Closing Costs in a Utah Seller-Financed Sale: Who Pays What
A buyer's list of closing costs on a Utah seller-financed purchase: what disappears, what remains, recording fees, title insurance, and who typically pays.
Informational onlyThis page is general information about Utah law, not legal advice for your situation. Reading it doesn't create an attorney-client relationship. Read the disclaimer.
Yes, a Utah seller-financed sale still has closing costs, but usually fewer than a bank loan. The lender charges mostly disappear. Title insurance, escrow, recording, and document preparation typically remain. Who pays each one is negotiable. Put the split in the purchase contract so nobody is surprised at the closing table.
Are there closing costs with seller financing in Utah?
Yes, there are closing costs with seller financing in Utah, though the list is shorter than a bank loan. You still pay to transfer title safely and record the documents. You just skip most charges a bank adds for making the loan.
The risk is assuming "no bank" means "no costs." It doesn't. A buyer who budgets only for the down payment can come up short at closing. That can delay the sale or sour the relationship with the seller.
Take a typical example. You buy a $400,000 home with $40,000 down. The seller carries $360,000. You still need a title search, a closing, recorded documents, and a properly drafted note and trust deed. Those costs are real, even without a bank in the picture.
The good news is that the bank's loan charges are often the biggest line items. Removing them usually leaves a smaller, more predictable bill. If you are still deciding whether seller financing fits you, start with our guide on how to buy a Utah home with seller financing when the bank says no.
Which bank-loan costs disappear with seller financing?
Most charges a bank adds for making the loan disappear with seller financing. That usually includes origination fees, discount points, underwriting and processing fees, credit report fees, and lender-required mortgage insurance.
Here is what those numbers can look like. On a $360,000 bank loan, a 1% origination fee is $3,600. One discount point is another $3,600. Underwriting and processing fees add more on top. None of those typically appear on a seller-financed closing.
Some costs disappear only because nobody demands them. A bank usually orders the appraisal and insists on it. With seller financing, nobody is forcing an appraisal. That saves money, but it also removes a check on the price.
Risk first: skipping the appraisal can mean overpaying. On a $400,000 price, a home worth $370,000 costs you $30,000 of equity on day one. Consider ordering your own appraisal or a broker opinion anyway. The same goes for the home inspection. A bank doesn't require one, and neither does a seller, but you want it.
A bank also usually sets up an escrow account for taxes and insurance. Seller financing often has no such account. Your monthly payment may be lower, but you pay the property tax bill and insurance premium directly. Budget for both.
What does recording the trust deed cost in Utah?
Recording the trust deed costs $40 per instrument at a Utah county recorder, plus $2 for each legal description beyond 10 Utah Code § 17-71-407. Most residential deals have one legal description, so each document is usually $40.
A typical seller-financed closing records at least two documents. The deed transfers title to you. The trust deed secures the seller's loan against the property. At $40 each, that is $80 in recording fees.
Here is the Utah County figure:
The Utah County Recorder charges $40 per document and $5 per certification (recorder fee schedule, checked 2026-09-25). The office is at 100 East Center St., Suite 1300, Provo, UT 84606, 801-851-8179.The Utah County Recorder is at 100 East Center St., Suite 1300, in Provo. It charges $40 per document and $5 per certification Utah County Recorder, Recording Fees. A certified copy is useful if you ever need to prove what was recorded.
Recording is cheap, but skipping it is expensive. An unrecorded deed leaves your ownership off the public record. An unrecorded trust deed leaves the seller's lien off it too. Either gap invites trouble with later liens or buyers. In practice, the title company records both documents at closing.
Who pays for title insurance, escrow, and document preparation?
Who pays for title insurance, escrow, and document preparation is negotiable, and the purchase contract decides it. The splits below are what typically happens in Utah, not what any law requires.
Start with the risk. If the contract is silent, you and the seller can end up arguing at the closing table. Settle every line item before you sign the purchase contract.
| Cost | Bank loan | Seller financing | Who typically pays |
|---|---|---|---|
| Origination fee and points | Yes | No | Not applicable |
| Underwriting and processing | Yes | No | Not applicable |
| Appraisal | Usually required by the lender | Optional | Buyer, if ordered |
| Owner's title insurance | Yes | Yes | Often the seller, by negotiation |
| Lender's title insurance | Yes | Optional | Often the buyer, by negotiation |
| Escrow and closing fee | Yes | Yes | Often split, by negotiation |
| Recording the deed and trust deed | Yes | Yes | Often the buyer, by negotiation |
| Note and trust deed preparation | Lender prepares | Attorney typically prepares | Negotiated; often buyer or split |
| Third-party loan servicing setup | Not applicable | Optional | Negotiated |
| Property tax and HOA prorations | Yes | Yes | Prorated to closing day |
Title insurance. There are two policies. An owner's policy protects your ownership. A lender's policy protects the seller's lien. The state Seller Financing Addendum includes an option for a lender's title insurance policy Seller Financing Addendum § 8. If the seller wants that policy, expect a conversation about who pays for it.
