memorandum is a legal document that states the objectives, risks, and terms of an investment involved with a private placement. This document includes items such as a company’s financial statements, management biographies, a detailed description of the business operations, and more. An offering memorandum serves to provide buyers with information on the offering and to protect the sellers from the liability associated with selling unregistered securities.

An offering memorandum, also known as a private placement memorandum (PPM), is used by business owners of privately held companies to attract a specific group of outside investors. For these select investors, an offering memorandum is a way for them to understand the investment vehicle. Offering memorandums are usually put together by an investment banker on behalf of the business owners. The banker uses the memorandum to conduct an auction among the specific group of investors to generate interest from qualified buyers. An offering memorandum, while used in investment finance, is essentially a thorough business plan. In practice, these documents are a formality used to meet the requirements of securities regulators since most sophisticated investors perform their extensive due diligence. Offering memorandums are similar to prospectuses but are for private placements, while prospectuses are for publicly traded issues. In many cases, private equity companies want to increase their level of growth without taking on debt or going public. If, for example, a manufacturing company decides to expand the number of plants it owns, it can look to an offering memorandum as a way to finance the expansion. When this happens, the business first decides how much it wants to raise and at what price per share. In this example, the company needs $1 million to fund its growth at $30 per share. The company begins by working with an investment bank or banker to draft an offering memorandum. This memorandum complies with securities laws outlined by the Securities and Exchange Commission (SEC). After compliance is met, the document is circulated among a specific number of interested parties, usually chosen by the company itself. This is in stark contrast to an initial public offering (IPO), where anyone in the public can purchase equity in the company. The offering memorandum tells the potential investors all they need to know about the company: the terms of the investment, the nature of the business, and the potential risk of the investment. The document almost always includes a subscription agreement, which constitutes a legal contract between the issuing company and the investor. An offering memorandum is a legal document that discloses the terms, conditions, risks, and other information about a private placement. It is not the same thing as a prospectus (those are for issuance of publicly-traded securities).

How Does an Offering Memorandum Work?

For example, let’s say Company XYZ is a private company that operates a chain of restaurants. It wants to raise $20,000,000 to open more restaurants, but it does not want to go public or borrow the money. So it decides to sell equity to investors in a private placement. In order to comply with state and federal securities laws, and in order to inform potential investors, Company XYZ writes an offering memorandum, which it circulates among interested parties. The offering memorandum details the terms of the transaction (such as the minimum investment amount, deadlines for purchasing shares, and investor qualifications), the nature of the business (including recent financials, a detailed description of the company’s operations, management biographies, customer data, financial forecasts, plans for the use of proceeds, and similar information), and the risks of the investment (including tax issues, litigation issues, and other company-level, industry-level, and economy-wide vulnerabilities). The offering memorandum usually includes a subscription agreement, which is the formal contract between the issuer and the investor for the purchase of the investment. In many cases, the law limits investors to those who are “accredited,” meaning they meet minimum net worth requirements and/or other requirements as dictated by the SEC and state laws.

Why Does an Offering Memorandum Matter?

Offering memorandums (also called private placement memorandums) are vehicles for raising capital. State and federal laws require them for most private placements, and they provide companies with a way to disclose key information to potential investors so that the investors can make informed decisions. This in turn provides protection for securities issuers as well.
Real Estate Offering Memorandum: Elements Every OM Should Include

How do you make an offering memorandum for a real estate deal?

An offering memorandum (OM) is typically published as a PDF and then shared with prospective investors. It covers a substantial amount of legal and marketing material, including an executive summary, deal structure details, risks and disclosures sections, and an investor suitability form. A securities or real estate attorney most often assembles your OM for you while sourcing transaction-related content from you.

Executive Summary

The Offering Memorandum begins with an executive summary, which lays out the high-level. In simple terms, the acquiring entity is seeking capital and there’s a brief description of your investment company (which may control or be the acquiring entity), its mission, the deal you’re pitching, a detailed description of the executives’ industry experience, and finally, deal financing requirements.

Location

Right after the executive summary, we jump into the location of the asset. Add images of the property’s location on a map, an aerial view of the site, and a second map highlighting important places (demand generators) near the property such as an airport, public transportation, restaurants and stores.

After describing the property’s physical location, insert multiple images of the actual property. For example, if it’s an apartment unit, add images of the interior, such as the kitchen and bathrooms. If the property is a retail center, show images of the different stores, the parking lot, and what visibility and access looks like from the street.

Investment Summary

The investment summary section covers various subtopics, each of which has its own separate section and brief description.

This section shows the amount of equity and debt to be raised, which are then add up to form the total sources of funds. You can copy and paste a screenshot into your OM from an excel model like in the example below. Also included shall be the uses of funds, including purchase price, closing costs, acquisition fee, working capital, and fronted capital expenditure, for example.

Loan Terms

The loan terms section is broken into the following subtopics:
• Loan amount: What is the approximate loan amount and the percentage of the purchase price it makes up.
• Borrower: Which entity will be borrowing and what kind of company it is.
• Interest rate: What is the locked interest rate?
• Term: How long is the term, and is it a fixed rate or variable rate?
• Amortization: Does amortization begin right away, or is there a period of interest-only servicing?
• Collateral: What collateral does the lender have on the deal

This table depicts the competitors in your market, where you stand against them, and each competing property’s financial information.

Every industry is different, whether residential, retail or another niche. Briefly describe what the specific industry for your property type is like in today’s market.

Similar to the industry overview, the market overview gives geographic specific insight on the real estate market where your building is located. Include facts about the city, such as population and financial status in addition to real estate market performance.

Risk Factors

Every real estate deal has multiple risk factors. This section should include every risk related to the business, tax, accounting, and legality of the property. There are often 10 to 20+ risks and each one should have its own paragraph description.

Real estate deals frequently receive support from accredited investors. This last section in the OM describes what types of investors the deal is suited for, and may be based on rules and regulations with regards to investor accreditation or general solicitation. These are the guidelines that concern the investors’ financial status and their ability to bear the risk of losing an investment.

Pull all of this info together into a neatly formatted document and you’ll be ready to start soliciting investments for your deal. It may take quite some effort to get all of this information, but having a complete and thoughtful offering memorandum that includes the sections suggested here will go a long way to instill confidence in your investors and serve as a guide throughout your process of issuing a new offering.

Real Estate Development Offering Memorandum

A real estate OM, or Offering Memorandum, is a document used to raise capital that outlines the securities rules and regulations, and the company’s terms to investors. When a company is seeking to raise money for building or construction pursues in the general real estate development industry, drafting a Offering Memorandum for such investment purposes is a standard. This is true for single family home projects to commercial developments to housing and condos.

Types of Offering Memorandums

There are many varying types of Offering Memorandums. The type of offering will determine the specific nature of the OM. The two-main private placement offering memorandum documents used throughout the world are an equity private placement or a debt private placement.

• Equity: In an equity offering, a company will sell an ownership stake. The most common type of equity Offering Memorandum is one that sells shares or stock in a company. In addition, an limited liability company (LLC) or a limited partnership (LP) may sell units, or limited partnership interests of the company. Some issue sweeteners, like preferred shares or preferred stock.

• Debt: In a debt offering, a company will sell securities such as a bond or a note. In a debt Offering Memorandum, a company will detail the securities being sold, such as the interest rate, maturity date, and other terms of the notes or bonds. In other types of debt issuance offering memorandums a company might offer convertible bonds or convertible notes. In this type of transaction, the debt securities will convert to equity at a pre-determined date.

• Rules: In addition to debt or equity, there are various national and in some cases, international rules that apply to each Offering Memorandum. For example, there is Rule 504, 505 and 506 of Regulation D (Reg D). Included in Reg D is also 506b and 506c offerings. There is also Regulation A (Reg A). A popular rule in the equity and debt private placement sphere is Regulation S (Reg S) and Rule 144A. Whether you require an equity OM or a debt Offering Memorandum, our team at Prospectus.com can assist.

Sections of an Offering Memorandum

There are many features and sections that go into the writing of an Offering Memorandum that is geared for raising capital. Here are just a few segments of the OM:

• Executive Summary: an executive summary is normally a one or two-page summary of the business plan. It’s always suggested to include an executive summary in a private placement offering memorandum document as this help explain what the business does.

