Is Utah a Deficiency Judgment State?
The short answer is yes.
A Utah lender has the right to seek a deficiency judgment after foreclosure if the amount the home sold at auction does not cover the entire mortgaged amount. Usually the mortgage that actually foreclosed on the property will have three months to seek the judgment. If there are other liens and/or mortgages on the property they may have up to six years to seek a judgment.
A short sale will avoid the possibility of a deficiency judgment as long as the agreement between you and the bank states you will not be responsible for any shortage. A good short sale agent will be trained to negotiate on your behalf.
If there is more than one lien or mortgage on your property you may end up with a short sale deficiency judgment. Don’t forget all parties involved must approve the short sale and just because the first mortgage is releasing you of your obligation doesn’t mean the second mortgage will do the same.
Utah Code Source: http://le.utah.gov/~code/TITLE57/htm/57_01_003200.htm
57-1-32. Sale of trust property by trustee — Action to recover balance due upon obligation for which trust deed was given as security — Collection of costs and attorney’s fees.
At any time within three months after any sale of property under a trust deed as provided in Sections 57-1-23, 57-1-24, and 57-1-27, an action may be commenced to recover the balance due upon the obligation for which the trust deed was given as security, and in that action the complaint shall set forth the entire amount of the indebtedness that was secured by the trust deed, the amount for which the property was sold, and the fair market value of the property at the date of sale. Before rendering judgment, the court shall find the fair market value of the property at the date of sale. The court may not render judgment for more than the amount by which the amount of the indebtedness with interest, costs, and expenses of sale, including trustee’s and attorney’s fees, exceeds the fair market value of the property as of the date of the sale. In any action brought under this section, the prevailing party shall be entitled to collect its costs and reasonable attorney fees incurred.
Utah Code Source: http://le.utah.gov/~code/TITLE57/htm/57_01_003400.htm
57-1-34. Sale of trust property by trustee — Foreclosure of trust deed — Limitation of actions.
The trustee’s sale of property under a trust deed shall be made, or an action to foreclose a trust deed as provided by law for the foreclosure of mortgages on real property shall be commenced, within the period prescribed by law for the commencement of an action on the obligation secured by the trust deed.
Disclaimer: Each situation is different and you should seek a lawyer for legal advice for your specific situation. I am not a lawyer nor do I play one on T.V. The statements on this page should not be considered legal advice.