Pub. 5 2017 Issue 1

Issue 1. 2017 13 James H. Jones is a partner at the Salt Lake City office of Snell &Wilm- er where he focuses his practice in commercial and real estate finance, workouts and distressed debt. James may be reached at jjones@swlaw. com or 801-257-1921. Tanner Frei is an attorney in the Salt Lake City office of Snell &Wilmer where he concentrates his practice in commercial finance and real estate. Tanner may be reached at tfrei@swlaw.com or 801-257-1967. a request for notice against the property prior to the recording of the notice of default. The notice of default must be mailed no later than 10 days after the notice of default is recorded, and the notice of sale must be sent after recording the notice of sale and at least 20 days before the date of the scheduled foreclosure. In total, satisfying these non-judicial foreclosure requirements takes a minimum of 121 days from the date the notice of default is filed to the date of the sale. Even at roughly four months, however, the non-judicial foreclosure process is significantly faster and cheaper than the alternative route of judicial foreclosure—that is, filing a lawsuit and having the foreclosure proceed through the state court system. Judicial foreclosure is rarely used in Utah, but in states where judicial foreclosure is the only option, the foreclosure process can easily take over a year. However, the primary advantages of non-judicial foreclosure—name- ly a faster, more streamlined process, with the cost to the lender reduced as a result, as well as avoiding the six-month right of redemp- tion granted to the trustor following a judicial foreclosure sale—can be negated entirely if the foreclosing party does not comply with the applicable state foreclosure laws. The most dramatic result if the stat- utory notice requirements are not satisfied is that a court can set aside the foreclosure sale completely. The Utah Supreme Court in Timm v. Dewsnupp described the standard for setting aside a foreclosure sale because of noncompliance with the statutory notice requirements: “Defects in the notice of foreclosure sale that will authorize the setting aside of the sale must be those that would have the effect of chilling the bidding and causing an inadequacy of price.” The reme- dy applied in any particular case, whether setting aside the sale in its entirety or some less stringent remedy, would depend on the facts of the case and the harm caused. Lenders can avoid that ambiguity of such judicial remedies by strictly complying with the applicable notice requirements Of course, simply having such cases end up in front of a judge indicates that the foreclosing lender largely lost the benefits of the non-judicial foreclosure by being forced to contend with expensive and lengthy litigation challenging the sale. Even if the lender recog- nizes and resolves a defect in compliance before the foreclosure sale takes place, and is thus able to preclude the filing of a lawsuit seeking to set aside the sale, correcting the defect may require re-noticing the sale and entirely resetting the clock for completion of the foreclosure. Again, the advantages of non-judicial foreclosure are significantly negated. Similarly, failure to satisfy the special notice requirements applicable to residential rental properties, as amended by Senate Bill 22, can cause additional delays in the foreclosing party realizing the full value of its collateral even after foreclosure, as holdover tenants may not be removed until after the requirements have been satisfied. n Women in Banking Conference April 27, 2017 – Salt Lake City Community Reinvestment Conference September 2017 – Salt Lake City Fall Compliance Conference October 24-26, 2017– Park City Leadership Conference November 2017 – Salt Lake City Bank Executive Winter Conference December 2017 – Salt Lake City MARK YOUR CALENDAR NOW! 2017 UBA Conferences provide annual updates on pressing issues, emerging trends, current and pending legislation, new products and services and innovative ways to enhance profitability and reduce risk. They also provide an invaluable opportunity to network with peers and stay current on important issues affecting our rapidly changing industry. UBA Conferences EDUCATION CORNER