• Jurisdictional Legends: the jurisdictional legends are specific country and state regulations governing the sale of securities in each jurisdiction. If it’s a US or Reg D offering, the jurisdictional legend will comprise of various states and rules for raising capital for selling stocks or bonds. If a company is raising capital worldwide they will use international legends that are country specific. Each country has their own rules regarding the flow of capital from outside investors and local investors.

• Terms of the Offering: the terms of the offering will highlight the relevant features of the issuance. Included in the offering term section will be the stock or share price, or bond or note price, investors requirements, use of proceeds, some risks factors, and, if a debt offering, the maturity date and interest rate. The terms of the offering are the main component of a Offering Memorandum.

• Investor Suitability: the investor suitability section of a OM will deal with investor standards. For example, if a company is raising capital and is required to only accept accredited investors then this section would detail that. Or if the suitability standards allow for non-accredited investors, or non-US investors under Regulation S (Reg S), or US investors in a 144A offering, the investor suitability section will detail that, which may include net worth requirements for each investor.

• Risk Factors: the risk factor section will deal with the pertinent risks of the business. Included in the risk factors would be industry specific risks that could materially affect the business, as well as micro and macro risks toward the company, including competitors, and factors outside the control of the company such as natural disasters, recessions and so. Listing the company’s risk factors is important as omissions can come back to haunt entrepreneurs.
• Management Team: the management team section will showcase the team’s skills, including the CEO and the support staff, and possibly even the board of directors or an advisory board. It is wise to include the strengths of the management team as this can help build investor confidence.
• Use of Proceeds: the use of proceeds section is one page or more that details where the company plans on spending the capital they are raising. The use of proceeds is not always the most elaborate chart, but should be a solid breakdown of the plan of where the proceeds from the offering will be spent.
• Tax Implications: the tax section of the Offering Memorandum will detail the implications for an investor. Most OMs will not detail the specific state tax requirements so each investor would be required to speak with their local accountant. For international clients, non-US (or not from the country of one’s offering), the tax implication will be important for profit and loss and each country will have their own rules.
• Subscription Agreement: the subscription agreement is a synopsis of the terms of the entire Offering Memorandum and acts as the contract between the issuing company and the investor. The agreement will outline the terms of the offering, and the securities being sold, such as the bonds, notes, stocks, shares, warrants, or convertible securities.
• Exhibits: one of the final sections of the OM is the exhibits, which are ancillary data related to the business of the company or the securities being sold. Examples of exhibits that go into a Offering Memorandum may be an image of a patent granted, or licenses or a company’s incorporation certificate.

Securities Law

A Offering Memorandum is meant for an issuing company to be compliant with both state and federal laws, no matter where the OM is issued. A company selling securities wants to ensure they do not break any laws when approaching investors and are exempt for registration requirements. For an investor to make an educated decision the OM should contain all the noted data above, including financial projections and past financial performance and of course the risk factors of the business and industry. Risk factor information will not scare away experienced investors who are most likely well aware of such language being placed in an Offering Memorandum. The important thing is make sure your company is compliant with securities laws and regulations when raising capital.

Free Initial Consultation with Lawyer

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, 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

Ascent Law LLC

4.9 stars – based on 67 reviews


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Judicial Vs Non-Judicial Foreclosure

Judicial Vs Non-Judicial Foreclosure

Utah foreclosures tend to be non-judicial, which means they happen outside of court. Judicial foreclosures, which go through the court system, are also possible. Because foreclosures in Utah are typically no- judicial. In most cases, under federal law, a servicer must wait until the borrower is over 120 days’ delinquent before officially starting the foreclosure process. To officially start the foreclosure, the trustee (the third party that administers non-judicial foreclosures) records a notice of default in the county recorder’s office at least three months before giving a notice of sale. The trustee mails a copy of the notice of default within ten days after the recording date to anyone who requested a copy. (Most deeds of trust in Utah include a request for notice, so borrowers typically get this notification. The bank or trustee mails a copy of the notice of sale to the borrower at least 20 days before the sale (if the deed of trust includes a request for notice).

Foreclosure means your creditor is trying to take your house and sell it to collect the money you owe. This happens when you get behind on your payments. Understanding the legal terms used with foreclosure can help you help yourself. Some definitions are:

• DEFAULT – A mortgage or contract is in default and foreclosure proceedings can begin as soon as you are late on one payment. Depending on the language in your loan documents, the lender may have to give notice before beginning a foreclosure.

• DELINQUENT PAYMENT – A mortgage payment is delinquent when it is not made on the day that it is due or within any “grace period” allowed by the lender.

• FORBEARANCE – An agreement where the lender agrees not to foreclose if you catch up your past due payments over a period of time. These payments will loan current.

• FORECLOSURE SALE – The forced sale by which your lender sells your property to pay your loan. A foreclosure sale has a bad affect your credit rating and future loans. The foreclosure sale takes place at the county courthouse.

• DEED IN LIEU OF FORECLOSURE – To avoid foreclosure when you know you will be unable to make your payments, you may consider handing over your deed to the lender. This is also called voluntary repossession. It means you are giving your house back to the lender. This may still affect your credit rating, but you may be able to avoid the cost of the foreclosure process.

• JUDGMENT – This is an order saying you owe money to the lender. The lender is then able to get the money through a foreclosure sale. In a non-judicial foreclosure your lender is not required to obtain a judgment before holding a foreclosure sale.

• DEFICIENCY JUDGMENT – A lender may be able to obtain additional money from you to recover their losses if the house sells for less than loan and cost to recover the money.

“Reinstating” is when the borrower catches up on the defaulted mortgage’s missed payments, plus fees and costs, to stop a foreclosure. Utah law provides the borrower with a three-month reinstatement period after the bank or trustee records the notice of default. Also, the loan contract might give you more time for completing a reinstatement. Check the paperwork you signed when you took out the loan to find out if you get more time to bring the loan current and if so, the deadline to reinstate. You can also call your loan servicer and ask if the bank will let you reinstate. In some states, you can redeem your home within a specific amount of time after the foreclosure. In Utah, though, foreclosed homeowners don’t get the right to redeem the home after a non-judicial foreclosure. When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the foreclosing bank to seek a personal judgment, which is called a “deficiency judgment,” against the borrower for this amount. Other states prohibit deficiency judgments with what are called anti-deficiency laws. In Utah, the foreclosing bank may obtain a deficiency judgment following a non-judicial foreclosure by filing a lawsuit within three months after the foreclosure sale. A deficiency judgment is limited to the lesser of:

• The total debt (including interest, costs, and expenses of sale, including trustee’s and attorneys’ fees) minus the property’s fair market value, or

• The total debt minus the foreclosure sale price.

If you’re facing a foreclosure in Utah, it will likely be non-judicial in nature because most banks choose this cheaper, more efficient method. In this article, you’ll learn about non-judicial foreclosure procedures in Utah, as well as rights that might help you keep your home. (To learn about what to do, and what not to do, in a foreclosure, see Foreclosure Do’s and Don’ts.). Federal law usually prevents the servicer from initiating a foreclosure until the borrower is more than 120 days overdue on the loan. Servicers are also, under federal law, required to work with borrowers who are having trouble making monthly payments in a “loss mitigation” process. Residential foreclosures in Utah are typically non-judicial, which means the foreclosure happens outside of the state court system. The non-judicial foreclosure process formally begins when the trustee records a notice of default at the county recorder’s office. The notice of default gives the borrower three months to cure the default. At the foreclosure sale, the property will be sold to the highest bidder, which is usually the foreclosing bank. At the sale, the bank doesn’t have to bid cash. Instead, it makes a credit bid. If the credit bid is the highest bid at the sale, the property then becomes REO. In some states, you can redeem (repurchase) your home within a certain amount of time after the foreclosure sale. Under Utah law, however, foreclosed homeowners don’t get a right of redemption after a non-judicial foreclosure.