Escrow and closing. A title company typically holds the down payment, prepares the settlement statement, notarizes signatures, and records the documents. Its closing fee is often split between buyer and seller. For a closer look at the division of labor, read our article on attorney vs title company for Utah seller financing.
Document preparation. The note and trust deed set your interest rate, payment, balloon date, and default terms. A bank drafts its own. In a private sale, an attorney typically drafts them. Our flat-fee document package is $750. Whether that cost is yours, the seller's, or shared is up to the two of you.
Servicing. Some buyers and sellers hire a third-party servicer to collect payments and keep records. That typically carries a setup fee and a monthly fee. A servicer gives you an independent payment history, which helps if you refinance later.
Is a Loan Estimate or Closing Disclosure required from a private seller?
No, a private seller below the more-than-five-per-year creditor threshold is not required to give you a Loan Estimate or Closing Disclosure 12 CFR § 1026.2; CFPB TILA-RESPA fact sheet. Most individual sellers financing one home fall below that threshold.
That is a real gap for you as the buyer. A bank's Loan Estimate arrives early and lists every cost. A Closing Disclosure arrives before closing so you can compare. With most private sellers, neither document shows up.
You can close that gap yourself. Ask for these items in writing before you commit:
- A cost worksheet. Ask the title company for an estimated settlement statement early.
- An amortization schedule. It shows how much of each payment goes to interest and principal.
- The full loan terms. Rate, payment, term, balloon date, late fee, and prepayment terms.
- A cost-split addendum. Every closing cost, with a name next to it.
On a $360,000 note at 7% over 30 years, the payment is about $2,395 a month. Total interest over 30 years runs about $502,000. Seeing that number before you sign is the whole point of a disclosure. Our seller carry calculator runs the math for your own terms.
How should you budget cash to close on a seller-financed purchase?
Budget for your down payment, your share of title, escrow, recording, and document costs, plus prorated taxes and insurance. Then add a cushion for inspection, appraisal, and anything the contract shifts to you.
Here is a simple way to build the number. Start with the example of $400,000 and $40,000 down. Add the recording fees, $80 for two documents. Add your share of the title company's fees and the title insurance quote. Add your share of document preparation. Add the inspection and, if you order one, the appraisal.
Then plan for the first months. Without a bank escrow account, the first property tax bill and insurance premium land on you directly. Set that money aside before closing, not after.
Finally, ask the title company for an estimated settlement statement a week or more before closing. Compare it to your budget line by line. Questions about a line item are easier to answer before closing day than at the table. If a term in the documents is new to you, our glossary explains the common ones, and the state forms are on our forms page. For more on the buyer side of these deals, see our buyers hub.
What Greg would tell you
Seller financing saves you the bank's fees, but it also removes the bank's paperwork that would have shown you every cost. Get the cost split in writing before you sign the purchase contract, and read the settlement statement before you sign anything at closing. If a number surprises you, stop and ask.
Frequently asked questions
Are closing costs lower with seller financing?
Usually yes, because the bank's loan charges drop out of the deal. You still pay for title work, escrow, recording, and document preparation. On a $360,000 carry, skipping a 1% origination fee alone saves $3,600.
Does the buyer or the seller pay to record the trust deed?
Either party can pay; the purchase contract decides who covers recording. In practice the buyer often pays to record the financing documents. In Utah, each recorded instrument costs $40 at the county recorder.
Do I need title insurance if the seller is financing my purchase?
You should strongly consider an owner's policy, because it protects your ownership. The seller-lender may also want a lender's policy. The state Seller Financing Addendum includes an option for one.
Will I get a Closing Disclosure from a private seller?
Probably not, because small private sellers are usually not required to provide one. The title company still prepares a settlement statement. Read that statement line by line before you sign.
Can I roll closing costs into the seller-financed loan?
Sometimes, if the seller agrees to carry a larger balance. Adding $4,000 of costs to a $360,000 note raises the balance to $364,000. Put any such agreement in writing.
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.
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How to Buy a Utah Home with Seller Financing When the Bank Says No
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How to Negotiate Seller Financing Terms as a Buyer
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Who Holds Title in a Utah Seller-Financed Sale?
Who owns the home in a Utah seller-financed sale: how title works under a note and trust deed versus a contract for deed, and why the buyer should record.