In the United States, there are two types of foreclosure in most common law states. Using a "deed in lieu of foreclosure" or "strict foreclosure", the noteholder claims the title and possession of the property back in full satisfaction of a debt, usually on contract.

However, Utah is not a deed in lieu of foreclosure state. Utah is a foreclosure deficiency state.  This means the bank has the option to come after you for the remaining balance owed.  Banks know this when working on a short sale or bank foreclosure and sometimes mention it when we are working out a short sale or foreclosure for our Utah client.  I have seen very few cases where the bank actually came after the individual.  The banks are more likely to come after a builder, investor or someone they think has done loan fraud.  

I see many homeowners lose sleep over thinking the bank will come after them for years in the future.  This is typically not the case.  The banks are very busy trying to stay afloat these days.  They don't want to bother with the legal hassle of trying to repossess a 2003 honda civic to apply to a deficiency balance.  If you have an experience or an opinion about this please post a comment below.

In the proceeding simply known as foreclosure (or, perhaps, distinguished as "judicial foreclosure"), the property is subject to auction by the county sheriff or some other officer of the court. Many states require this sort of proceeding in some or all cases of foreclosure to protect any equity the debtor may have in the property, in case the value of the debt being foreclosed on is substantially less than the market value of the immovable property (this also discourages strategic foreclosure). In this foreclosure, the sheriff then issues a deed to the winning bidder at auction. Banks and other institutional lenders may bid in the amount of the owed debt at the sale but there are a number of other factors that may influence the bid, and if no other buyers step forward the lender receives title to the immovable property in return.  This process is very costly to the bank this is why the banks typically prefer to do a short sale.

In Utah County it is customary for the foreclosing lender to obtain a title search of the immovable property and to notify all other persons who may have liens on the property, whether by judgment, by contract, or by statue or other law, so that they may appear and assert their interest in the foreclosure litigation. In all US jurisdictions a lender who conducts a foreclosure sale of immovable property which is the subject of a federal tax lien must give 25 days' notice of the sale to the IRS.  Failure to give notice to the IRS results in the lien remaining attached to the immovable property after the sale. Therefore, it is imperative the lender search local Federal Tax Liens so if parties involved in the foreclosure have a federal tax lien filed against them, the proper notice to the IRS is given.

If your home is going into foreclosure in Utah get your home listed  before it is too late.  Team Teasdale has helped many people avoid foreclosure.  If you just want some free advise call us we are here to help.  Foreclosure can be very stressful.

The US congress passed, and President Bush signed into law, a temporary change to the tax code. For the period Jan. 1, 2007, through Dec. 31, 2009, homeowners do not have to pay tax on canceled debt.  It is January 1st 2010 and I am wondering it the tax code was extended.  I think taxing people for real estate losses is completely unfair in the first place.  

See all the bank foreclosures instantly in Utah County.


Welcome to my Utah County Real Estate blog!  We are located  in Mapleton, Utah.  Our team combines proven traditional real estate practices and represents the leading edge in the future of real estate marketing by merging internet technologies, service, communication, information and analysis with those traditional practices to provide our clients with an exceptional real estate experience and superior marketing.

Paul Teasdale, Principal Broker
ABR, CRS, e-PRO, QSC, Finance  BYU
15 Years Experience, 775+ Homes Sold
Team Teasdale Realty, Utah County Real Estate
Phone: 801-491-7653