The foreclosing bank may obtain a deficiency judgment following a non-judicial foreclosure if it files a lawsuit within three months after the foreclosure sale. The deficiency amount is limited to the difference between the borrower’s total debt and the property’s fair market value. (Utah Code Ann. § 57-1-32). Utah primarily operates as a title theory state where the property title remains in trust until payment in full occurs for the underlying loan. Foreclosure is a non-judicial remedy under this theory. The document that secures the title is a deed of trust or trust deed. Utah law also permits mortgages to serve as liens upon real property and for judicial foreclosures to occur through the courts. Because the power of sale provisions in deeds of trust allow for a more expeditious process to effectuate foreclosure, this is the primary method used by lenders to foreclose. The documents are the trust deed, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, a mortgage is filed to evidence the underlying debt and terms of repayment, as set forth in the note. Depending on the timing of the various required notices, it takes approximately 120 days to complete an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and postponements of sale, or files for bankruptcy. The documents are the trust deed, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, a mortgage is filed to evidence the underlying debt and terms of repayment, as set forth in the note.

Depending on the timing of the various required notices, it takes approximately 120 days to complete an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and postponements of sale, or files for bankruptcy.
A trustee records a Notice of Default at the county recorder’s office. The Notice of Default includes the reason the trustee believes your loan is in default. A trustee must give written notice of the default to the borrower and anyone who has filed a Request for Notice. This is usually done by registered mail. Always arrange to get letters sent by registered mail. The notice is valid even if you fail to sign for it or pick it up from the post office. You will receive a copy of the Notice of Default. If you suspect you are in default, you should check with the county recorder to see if a notice of default has been filed. You may also file a request for notice with the county recorder’s office so you are notified of any default. A notice of default does not mean you have to move out, but you will have to move once the sale of the property is final. After the Notice of Default is filed, you must make a payment plan with your creditor. You will have to pay any past due payments, late fees, collection fees, and legal fees. This must be done within three months of the recording of the Notice of Default.

Otherwise, after three months the trustee can issue a Notice of Sale and you will have to pay the entire loan to avoid losing your property. If you do not cure the default, the trustee must give written notice of the time and place of the sale. Placing an ad in a newspaper once a week for three straight weeks. The last notice must occur more than 10 days but less than 30 days before the date of sale; and, Posting a Notice of Sale at least 20 days before the date of sale on the property and in at least three locations in the county where the property is located. If the house sold for less than what you owe the lender, they may, within three months after the sale, sue you for the rest of the debt owing and expenses. This is called a deficiency judgment. The deficiency judgment is limited to the amount the debt, interest, costs, and expenses of sale is more than the fair market value of the property at the date of the sale. The fair market value is the value of the property to the normal buyer on the date of sale. The fair market value is not always the amount the property sold for at the Trustee’s Sale.

What is a Mortgage Foreclosure?

When a trust deed or mortgage goes into default, the lender has the right to declare the entire balance of the loan due and file a lawsuit to collect the debt. To foreclose on the property in this manner, the mortgage holder must file a summons and complaint and serve them on you. You must file a response to these papers in court. It is not a defense that you cannot afford the payments. Once the mortgage holder has a judgment against you, a sheriff can serve an order called a writ of execution that allows your house to be sold to satisfy what you owe on the mortgage. Once the property sells, you have six months to redeem the property. To redeem the property, you must pay the amount the property was purchased for at the foreclosure sale plus any costs incurred by the mortgage holder, plus a 6% redemption fee. The judicial foreclosure process is one in which the lender must file a complaint against the borrower and obtain a decree of sale from a court having jurisdiction in the county where the property is located before foreclosure proceedings can begin. Generally, if the court finds the borrower in default, they will give them a set period of time to pay the delinquent amount, plus costs. If the borrower does not pay within the set period of time, the court will then order the property to be sold in the manner of normal execution sales. The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust.

A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the “Power of Sale Foreclosure Guidelines”. In a judicial foreclosure, the lender sues the defaulting borrower in state court in order to auction the property to recoup unpaid debts. In non-judicial foreclosures, the lender auctions the property without having to go to court. Rules regarding which types of foreclosures are allowed vary depending upon the state, with about half of the 50 states using a judicial foreclosure system. In judicial foreclosure, the lender must prove that the borrower has defaulted on their loan and pursue court action. If the borrower cannot pay the debt, the property is sold at auction by the county sheriff or another official. The winning bidder receives the deed to the property. The process usually takes between 6 months and 2 years. As the vast majority of foreclosures are uncontested, the U.S. financial industry has lobbied since the 19th century for non-judicial foreclosure – foreclosure that occurs out of the courts. Non-judicial foreclosure occurs when a mortgage contains a power of sale clause, allowing the lender to initiate a foreclosure sale without going through the courts.

The lender issues a notice of default and notifies the borrower of this fact, before conducting an auction of the home. The lender itself can bid in the auction, and the winner receives the deed to the home, although they then might be forced to sue for the eviction of the current residents. The process usually takes between 1 month and 1 year. The Mortgage Bankers Association (MBA) and other lending industry organizations tend not to like the judicial foreclosure system because it adds to their costs. Often, lenders and mortgage servicers themselves were overwhelmed with the volume of foreclosures and were unable to gather all the necessary documentation for the courts in time. As of the end of September 2012, according to the MBA, 6.6% of all loans were in foreclosure in judicial states, compared with 2.4% in non-judicial states. The MBA has blamed this on a “sluggish” process in judicial foreclosure states for a backlog in foreclosures. If a lender proceeds with a foreclosure on your home, it may be able to choose between a judicial foreclosure and a non-judicial foreclosure. Essentially, a judicial foreclosure means that the lender goes to court to get a judgment to foreclose on your home, while a non-judicial foreclosure means that the lender does not need to go to court. Every state allows a lender to get a judicial foreclosure, but not every state provides procedures for a non-judicial foreclosure. The difference between these processes can have an impact on how a homeowner makes a defense to a foreclosure, if any applies.

It also can affect the timeline of the process and how swiftly you need to move if you cannot prevent the foreclosure. The lender will bring a lawsuit in court, and a judge will review the evidence submitted by both sides. They may hold a hearing to decide whether the homeowner is in default on the loan. The homeowner can try to reach a settlement with the lender before the hearing to prevent the foreclosure. If the parties cannot reach a settlement, and the court finds in favor of the lender, the court will enter a judgment of foreclosure. This will trigger a foreclosure sale and may expose the homeowner to a deficiency judgment for any remaining balance of the loan not covered by the sale. Sometimes the lender or the trustee will give the homeowner time to catch up with the missed payments on the loan, or negotiate with the lender, before proceeding with a foreclosure. In this situation, they will send a notice of default. However, in other states, a lender might send a notice of default together with a notice of sale, or it might send only a notice of sale. Sometimes a lender only needs to publish notice in the newspaper and post it on the property. If you have a defense to a non-judicial foreclosure, you will need to file a lawsuit in court to raise the defense. By contrast, you would respond to the pre-existing lawsuit if you have a defense to a judicial foreclosure.

Foreclosure Attorney Free Consultation

When you need legal help with 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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Deed In Lieu Of Foreclosure

Deed In Lieu Of Foreclosure

Foreclosure means your creditor is trying to take your house and sell it to collect the money you owe. This happens when you get behind on your payments.

Understanding the legal terms used with foreclosure can help you help yourself. Some definitions are:
• Default: A mortgage or contract is in default and foreclosure proceedings can begin as soon as you are late on one payment. Depending on the language in your loan documents, the lender may have to give notice before beginning a foreclosure.
• Delinquent Payment: A mortgage payment is delinquent when it is not made on the day that it is due or within any “grace period” allowed by the lender.
• Forbearance: An agreement where the lender agrees not to foreclose if you catch up your past due payments over a period of time. These payments will loan current.
• Foreclosure Sale: The forced sale by which your lender sells your property to pay your loan. A foreclosure sale has a bad affect your credit rating and future loans. The foreclosure sale takes place at the county courthouse.
• Deed In Lieu Of Foreclosure: To avoid foreclosure when you know you will be unable to make your payments, you may consider handing over your deed to the lender. This is also called voluntary repossession. It means you are giving your house back to the lender. This may still affect your credit rating, but you may be able to avoid the cost of the foreclosure process.
• Judgment: This is an order saying you owe money to the lender. The lender is then able to get the money through a foreclosure sale. In a non-judicial foreclosure your lender is not required to obtain a judgment before holding a foreclosure sale.
• Deficiency Judgment: A lender may be able to obtain additional money from you to recover there losses if the house sells for less than loan and cost to recover the money.

