Article Sorting Out Statute of Limitations for Utah Foreclosures, 1019 UTBJ, Vol. 32, No. 5. 14

Authorby Spencer Macdonald
PositionVol. 32 5 Pg. 14

Article Sorting Out the Statute of Limitations for Utah Foreclosures

Vol. 32 No. 5 Pg. 14

Utah Bar Journal

October, 2019

by Spencer Macdonald

Some practitioners of real estate law may have encountered litigation in which a borrower, citing the statute of limitations, has challenged a lender's right to foreclose. Correctly identifying and applying the appropriate statute of limitations for nonjudicial foreclosures in Utah is a surprisingly complex and somewhat unsettled area of law, as both state and federal courts have applied different statutes in different ways. This article explores the contours of this issue and also outlines additional and occasionally relevant factors to be considered.

Sorting out the Statutes

The statute of limitations for nonjudicial foreclosures consists of a series of statutes that must be read and interpreted together.

Utah Code Section 57-1-34

The first statute, Utah Code Section 57-1-34, provides that " [a] person shall, within the period prescribed by law for the commencement of an action on an obligation secured by a trust deed: (1) commence an action to foreclose the trust deed; or (2) file for record a notice of default under Section 57-1-24." Which period is "prescribed by law" has not been immediately clear, as evidenced in Utah case law by two separate statutory schemes cited in tandem with this statute. While both schemes prescribe a six-year limitation period, they contain potentially different triggering dates for the commencement of the period.

Statute of Limitations - Mesne Profits (Utah Code Section 78B-2-309(2))

Utah Code Section 78B-2-309(l) ("Within six years - Mesne profits of real property - Instrument in writing") provides that " [an action may be brought within six years] upon any contract, obligation, or liability founded upon an instrument in writing." (Formerly numbered as Utah Code Ann. § 78-12-23 (2007)). This statute has previously been interpreted as six years from the date of the borrower's default and has been invoked in various decisions pertaining to nonjudicial foreclosures. For example, in Timm v. Dewsnup, 2003 UT 47,86 P.3d 699, the Utah Supreme Court interpreted a statute of limitations issue pertaining to a nonjudicial foreclosure sale by applying this statute. Id. ¶ 18; see also F M. A. Fin. Corp. v. Build, Inc., 404 P.2d 670, 672 (Utah 1965) (applying Utah Code Ann. § 78-12-23 (renumbered as id. § 78B-2-309)); Tasila v. 698765 Isbell, Case No. 2:12-cv-01115 (D. Utah March 30, 2015) (applying Utah Code Ann. § 78B-2-309); DiMeo v. Nupetco Assocs., IIC, 2013 UT App 188, ¶ 8, 309 P.3d 251 (same). However, this statute is found in "Part 3 (Other than Real Property)" of Title 78B, Chapter 2, which makes its application to foreclosures of real property potentially problematic. Moreover, most of the more recent federal and state decisions, discussed below, have declined to apply this statute in a foreclosure context.

Statute of Limitations - Uniform Commercial Code (Utah Code Section 70A-3-118(l))

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