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[Utah Code Table of Contents]
[TITLE 57. Table of Contents]
57-15-1 Legislative findings.
The Legislature finds that clauses in instruments representing
security interests in residential real property which allow
a secured party to accelerate or mature an indebtedness secured
by property, or increase the interest thereon, upon the sale
or transfer of the property or upon assumption of the indebtedness,
in certain circumstances, constitute unreasonable restraints
on alienation to the detriment of the public welfare.
1981
57-15-2 Provision for acceleration or increased interest on assumption unenforceable - Exception.
Subject to the limitations and exceptions provided for
in this chapter, any provision in an instrument in existence
before or after the effective date of this act representing
a security interest in real estate is unenforceable as an
unreasonable restraint upon alienation if the provision allows
or requires the secured party, directly or indirectly, to
accelerate or mature the indebtedness secured by the real
estate or increase the interest rate specified in the instrument
representing the security interest in the real estate, on
account of the sale or transfer of all or part of the real
estate or on account of the assumption by a new buyer of
all or part of the indebtedness, except where the person
to whom the real estate would be sold or transferred or by
whom the indebtedness would be assumed is reasonably determined
by the person holding the security interest to be in such
a financially insecure position as to substantially impair
the lender's prospect of prompt and full payment under the
terms of the instrument.
1981
57-15-3 Substantial impairment of lender's prospect of prompt and full payment.
For purposes of this act, the lender's prospect of prompt
and full payment under the terms of the instrument is substantially
impaired when, according to standards normally used by persons
in the business of making loans on real estate for original
loans under the same or similar circumstances and terms,
the person to whom the real estate would be sold or transferred
or by whom the indebtedness would be assumed is unable to
meet the payment schedule set in the original contract.
1981
57-15-4 Charge assessed by secured party for assumption - Limitation.
No fee or charge assessed by a secured party to effect
the assumption of an indebtedness secured by an instrument
representing an interest in real estate may exceed one per
cent of the outstanding indebtedness exclusive of title insurance
and recording costs. This fee may be charged only where lender
accepts new buyer as obligated party and releases original
borrower or borrowers from the obligation.
1981
57-15-5 Property subject to chapter.
This chapter shall be applicable only to security interests
in real property consisting of four or fewer housing units
utilized as residential dwelling units other than motels,
hotels, or nursing homes.
1981
57-15-6 Exempt lenders.
This chapter is not applicable to security interests in real estate originated by, or for purchase by any entity established pursuant to Title 9, Chapter 4, Part 9, or by public agencies making noninterest and/or low interest loans and noninterest and/or low interest loans made by private nonprofit corporations for the rehabilitation of existing residential structures.
This chapter is not applicable to a person with a security
interest in real estate who is not regularly engaged in the
business of making real estate loans.
1995
57-15-7 Calling entire balance on impairment of security.
If the lender's security interest is substantially impaired,
according to the standard of Section
57-15-3
, the lender may call the entire loan balance
due, if that option is provided for in the original loan
agreement, though the lender may not charge any penalty or
increased interest for prepayment of the indebtedness made
as a result of the call.
1981
57-15-8 Procedure for assumption - Request to lender - Effect of failure to request - Approval or refusal by lender - Information furnished by lender.
(1) In order to effect an assumption under this chapter the original borrower, or, if the secured party has previously approved, and pursuant to that approval there has been effected, an assumption of the indebtedness secured by an instrument representing a security interest in real estate, the person last approved as an assumer and who has assumed the indebtedness shall give to the lender a written notice and request for assumption. The lender shall either approve or reject a prospective assumer within 30 days after the written notice and request for assumption is received from the original borrower or the party last approved as an assumer. The lender may refuse to release the original borrower or the party last approved as an assumer and who has assumed if the secured party has previously approved the assumption of the indebtedness, from liability for the payment of the indebtedness to be assumed. With respect to any transfer involving an assumption effected after the effective date of this act, if the written notice and request for an assumption is not timely made before a transfer or within 90 days after transfer, the lender may call the entire loan balance due without a determination that the security interest is substantially impaired, if that option is provided for in the original loan agreement.
(2) The lender shall provide the original borrower or,
if the indebtedness has been assumed with the previous approval
of the lender, the person last approved with a statement
of loan condition within 14 days after receipt of written
notice and request. The statement shall include the following
information: (a) the amount of the unpaid balance on the
secured loan; (b) the interest rate; (c) the amount of the
monthly loan installment; (d) the date or dates any real
estate taxes and special assessments were last paid; (e)
the amount of hazard insurance in effect if that information
is contained in the records of the lender; and (f) the amount
of any impound balance reserve for payments of taxes, special
assessments, and insurance.
1981
57-15-8.5 Acceleration - Conditions authorizing - Exemption of loans sold to federal agencies.
Notwithstanding the provisions of Sections 57-15-2 and 57-15-4 , a lender or secured party may accelerate or mature an indebtedness upon assumption of that indebtedness if:
(1) A written agreement with, or a written instrument executed by, the obligor on the indebtedness allows the secured party or lender to accelerate or mature the indebtedness and/or increase the interest rate thereon upon assumption of the indebtedness; and
(2) The secured party or lender has offered to accept the assumption without acceleration and without maturing the indebtedness provided the assumer agree to pay the secured party or lender not more than a 1% assumption fee, a not more than 1% interest rate increase effective as of the date of assumption, whichever is earlier, and a further not more than 1% interest rate increase effective a date five years after the date of assumption, whichever is earlier. Neither of said interest rate increases may cause the total interest rate on the indebtedness to exceed 1% below the weighted average yield of the Federal Home Loan Mortgage Corporation weekly auction for purchases of mortgages secured by residential 1 to 4 family dwellings in effect on the date of the increase; and
(3) The assumer has refused to consent to such assumption fee and interest rate increases.
As used in this section, the term "obligor" shall mean the original borrower or, if the secured party or lender has previously approved, and pursuant to that approval there has been effected, an assumption of the indebtedness, the person last approved as an assumer and who has assumed the indebtedness.
If a determination is made by the Federal National Mortgage
Association or by the Federal Home Loan Mortgage Corporation
that it will not purchase Utah mortgage loans because of
the effects of this act, and such determination is communicated
in writing to the Legislature or governor of this state,
then this act will not apply, after receipt of such communication,
to any mortgages originated after the effective date of this
act and sold to the entity making such determination.
1981
57-15-9 Liability for damages caused by violation.
A lender violating any provision of this act, in addition
to any other penalties provided by law, shall be liable to
an injured party for actual damages plus all reasonable attorney's
fees and costs incurred by the injured party because of the
violation.
1981
57-15-10 Severability of provisions.
If any provision of this chapter, or the application of
any provision to any person or circumstance, is held invalid,
the remainder of the chapter shall not be impaired thereby.
1981
57-15-11 Limitation on enforcement of due-on-sale clauses.
After October 15, 1985, this chapter applies to any instrument described in Section 57-15-2 that:
(1) was originated in this state by a financial institution other than a national bank, a federal savings and loan association, a federal thrift institution, or a federal credit union; and
(2) was made or assumed during the period beginning on
May 12, 1981, and ending on October 15, 1982.
1985