How can I avoid foreclosure?

To avoid foreclosure, pay your monthly mortgage. The lender does not want to foreclose on your property because it takes time and money to go through the process. If you cannot make a payment, it is important to contact your mortgage company to agree to make payments. Be sure to get any payment plan in writing. Discuss with your lender how much you owe and how long it will take to catch up on any missed payments. Be prepared to answer
• why you fell behind on your payment,
• what your current financial resources are, and
• if you have a realistic plan for repaying the money you owe.
If you go to your lender with a good attitude and are honest, your problems will likely be easier to solve. You may also ask your lender about modifying the loan. That might reduce your monthly payments to an affordable level

Kinds of Foreclosure Procedures

In Utah, there are three different kinds of foreclosures. They are trust deed foreclosure, mortgage foreclosure, and uniform real estate foreclosure.

Trust Deed Foreclosure

To foreclose on a Trust deed, a creditor must follow these steps:
• A trustee records a Notice of Default at the county recorder’s office. The Notice of Default includes the reason the trustee believes your loan is in default. A trustee must give written notice of the default to the borrower and anyone who has filed a Request for Notice. This is usually done by registered mail. Always arrange to get letters sent by registered mail. The notice is valid even if you fail to sign for it or pick it up from the post office.
• You will receive a copy of the Notice of Default. If you suspect you are in default, you should check with the county recorder to see if a notice of default has been filed. You may also file a request for notice with the county recorder’s office so you are notified of any default. A notice of default does not mean you have to move out, but you will have to move once the sale of the property is final.
• After the Notice of Default is filed, you must make a payment plan with your creditor. You will have to pay any past due payments, late fees, collection fees, and legal fees. This must be done within three months of the recording of the Notice of Default. Otherwise, after three months the trustee can issue a Notice of Sale and you will have to pay the entire loan to avoid losing your property.
• If you do not cure the default, the trustee must give written notice of the time and place of the sale. This is done by: Placing an ad in a newspaper once a week for three straight weeks. The last notice must occur more than 10 days but less than 30 days before the date of sale; and, Posting a Notice of Sale at least 20 days before the date of sale on the property and in at least three locations in the county where the property is located.

• The sale can be postponed by the trustee. Once the Notice of Sale has been issued, you can only redeem the property if you pay the entire loan balance plate fees, collection fees, and legal fees.
• If the house sold for less than what you owe the lender, they may, within three months after the sale, sue you for the rest of the debt owing and expenses. This is called a deficiency judgment. The deficiency judgment is limited to the amount the debt, interest, costs, and expenses of sale is more than the fair market value of the property at the date of the sale. The fair market value is the value of the property to the normal buyer on the date of sale. The fair market value is not always the amount the property sold for at the Trustee’s Sale.

Deeds in Lieu of Foreclosure

Sometimes lenders will opt to obtain title by accepting a deed to your property instead of foreclosing on it. In this instance, the deficiency amount is the difference between the property’s fair market value and the total amount you owe. If the agreement does not state that accepting the need satisfies any debt, the lender can seek a deficiency judgment against you for the balance.

To deed in lieu of foreclosure is when a property owner surrenders the deed to the property to their lender in exchange for being relieved of the mortgage debt. A deed in lieu of foreclosure is a potential option taken by a mortgagor, usually as a means to avoid foreclosure. In this process, the mortgagor deeds the collateral property, which is typically the home, back to the lender that is serving as the mortgagee in exchange for the release of all obligations under the mortgage. Both sides must enter into the agreement voluntarily and in good faith. This is a drastic step, usually taken only as a last resort when the property owner has exhausted all other options and has accepted the fact that they will inevitably lose their home. Although the homeowner will have to relinquish their property and relocate, they will be relieved of the burden of owing the remainder of the loan. This process is also usually done with less public visibility than a foreclosure, so it may allow the property owner to minimize their embarrassment and keep their situation more private.

Advantages of a Deed in Lieu of Foreclosure

A deed in lieu of foreclosure has advantages for both a borrower and a lender. For both parties, the most attractive benefit is usually the ability to avoid a long, drawn-out period of time-consuming and costly foreclosure proceedings. In addition, the borrower can often avoid some public notoriety, depending on how this process is handled in their area. Since both sides reach a mutually agreeable understanding that includes specific terms as to when and how the property owner will vacate the property, the borrower also avoids the possibility of having officials show up at their door to evict them, as can happen with a foreclosure. In some cases, the property owner may even be able to reach an agreement with the lender that allows them to lease the property back from the lender for a certain period of time. The lender often saves quite a bit of money by avoiding the expenses they would incur in a situation involving extended foreclosure proceedings. In evaluating the potential benefits of agreeing to this arrangement, the lender needs to assess certain risks that may accompany this type of transaction. These potential risks include, among other things, the possibility that the property is not worth more than the remaining balance on the mortgage and that junior creditors might hold liens on the property.

How to Get Out From Under a Mortgage

Of all the complexities facing homeowners, knowing how to get out from under a mortgage legally without ruining credit may seem like one of the trickiest dilemmas imaginable. Few homeowners want to consider the idea of facing debt as a result of a mortgage loan. But circumstances change; whether it’s a result of losing a job, unforeseen medical bills or any other crisis many Americans face daily, you need to be prepared for very real consequences as a result of leaving your mortgage. A mortgage is, of course, a legally binding contract. Failing to pay it off can result in seizure and foreclosure as well as ruining your credit. The easiest option would be to sell your home short and pay off the difference, simply counting your losses. There are options available for homeowners to get out of a mortgage legally without necessarily breaking a contract. Here are two legit and legal ways to escape the burden of paying your mortgage:

• Strategic Defaults and Deeds In Lieu Of Foreclosure: A strategic default typically occurs when property is worth substantially less than the value of a mortgage. This negative equity is frequently referred to as having an “upside down mortgage.” Many homeowners simply choose to stop paying off their mortgage altogether. By negotiating with a lender, you can come to a flexible arrangement in terms of foreclosure. This will usually include additional time to vacate your property (some may actually pay your maintenance fees for upkeep) as well as coming to a mutual agreement on circumstances of negative equity which can alleviate some of the resulting strain on your credit. Many lenders, however, insist on a deed in lieu of foreclosure. A deed in lieu of foreclosure involves deeding property to a lender with an agreement of forgiving either the entire mortgage loan, or at least a substantial portion of it. One reason why this is more mutually beneficial is that lenders can typically recoup their unpaid mortgage by selling the property, and upside down homeowners are no longer legally bound by a contract.

• Home Buying Companies: You may have come across references to companies that buy houses for cash in Utah, both online and otherwise. And you may have even assumed they were a scam. But they’re not. There’s numerous houses buying companies & services out there which are legitimate, reputable and more importantly, willing to help you legally leave a mortgage contract without a short sale or potentially damaging or defaulting on your credit. A home buying company is exactly what it sounds like; a licensed company (as opposed to a homebuyer) which purchases homes from both distressed or simply eager sellers. They’ve become prevalent in recent years for various reasons; both to assist homeowners with mortgage obligations, but also with the intent of renovation and resale. And while you may receive less than the initial value of your home as a result, you don’t have to pay out of pocket or negotiate with a buyer, agency or lender. Most importantly, you avoid any negative credit impact as a result of foreclosure. The main benefit to using a home buying company isn’t just avoiding ruining your credit or defaulting on your mortgage, however. Because home buying companies typically pay full cash value for a home and frequently at a profit for sellers it’s an instant solution to mortgage lender obligations. The process of foreclosure can take weeks if not months to negotiate with a lender. And while that might seem like a minor inconvenience compared to going into debt, the impact it has on your credit rating can take years to resolve. The turnaround time in selling your Utah house for cash to a home buying company is typically a week; often sooner, since many legitimate home buying companies now offer online applications. This is probably the easiest and most convenient solution for homeowners who need to resolve their mortgage contracts or liquify assets quickly and legally; allowing them to start all over again with no negative impact.

