Attorney vs Title Company for Utah Seller Financing: Who Does What?

In a Utah seller-financed sale, the attorney and the title company do different jobs. The attorney drafts the note, trust deed, and any custom terms, and advises you. The title company typically runs escrow, searches title, issues title insurance, closes, and records. You usually want both. Neither one replaces the other.

What does a title company do at a seller-financed closing?

A title company typically holds escrow, searches title, issues title insurance, prepares the settlement statement, collects signatures, disburses funds, and records the documents. It is the neutral party that makes sure money and paper change hands correctly.

That neutrality is the point. The title company does not represent you or the buyer. Its job is to close the transaction both of you agreed to, as written. Here is what that typically covers:

• Escrow. It holds the buyer's down payment until every condition is met.
• Title search. It checks the county records for liens, judgments, and easements.
• Title insurance. It issues an owner's policy, and a lender's policy if you ask for one.
• Settlement statement. It itemizes who pays what, down to the recording fees.
• Signing. It notarizes the deed, note, and trust deed.
• Recording. It records the deed and trust deed with the county recorder.
• Payoff. It pays off any existing liens being cleared at closing.

The lender's policy matters more in a seller-financed sale than most sellers expect. You are now the lender. The state Seller Financing Addendum includes an option for a lender's title insurance policy Seller Financing Addendum § 8. That policy protects your lien, not the buyer's ownership.

Say you sell for $450,000 and carry $360,000. An old judgment lien against you turns up two years later. An owner's policy protects the buyer. A lender's policy is what protects your $360,000 position. Ask the title company to quote both.

What legal drafting falls outside what a title company or agent provides?

Custom loan documents and legal advice typically fall outside what a title company or agent provides. That means the promissory note's specific terms, the trust deed, any special clauses, and advice on whether the deal fits the federal rules.

Real estate agents work from state-approved forms. Licensees may not alter the boilerplate on those forms, and they must use the approved addenda Utah Admin. Code R162-2f-401b. So any term the forms do not cover goes into attorney-drafted documents Utah Admin. Code R162-2f-401b.

The state Seller Financing Addendum says so directly. It warns that real estate brokers are not qualified or licensed to ensure the financing complies with the law Seller Financing Addendum. That is not a knock on agents. It is the form telling everyone where the agent's role stops.

Title companies typically follow the same line. In practice, a title company prepares closing documents and fills in standard forms. It does not typically negotiate terms for you, draft custom clauses, or tell you whether a term is wise. Drafting and advice are legal work. A Utah attorney is the person who does them.

Here is what usually lands on the attorney's desk in a seller-carry:

• The promissory note. Rate, amortization, balloon date, late fees, and prepayment terms.
• The trust deed. Who the trustee is, what counts as default, and how the property secures the debt.
• Custom clauses. Escrow for taxes and insurance, a due-on-transfer clause, or a right of first refusal.
• Federal fit. Whether your terms work under the Dodd-Frank seller exclusions.
• Your side of the deal. Explaining what each term means for you, in plain English.

Think of a buyer who asks for "no payments for six months." The addendum does not have a box for that. Someone has to write it, make it enforceable, and make sure it fits the federal rules. That is attorney work. Our flat-fee seller financing documents cover exactly this piece, at $750.

Who can serve as trustee and conduct a trustee's sale?

Only an active Utah State Bar member with a Utah office, or a licensed title insurance company or agency with a bona fide Utah office, may exercise a trust deed's power of sale Utah Code § 57-1-21. Both can be named as trustee.

The trustee is the neutral party named in the trust deed. It holds the power of sale on your behalf. If the buyer stops paying, the trustee is the one who runs the nonjudicial foreclosure.

That is why the trustee choice matters at closing, not just at default. If you name a trustee who cannot exercise the power of sale, you have a problem later. The safe choices are the two the statute names: a Utah attorney or a Utah title company Utah Code § 57-1-21.

Here is how the two typically compare in practice:

In practice, many trust deeds name the closing title company as trustee. That is a common and workable choice. If a default happens years later, a substitute trustee is often appointed. An attorney often serves in that role, because a contested default tends to raise legal questions along the way.

Either way, write the right trustee into the document from the start. The complete guide to seller financing in Utah walks through what happens after a default.

When do you want both involved?

You want both involved in nearly every seller-financed sale. The attorney drafts and explains the loan documents. The title company closes, insures, and records them. Each covers a gap the other leaves.

It helps to think about what goes wrong when one is missing.

Title company, no attorney. The sale closes cleanly. But the note may have been built from a generic template. Nobody checked whether a balloon fits your federal exclusion. Nobody explained what happens if the buyer sells. The paperwork is recorded and polished, and it may still say the wrong thing.

Attorney, no title company. The documents fit your deal. But nobody insured title or checked for a lien that would prime yours. Money may change hands outside escrow. Recording may lag. If the buyer had an unpaid judgment, it could attach the moment the deed records.

Both. The attorney drafts the note and trust deed to your terms. The title company searches title, issues a lender's policy, holds the down payment, and records everything at closing. Each one does what it is set up to do.

Here is a typical order of events when both are involved:

1. Step 1
   Sign the REPC and addendum
   Your agent prepares the state purchase contract and the Seller Financing Addendum with the agreed terms.
2. Step 2
   Open escrow
   The buyer's earnest money goes to the title company, which orders a title search.
3. Step 3
   Attorney drafts the loan documents
   The attorney drafts the note and trust deed to match the addendum, names a qualified trustee, and explains each term to you.
4. Step 4
   Review the title commitment
   You and your attorney review liens and exceptions, and you decide whether to buy a lender's policy.
5. Step 5
   Close
   The title company collects signatures, notarizes, and disburses the down payment.
6. Step 6
   Record
   The title company records the deed and trust deed so your lien is on the public record.

There are a few moments where an attorney is especially worth calling:

• The buyer wants terms the addendum does not cover. Someone has to draft them.
• You plan a balloon or an adjustable rate. Federal fit depends on your facts.
• You are selling through an entity or a trust. The exclusions treat entities differently.
• You still owe on the property. That raises questions only an attorney should answer.
• The buyer misses payments. Default and foreclosure are legal work from the first letter.

If you want to see whether a flat fee fits your deal, read about Greg Hansen and check the seller financing FAQ first.

What does each one cost you if you skip it?

Skipping the attorney typically costs you protection in the documents. Skipping the title company typically costs you protection in title and closing. The savings are small compared with the size of a carried note.

Put numbers on it. On a $450,000 sale with $90,000 down, you carry $360,000. That note might run 30 years. A single missing clause or an uninsured lien can put a large share of that balance at risk.

Here is what tends to go wrong when a piece is missing:

• No clear default terms. You may not be able to accelerate the loan when you expected to.
• A trustee who cannot exercise the power of sale. Foreclosure may take a slower path.
• No lender's title policy. A hidden lien could sit ahead of your trust deed.
• Late recording. Another creditor could record first.
• No written explanation. You may not know your rights until you need them.

These are ordinary mistakes. They come from asking one professional to do another's job.

What Greg would tell you

Use the title company for what it does well, which is escrow, title insurance, closing, and recording. Use an attorney for the note, the trust deed, and anything the state forms do not cover. When each one does its own job, you end up with a loan you understand and a lien you can enforce.

This site is for general information about Utah law and is not legal advice. Using it does not create an attorney-client relationship. Every transaction is different — talk to an attorney about yours. Attorney advertising.