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Utah Wills and Trusts Attorney - Due on Sale

Creating a living trust (sometimes called a "family" trust) can be an important part of a comprehensive estate plan. Transferring your home or other real estate into your living trust is an important part of funding your trust, and is an important step toward avoiding an expensive and lengthy probate process. Contact Utah estate planning attorney Stephen Howard to learn more.

Does transferring my home to a living trust trigger a mortgage "due-on-sale" clause in Utah?

There is some confusion that perpetuates in regard to the question of whether a transfer into a living trust will trigger a due-on-sale clause in a residential mortgage. In most cases, a person who transfers his home into a living trust of which he is also a beneficiary will not trigger a due-on-sale clause. Below is a partial explanation of why confusion on this issue continues.

Family Trusts Attorney Salt Lake City UtahIn the 1970's and early 1980's, there were several state appellate court opinions from other states that addressed the enforceability of due-on-sale clauses in the context of a residential mortgage. Ultimately, the issue ended up with the United State Supreme Court holding that due-on-sale could be enforced. In response to this litigation, the federal government enacted what is sometimes called the Garn-St. Germain Act. This act provides for the enforcement of due-on-sale clauses. However, it also provides for certain exceptions.

The most important exception to the enforceability of a due-on-sale clause comes under 12 U.S.C. 1701j-3(d)(8) which provides that a lender may not exercise its option pursuant to a due-on-sale clause upon "a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property. . . ." A similar provision is found in 12 C.F.R. 591.5.

Mortgage loans made subsequent to the enactment of this legislation are subject to its requirements in regard to transfers of real estate into living trusts. It has now been more than 30 years since the passing of the Garn-St.Germain Act. Thus, as a general rule now, a due-on-sale clause will not be triggered by a transfer of a home occupied by the borrower into a living trust in which the borrower is a beneficiary.

Finding a Utah Wills and Trusts Attorney in Salt Lake City

A wills and trusts attorney in Utah can assist you in creating a personalized estate plan, tailored to suit your individual needs. Based in Salt Lake City, estate planning attorney Stephen Howard assists clients throughout Utah. Contact us today for an initial consultation.


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Estate Planning Attorney Wills & Trusts Estate Planning - Setting up a good estate plan requires more than filling out a free online form or downloading software. But a good estate plan does not have to be overly expensive. A good attorney can guide you through the process of determining what estate planning tools are right for you and your family, and then create personalized estate planning documents to protect you and your family, and give you the peace of mind you deserve. Contact us today to start the process of setting up a personalized estate plan.

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Serving Salt Lake, Davis, Weber, Utah, Cache, Tooele, Summit, Box Elder, Morgan, and Wasatch Counties - and all of Utah.


Stephen W. Howard is Utah attorney, practicing as part of the Canyons Law Group, LLC.
With offices in Salt Lake and Davis Counties, we are pleased to provide legal services to clients throughout Utah.
Call 801-449-1409 to arrange for a confidential initial consultation.

Stephen W. Howard, PC

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