Rejected Deed in Lieu of Foreclosure

A common misconception about deeds in lieu is that the property must be in foreclosure. The lender may or may not have filed a notice of default or started judicial proceedings to foreclose but may still be open to discussing a deed in lieu. However, banks are often reluctant to accept a deed in lieu of foreclosure if the homeowner is current, but being current doesn’t mean the bank will refuse. Banks are under no obligation to accept a deed in lieu of foreclosure. Here are a few reasons why a bank might refuse a deed in lieu:

• Such action is not profitable for the bank. If a bank believes it can make more money through foreclosure, because the property has equity or the federal government is providing financial incentives to the bank to foreclose, the bank might reject a homeowner’s offer to deliver the deed in lieu of foreclosure.

• Junior encumbrances, judgments, or tax liens. Any subsequent lien filed against the property will stay with the property and become the lender’s responsibility if not released prior to the agreement for a deed in lieu of foreclosure. Typically, a property with only one loan is the best candidate. Or, a second lender might accept a deed in lieu if the first loan is current and the property is worth more than the sum of its encumbrances.

• Servicing guidelines prohibit deeds in lieu. Many loans are serviced by PSAs, and the guidelines in those PSAs might prohibit a deed in lieu of foreclosure. PSAs are required to follow guidelines and those terms cannot be altered.

• Unacceptable terms. It is also possible that the PSA might ask the borrower to make a financial contribution in exchange for acceptance of the deed in lieu, and the borrower might refuse either due to principle or lack of principal.

Drawbacks to a Deed in Lieu of Foreclosure

Always seek legal advice before jumping at the bit to give the bank a deed in lieu of foreclosure. Remember, it is in the bank’s interest to obtain the deed from you. It might not be in your best interest to comply. In some ways, it can be argued that giving a bank a deed in lieu of foreclosure is just a step above walking away from your mortgage. Following are a few ways you could be affected with a deed in lieu of foreclosure:

• It will affect your credit: A deed in lieu will show up on your credit report. Some sources say the affect on credit is identical to that of a full-blown foreclosure. Each individual’s situation is different. When in doubt, call a credit bureau and ask.

• Ability to buy another home: There is no such thing as giving a deed in lieu and turning around to immediately buy another home.

• Compare the wait to buy after a foreclosure, which is seven years without extenuating circumstances, five with, and what you have picked up is essentially a three-year gain. Looking at it another way, a short sale may qualify you to buy a home within two years, in which case you may have lost two years if you are forced to wait four years after a deed in lieu.
• Release of liability: Make sure that the deed in lieu specifically releases you from liability to repay the loan. Moreover, there is little point in handing over title if you have a second lender that will pursue you for a deficiency.
• Potential Tax Effects: Be sure to ask your accountant whether the cancelled debt from your home loan could result in a tax liability. Temporarily, the 2007 Mortgage Forgiveness Debt Relief Act continues to offer protection due to an extension provided by the Bipartisan Budget Act of 2018, and that legislation gets renewed annually. Insolvency may be another exemption available.

Deed in Lieu of Foreclosure Documents

If approved for a deed in lieu of foreclosure, the bank will send you documents to sign. You will receive:
• a deed that transfers ownership of the property to the bank, and
• an estoppels affidavit. (Sometimes there might be a separate deed in lieu agreement.)
The estoppels affidavit sets out the terms of the agreement and will include a provision that you are acting freely and voluntarily. It might also include provisions addressing whether the transaction is in full satisfaction of the debt or whether the bank has the right to seek a deficiency judgment.

Deed In Lieu Of Foreclosure Attorney Free Consultation

When you need legal help with a deed in lieu of 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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Foreclosure Lawyer Midvale Utah

Foreclosure Lawyer Midvale Utah

If you are a victim of predatory or subprime lending and you are facing foreclosure, consult an experienced Midvale Utah foreclosure lawyer today. You can save your home from foreclosure.

Subprime lending is not a new business. Lending to people with blemished credit histories has been around seemingly for as long as there have been creditors and debtors. Examples of the long-standing tradition of subprime lending in the United States run the gamut from pawnshops to the more positively regarded community development home loans. Subprime lending has, however, changed since the 1980s as the technological, macroeconomic, and legal frameworks in which these transactions take place have evolved, giving rise to increasingly sophisticated operations and substantial growth. Accompanying this growth has been the notable emergence of predatory home mortgage lending within the subprime credit sector. This chapter argues that deregulation and increased access to investment capital have interacted with preexisting credit market dynamics in ways that have made increases in high-fee predatory home mortgage lending among nondepository lenders predictable if not inevitable. It concludes with a discussion of whether the nation’s storied depository institutions have been or may yet be similarly corrupted—and the resulting implications for American consumers.

For many years, subprime lending was the province of pawnshops and finance companies that were typically restricted in the amount of fees and even the rates of interest which they could charge. These enterprises were readily recognizable and identifiable as lenders of if not last, at least second, resort. But increasingly, household names of creditors like Citi and Wells Fargo have become attached to subprime suffixes like Financial. If these changes represent a transition of subprime lending into the mainstream and a commensurate increase in access to fairly priced credit, they will no doubt be widely welcomed. However, if these changes serve to leverage the formidable economic and political power of large, legally favored institutions to promote abusive lending, a contentious debate is likely to ensue.

Congress’ initial response to the emergence of abuses within the subprime lending market, the Home Ownership and Equity Protection Act of 1994 (HOEPA), has been viewed by many as inadequate to stop predatory lending. In fact, the law’s failure to include the full range of home loans (completely omitting home purchase loans and open-end loans such as home equity lines of credit) and its numerous loopholes for points and fees (prepayment penalties in particular) provide ample opportunities for predatory lenders to evade the legislation. Despite HOEPA’s enactment, the total cost of predatory lending to U.S. consumers in 1999 alone was estimated at more than $9 billion.

Within subprime home lending, technological advances have given rise to fantastic increases in the cost-effectiveness of customer identification and mass marketing as well as the ease with which creditors can navigate state laws.

Traditionally, credit has been among the most regulated of products. Major religions and nations have set maximum permissible rates of interest, with such regulation falling under the rubric of usury. It is not without reason that credit has been viewed with some skepticism and trepidation. Few other decisions have the continuing cost or the singular ability to alter an individual or family’s welfare that the act of signing a loan agreement as. Borrowing to buy a home can build equity and economic security but on the other hand, lending abuses decimate families and harm whole communities.
In fact, to the extent that these high fees deter borrowers from refinancing when higher rates would not, they can properly be seen as anti-competitive terms that offer borrowers little to no offsetting advantages. If a borrower receives a loan with an interest rate that is too high for her risk profile, another lender can simply offer to refinance at a lower rate, thereby denying a would-be predatory lender the future excess interest. To be sure, the borrower loses the excessive interest paid before she refinances; however, such an outcome stands in contrast to a high-fee loan where the lender locks in profits through fees at the time of origination, effectively prohibiting any lender from competing to offer a better deal.

Unfortunately, to date, regulators and the courts have been slow to comprehend and address this distinction between interest rates and fees. For example, the Supreme Court has actually articulated a premise clearly at odds with the foregoing logic: “there is no apparent reason why home state-approved percentage charges should be permissible but home-state approved flat charges unlawful.”

In a historical context, federal policy makers’ failure to act on this distinction may not have been significant, since in the United States, the structure and terms of credit have customarily been regulated at the state level. While these state laws have varied in the level of protection afforded consumers, several developments at the federal level have made it easier for unscrupulous lenders to lure borrowers into abusive loans, particularly high-cost, high-fee loans. First, Congress has explicitly deregulated certain types of home loans, explicitly allowing charges that would otherwise contravene state law to be levied by a broad class of lenders. Second, federal law has blurred state boundaries by allowing certain lenders to charge rates and fees based on their home state’s law in all other states. Third, and finally, federal law has provided consumers with incentives to prefer home secured debt over non-secured debt.

Deregulation of Certain Types of Home Loans And Foreclosure

Perceiving a credit crisis in the home loan market resulting in part from the application of state usury caps in a rapidly escalating interest rate environment, Congress moved to deregulate and pre-empt conflicting state law on a broad set of first-lien home loans and laws restricting “alternative” mortgages.

First, the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDA) pre-empted the “constitution or the laws of any State expressly limiting the rate or amount of interest, discount points, finance charges, or other charges” on extensions of credit secured by a first lien on a home (12 U.S.C. 1735f-7a(a)(l)). The legislative history of DIDA specifically provides that this provision pre-empts only state laws related to interest and certain other charges. As a result, the corresponding regulations expressly disavow pre-emption of any “limitation on prepayment charges, attorneys’ fees, late charges or other [charges not included in calculations of APR].” Second, in a further limitation, DIDA provides that states may restore their laws on points and fees at any time through legislative action (though the deadline for states to opt out of interest rate pre-emption expired in 1983).

Despite these limitations, by pre-empting prior state laws that limited fees on first lien home loans, Congress has nonetheless provided substantial leeway for lenders bent on stripping home equity through fees. In a report exceedingly critical of a state-chartered finance company, the Washington Department of Banking found that Household International was deceiving borrowers and repeatedly charging more than seven bogus discount points. In another instance involving a state non-depository lender, First Alliance Mortgage Company charged borrowers percent in fees, financing the fees directly into the loan amount, and enticed borrowers by representing that the loan had “no out-of-pocket costs.”

Following up on DIDA in 1982, Congress passed the Alternative Mortgage Transaction Parity Act (AMTPA) to give non-federally chartered “state housing creditors” parity with federally chartered institutions with regard to “alternative” mortgage transactions (12 U.S.C. 3801). More specifically, Congress identified that state housing creditors, including non-depository finance companies in particular, were having difficulty originating fixed-rate, fixed-term loans in a high-interest-rate environment, and could not compete with federally chartered institutions that were already authorized by their regulators to offer alternative products, such as adjustable-rate mortgages, to help minimize monthly payments.

The first enabling AMTPA regulations permitted state housing creditors to follow federal regulations applicable to federal thrifts regarding negative amortization and balloon payments rather than state law on these points. While prepayment penalties were not initially pre-empted by federal regulators for state housing creditors, the federal Office of Thrift Supervision (OTS) in 1996 identified late fees and prepayment penalties as terms that state housing creditors could also consider to be governed by federal law.

The 1996 policy change presented a particularly vexing problem for vulnerable home loan borrowers. Prepayment penalties have been decried as among the least transparent and most widely abused charges associated with subprime home loans. The damage done by prepayment penalties in subprime home loans is threefold: they strip home equity, trap borrowers in bad loans with an increased risk of foreclosure, and facilitate kickbacks that encourage brokers to place borrowers in loans with higher interest rates than loans for which the borrowers qualify (by ensuring lenders can recoup the kickback should the loan prepay). Prepayment penalties with a lockout period of three to five years, which stipulate that a borrower must pay “six months’ interest” on up to 80 percent of the original loan amount if he prepays his subprime home loan, are common. On a 12 percent interest, $125,000 principal balance, 30-year home loan, such a penalty can approach $6,000, a substantial amount for families trying to build wealth.

In fact, many borrowers find themselves trapped in unattractive subprime home loans by prepayment penalties. While only 2 percent of borrowers in the competitive prime home loan sector choose mortgages with prepayment penalties, over 80 percent of borrowers in the subprime market receive loans with a penalty. Borrower choice is unable to explain such a disparity, since rational borrowers in the subprime market, who may improve their credit scores and refinance into more attractive rates, should presumably prefer prepayment penalties less often than borrowers in the prime market.

Moreover, lenders who claim to be providing a reasonable benefit to borrowers in the form of decreased monthly costs in exchange for the acceptance of a prepayment penalty have been shown to provide considerably less than equitable exchanges. For example, one finance company affiliate of a national bank reported that it provided a reduction of 0.50 percent in interest for borrowers who chose a prepayment penalty. Yet, a borrower who has to pay a six months’ interest prepayment penalty to refinance at year three of a 12 percent interest, 30-year home loan—roughly the average life of subprime home loans for many originators—will have received a benefit worth less than 2 percent of the loan amount, but may be liable for a penalty of almost 5 percent of the loan amount. In other words, for the majority of borrowers facing this prospect, such a prepayment penalty-interest rate exchange will be a losing proposition.

Subsequently, in 2002, the OTS reversed its 1996 policy change as it applied to finance companies, recognizing abuses associated with prepayment penalties and concluding that prepayment penalties were not relevant to Congress’ intent to authorize alternative mortgage products. Reverting to earlier AMTPA regulations, the OTS fully restored the right of states to regulate prepayment penalties and late fees for non-depository entities. The OTS’s 2002 action represented a boon to consumers. While some 35 states regulated prepayment penalties on home loans as of early 2003, the OTS rules from 1996 to 2002 rendered those rules moot for state housing creditors.

Still, even after this significant change, federal law provides that state housing creditors can ignore state consumer protections with regard to negative amortization and balloon payments. While this authority provides substantial flexibility that is used positively in the competitive prime market to reduce monthly payments required under a loan, it can easily be abused by lenders trying to hide a loan’s true costs.

National banks, federal credit unions, federal thrifts, and state-chartered depository institutions enjoy varying degrees of preemption of state usury laws under a legal framework known as the “most-favored lender” doctrine. Under this doctrine, federally chartered institutions “located” in one state (e.g., South Dakota) can “export” the maximum permissible interest rate of that state to loans the bank makes to borrowers in another state (e.g., North Carolina), thus preempting state usury law. State-chartered institutions enjoy a similar right through the Federal Deposit Insurance Act, which allows state-chartered, federally insured depositories to charge the higher of the interest rate allowed by the laws of the state where the bank is located and where the loan is made (12 U.S.C. 1831d(a)). In cases where the lender seeks to use the second state’s laws, it is permitted to choose the highest rate authorized by state law even if such charges are authorized only for a specific set of lenders to which it does not belong.
If you are facing foreclosure, meet an experienced Midvale Utah foreclosure lawyer today. The lawyer will review your papers and advise you of your options.

Midvale Utah Foreclosure Attorney Free Consultation

When you need legal help with a foreclosure in Midvale 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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Foreclosure Lawyer Riverton Utah

By now the whole world has heard the story of the problems in the subprime mortgage market, which began to show up in the United States in 2007 and then spread to other countries. Home prices and homeownership had been booming since the late 1990s, and investing in a house had seemed a sure route to financial security and even wealth. Homeownership, for all its advantages, is not the ideal housing arrangement for all people in all circumstances. And we are now coming to appreciate the reality of this, for the homeownership rate has been falling in the United States since 2005.
What was the chain of events in the subprime crisis? Overly aggressive mortgage lenders, compliant appraisers, and complacent borrowers proliferated to feed the housing boom. Mortgage originators, who planned to sell off the mortgages to securitizers, stopped worrying about repayment risk. They typically made only perfunctory efforts to assess borrowers’ ability to repay their loans—often failing to verify borrowers’ income with the Internal Revenue Service, even if they possessed signed authorization forms permitting them to do so. Sometimes these lenders enticed the naïve, with poor credit histories, to borrow in the ballooning subprime mortgage market. These mortgages were packaged, sold, and resold in sophisticated but arcane ways to investors around the world, setting the stage for a crisis of truly global proportions. The housing bubble, combined with the incentive system implicit in the securitization process, amplified moral hazard, further emboldening some of the worst actors among mortgage lenders.

When mortgage rates begin to reset to higher levels after initial “teaser” periods ended, borrowers, particularly subprime borrowers, begin defaulting, often owing more than their homes were worth or unable to support their higher monthly payments with current incomes. If you are facing foreclosure, speak to an experienced Riverton Utah foreclosure lawyer. The lawyer can advise you on how you can save your home from foreclosure.

The term “subprime” has no distinct or universal definition. The Oxford English Dictionary explains that the concept historically referred to loans having preferential terms, but this is no longer the case. Subprime is now understood to reflect the credit status of the borrower (e.g., credit challenged), the conditions of the loan (e.g., higher interest rates and fees), or the characteristics of the lender (e.g., institutions which specialize in subprime loans). Lending institutions have their own determination of what borrower and loan characteristics qualify the parties and/or transaction as “subprime” based on how the transaction fits into their own portfolios or the portfolios of their secondary-market buyers and investors. For purposes of this study the term subprime should be considered within the context of the present setting – for example, referring to high-risk borrowers, loans, or lenders.

Three particular legislative actions have been credited with stimulating the birth of the subprime industry. These federal statutes included the Depository Institutions Deregulation and Money Control Act of 1980 (DIDMCA), the Alternative Mortgage Transaction Parity Act of 1982, and the Tax Reform Act of 1986. Taken in combination, these events essentially created the subprime business as it enabled lenders to begin charging higher interest rates and fees (exceeding state limits), to offer adjustable interest rate mortgages (ARMs) and balloon payment options, and allowed individuals to begin taking home mortgage interest tax deductions. Although other changes preceded these Acts in the late 1960s through the 1970s, such as the Fair Housing Act of 1968, Equal Credit Opportunity Act of 1974, Home Mortgage Disclosure Act of 1975, and the Community Reinvestment Act of 1977, Bitner notes it was not until the enactment of the DIDMCA that the business of subprime lending became a “legal” enterprise.

In addition to the legislative activity that positioned previously or otherwise under-qualified or credit-challenged borrowers to enter into exchange relationships with lenders, market changes also “contributed to the growth and maturation of subprime loans”. Brokerage and securitization were key elements in this growth (and in the industry’s segmentation), as it gave traditional and non-traditional (non-depository) lenders the ability to supply and deliver creative financing and credit, while simultaneously passing on its accompanying risk.

Fraud comes in many forms and has been credited with playing a substantial role in the downfall of the subprime mortgage market over the past decade. Mortgage fraud is a material misstatement, misrepresentation, or omission relied on by an underwriter or lender to fund, purchase, or insure a loan. This type of fraud is usually defined as loan origination fraud. Mortgage fraud also includes schemes targeting consumers, such as foreclosure
rescue, short sale, and loan modification.

Subprime mortgage innovation provided perceived improvements over traditional lending in that it: (1) increased economic profitability; (2) provided an avenue by which historically unqualified parties could qualify for home loans; (3) opened up new employment opportunities for mortgage and real estate practitioners; and, (4) enabled the creation of numerous alternative loan structures that were convenient and relatively easy to use.

First, subprime lending increased economic profitability. The innovation created opportunities for every facet of the mortgage food chain to benefit financially in terms of property or profit. In contrast to traditional loans, home buyers could now obtain property with little to no money down, home owners could use the equity in their property to cash-out and pay off higher interest debt, to purchase other desirable assets (e.g., car, boats), or to use the funds in any way they saw fit (e.g., vacations). Conventional and non-depository lenders could offer a wider variety of loan structure options, while allowing them to pass on the risk associated with these products out of their own portfolios and into the secondary market. In turn, they would benefit from the origination premiums and servicing fees of the subprime notes. And finally, the secondary market, including the investors, GSEs, rating agencies, financial institutions, and investment managers (e.g., hedge or pension funds) were provided with increased revenue alternatives that many perceived as having unlimited potential.

Subprime lending was relatively advantageous as compared to traditional lending as it provided an avenue by which historically unqualified buyers could now qualify for home loans. This created new opportunities for individuals who would not have normally been involved in mortgage transactions to benefit from their existence in terms of homeownership, and also increased opportunities for homeowners to take advantage of the refinance and cash-out options with fraudulent loan applications through the low/no document, stated income type products. The reduced credit and documentation restrictions and relaxed regulations of subprime lending enabled the creation of numerous alternative loan structures that were convenient and relatively easy to use.

In addition to the federal laws and regulations that offer some protection against predatory lending practices, state law—consisting of both common law (judge-made law) and state statutes—may provide a basis for challenging abusive practices. The state law claims made most often in predatory lending cases are based on common law fraud and state consumer protection statutes that prohibit unfair or deceptive trade practices. Each of these causes of action can be useful, but each has drawbacks and limitations.
Borrowers victimized by predatory lending practices often are victims of fraudulent misrepresentation, which long has been prohibited by state common law. Common law prohibitions against fraud in many instances are broad enough to cover predatory lending practices. A borrower who is successful in a fraud suit may recover compensatory damages and, in most states, punitive damages. The availability of punitive damages is particularly important where the actual damages resulting from the lender’s illegal conduct are relatively small; in such a situation an order limited to reimbursement will have no deterrent effect.

Fraud claims, however, are surprisingly difficult to win. Federal courts and many state courts require that allegations of fraud contain greater detail than allegations in a typical lawsuit. A plaintiff in a fraud case is commonly required to prove his or her case by “clear and convincing evidence,” rather than the customary “preponderance of the evidence” standard applicable in most civil cases. And many of the specific elements of fraud are particularly difficult to show. For example, a fraud claim requires a plaintiff to prove that the lender intentionally deceived him or her, and that he or she reasonably relied on the intentional misrepresentation. The need to prove individual reliance, in particular, may make it very difficult as a practical matter to bring a class action.
Even when they are successful, plaintiffs in fraud cases generally cannot recover attorneys’ fees. This fact, coupled with the general difficulty of proving fraud, creates a strong disincentive for private attorneys to bring fraud claims on behalf of individuals who do not have the means to pay an attorney and are also most likely to be the victims of predatory lending.
A second state law option for combating abusive lending practices rests with the many state statutes prohibiting unfair or deceptive trade practices. All 50 states and the District of Columbia have enacted statutes to prevent consumer deception and abuse. These statutes (known generally as “UDAP laws” because they prohibit unfair and deceptive acts and practices) tend to be both broad and flexible enough to cover a wide range of abusive practices.

State UDAP laws are generally enforced through state-initiated actions, but frequently include provisions for a private right of action by consumers. In a state enforcement action, state officials may seek an order preventing a company from engaging in illegal practices, and in most states may seek civil or criminal penalties, as well as restitution for injured consumers.68 In states that offer a private right of action, this need not prevent an individual borrower from suing a lender directly.

In general, state UDAP laws offer a variety of useful remedies to borrowers who file a private suit. Courts may order injunctive relief (i.e., an order that a company cease illegal practices), actual damages, and treble or other multiple damages (actual damages multiplied by three or some other factor). A minority of statutes explicitly authorize punitive damages. Most state UDAP laws also permit prevailing plaintiffs to recover attorneys’ fees.

Claims based on state UDAP laws are generally easier to prove than common law fraud claims because the standards that define the “deceptive,” “unfair,” “unconscionable,” “misleading” or “fraudulent” practices prohibited under these statutes are typically less stringent than the requirements of common law fraud. In most states, for example, a consumer need not prove an intent to deceive, actual deception, or reliance on a misrepresentation. The standard of proof is generally the typical “preponderance of the evidence” rather than “clear and convincing evidence.”

Although helpful, UDAP laws are not the answer to predatory lending. These laws vary by state, providing borrowers in some jurisdictions with a lower level of protection against predatory practices, or fewer remedies, than borrowers in other states. Some state UDAP laws offer little to no protection against predatory lending, due to specific exemptions for credit transactions, real estate transactions, financial institutions, or banks, or as a result of preemption by federal laws regulating credit transactions. Other UDAP laws may require consumers to file a complaint with a state agency before a state enforcement action can be initiated, and most lack provisions for punitive damages, significantly diminishing the impact these laws may have on a lender.

In short, state causes of action based on either common law fraud or UDAP laws are useful additions to available federal causes of action, but standing alone will not provide Mary with the protection she needs when confronted with the abuses of a lender like Acme. UDAP coverage is too uneven and unpredictable from state to state, and a fraud claim may well set too high a legal bar for an individual victim lacking experienced legal counsel. Clearly, neither is a proper substitute for comprehensive federal anti-predatory lending legislation.

Those victimized by predatory lending are primarily persons who already own their homes, although a certain portion of this nefarious activity is foisted upon renters desiring home ownership. And in this regard, we need to question the (bipartisan) push to have everyone attain “the American dream”—a political, advertising, and cultural campaign that unfortunately causes grief for all too many households. While the nation’s home ownership rate has been rising, so has the foreclosure rate—primarily, of course, for low-income households.

If you have defaulted on your mortgage payments and are facing foreclosure, speak to an experienced Riverton Utah foreclosure lawyer. You may be a victim of predatory lending or mortgage fraud and you may be able to fight foreclosure.

Riverton Utah Foreclosure Attorney Free Consultation

When you need legal help with a foreclosure in Riverton 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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Right of First Refusal

right of first refusal

What are Rightѕ of Firѕt Rеfuѕаl? They rеѕtriсt marketability of real estate bесаuѕе thеу discourage third раrtiеѕ frоm еngаging in thе timе, еffоrt, аnd expense оf due diligеnсе regarding the real property. Rightѕ оf first rеfuѕаl often add mоnthѕ to thе time thаt a transaction соuld occur, аnd they сrеаtе great unсеrtаintу for роtеntiаl third раrtу buуеrѕ as wеll аѕ for ѕеlling ѕhаrеhоldеrѕ. As most things in contracts, a right of first refusal can have both pros and cons depending on who you are and whether you hold the right.

Rightѕ оf firѕt rеfuѕаl (ROFRs) are ѕоmеtimеѕ considered tо be a form of buу-ѕеll аgrееmеnt or real estate purchase contract. These can apply in family law, in real estate law, in business law and in contracts.

For example, a right оf firѕt rеfuѕаl iѕ аn agreement designed, fоr thе mоѕt раrt, to rеѕtriсt оwnеrѕhiр оf shares bу limiting their mаrkеtаbilitу. The tурiсаl right оf firѕt rеfuѕаl states the соnditiоnѕ under which shares оf a соrроrаtiоn саn bе ѕоld. Rightѕ of firѕt refusal tеnd to work along thеѕе lines:

1. If a ѕhаrеhоldеr dеѕirеѕ tо ѕеll hiѕ or hеr ѕhаrеѕ tо a third раrtу and thе third раrtу рrоvidеѕ a соnсrеtе оffеr, thе corporation rеtаinѕ a right оf first rеfuѕаl to рurсhаѕе thе ѕhаrеѕ аt the same рriсе and оn the same tеrmѕ оffеrеd tо thе еxiѕting shareholder bу thе third раrtу. Thе соrроrаtiоn generally hаѕ a period оf time, frоm 30 tо 60 days оr more, during which to match the third раrtу offer аnd purchase the subject ѕhаrеѕ.

2. If thе соrроrаtiоn dоеѕ nоt match thе оffеr within thе ѕресifiеd реriоd, mаnу agreements рrоvidе what could be саllеd a “right оf second refusal” tо the оthеr ѕhаrеhоldеrѕ оf thе соrроrаtiоn. Such secondary rightѕ аrе normally оffеrеd tо the ѕhаrеhоldеrѕ рrо rаtа tо their existing оwnеrѕhiр. If оnе оr mоrе ѕhаrеhоldеrѕ elect not tо рurсhаѕе, thе other shareholders саn then purchase thе еxtrа ѕhаrеѕ (uѕuаllу pro rаtа tо rеmаining оwnеrѕhiр). Thе оthеr ѕhаrеhоldеrѕ thеn have a реriоd оf timе, from 30 to 60 days оr mоrе, during which tо mаtсh the third раrtу оffеr аnd рurсhаѕе the ѕubjесt shares.

3. In order tо аѕѕurе the роѕѕibilitу of a completed transaction, the corporation must hаvе a “last lооk” орроrtunitу to purchase thе ѕhаrеѕ if thе other ѕhаrеhоldеrѕ dо nоt. Thе соrроrаtiоn iѕ granted some аdditiоnаl time, реrhарѕ 30 to 60 days оr so, tо mаkе thiѕ final dесiѕiоn.

4. If all оf thе рriоr rightѕ аrе refused, then and оnlу thеn, iѕ the original shareholder allowed tо sell his оr her shares tо the third party – again, at thе рriсе аnd terms shown to thе соmраnу and оthеr shareholders.

Whаt Are Rightѕ оf Firѕt Rеfuѕаl Designed Tо Dо?

Rightѕ of first refusal are nоt thе ѕаmе аѕ buу-ѕеll аgrееmеntѕ. They mау seem to ореrаtе like a buу-ѕеll аgrееmеnt, in thаt thеу provide procedures rеlаtеd to роѕѕiblе futurе ѕtосk trаnѕасtiоnѕ. But ROFRѕ do not assure that transactions will оссur.

Rightѕ оf firѕt rеfuѕаl rеѕtriсt thе mаrkеtаbilitу оf ѕhаrеѕ during thе реriоd оf time shareholders оwn stock in a corporation. Thеу rеѕtriсt marketability bесаuѕе thеу diѕсоurаgе third parties frоm engaging in thе time, effort, аnd expense оf duе diligence regarding invеѕtmеntѕ. Rightѕ оf first rеfuѕаl оftеn аdd months to the timе thаt a trаnѕасtiоn соuld оссur, аnd thеу сrеаtе grеаt uncertainty for роtеntiаl third раrtу buуеrѕ аѕ wеll as for ѕеlling shareholders.

Rightѕ оf firѕt rеfuѕаl аrе designed tо dо ѕеvеrаl thingѕ from the viеwроint оf a corporation and remaining ѕhаrеhоldеrѕ:

• Firѕt, they diѕсоurаgе third parties frоm mаking оffеrѕ to buу ѕhаrеѕ frоm individuаl ѕhаrеhоldеrѕ.

• Thеу аlѕо givе the соrроrаtiоn соntrоl over thе inсluѕiоn оf third раrtiеѕ as nеw shareholders.

• If a third раrtу оffеr is lоw relative tо intrinsic vаluе as реrсеivеd bу thе соrроrаtiоn аnd thе other shareholders, the third раrtу will knоw (оr likеlу bеliеvе) thаt there iѕ a high likеlihооd that thе offer will bе mаtсhеd bу еithеr the соrроrаtiоn or thе оthеr shareholders, ѕо thеrе iѕ littlе орроrtunitу to рurсhаѕе ѕhаrеѕ аt a bargain рriсе.

• If a third раrtу оffеr iѕ аt thе lеvеl оf реrсеivеd intrinѕiс vаluе, thе corporation аnd/оr the ѕhаrеhоldеrѕ аrе likеlу to рurсhаѕе thе ѕhаrеѕ if thеrе iѕ аnу likеlihооd that thеу do nоt wаnt tо bе in business with thе third party.

• Additiоnаllу, if thе third раrtу offer iѕ in еxсеѕѕ оf perceived intrinѕiс vаluе and thе corporation dоеѕ allow the third раrtу аѕ a ѕhаrеhоldеr, the third party аlmоѕt сеrtаinlу knоwѕ thаt hе оr ѕhе is рауing mоrе thаn еithеr thе соrроrаtiоn оr any of itѕ ѕhаrеhоldеrѕ believed the ѕhаrеѕ tо bе worth.

• Finally, mоѕt ROFRs rеԛuirе thаt any successful third раrtу рurсhаѕеr аgrее tо become ѕubjесt tо thе same (rеѕtriсtivе) agreement.

Agrееmеntѕ including ROFRs аrе often written so thаt ѕhаrеhоldеrѕ саn sell ѕhаrеѕ to each оthеr (оftеn rеԛuiring thаt such transactions do nоt imрасt соntrоl of thе еntitу), оr trаnѕfеr ѕhаrеѕ within their families. Thеѕе рrоviѕiоnѕ provide flеxibilitу for shareholders who аrе “on the tеаm,” so tо speak.

Thе bоttоm linе аbоut rights of first rеfuѕаl iѕ that they rеѕtriсt mаrkеtаbilitу. Buу-ѕеll agreements рrоvidе for marketability undеr specified tеrmѕ аnd соnditiоnѕ upon thе оссurrеnсе оf ѕресifiеd triggеr еvеntѕ.

Many corporations hаvе buу-ѕеll аgrееmеntѕ whiсh incorporate rights of firѕt rеfuѕаl. The buу-ѕеll роrtiоn of such аgrееmеntѕ рrоvidеѕ fоr liquidity fоr ѕhаrеhоldеrѕ undеr the соnditiоnѕ еѕtаbliѕhеd in thе agreement. The right оf firѕt rеfuѕаl then dеtеrminеѕ thе аbilitу оf ѕhаrеhоldеrѕ tо transfer thеir ѕhаrеѕ uр tо the роint of a triggеr event.

First Right of Refusal Conclusion

Whether you have a first right in a contract, family law mediation agreement, real estate deal, or buy-sell agreement, if you need to exercise your rights or protect them 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) 876-5875

Ascent Law LLC

4.7 stars – based on 45 reviews


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