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Seller Financing for Utah Real Estate Agents: The Addendum, the UPL Line, and Your Commission

A Utah agent's guide to seller financing: the state Seller Financing Addendum section by section, the due-on-sale disclosure, where legal drafting starts, and how commission gets paid.

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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.

Seller financing in Utah runs through the state Seller Financing Addendum, which you fill in, and a note and trust deed, which an attorney typically drafts. Your job is the terms, the disclosures, and the deadlines. The attorney's job is the documents. The title company closes and records. This guide shows where each line sits.

If the seller still has a mortgage, the due-on-sale clause is the first thing to put in writing. Utah licensees carry a specific written disclosure duty for it, covered below.

How do I fill out the Utah Seller Financing Addendum to the REPC?

You fill in the financing terms the parties agreed on, section by section, and attach the addendum to the REPC. The Seller Financing Addendum is the state-approved form for seller-financed terms, effective October 20, 2021 (Seller Financing Addendum (state-approved form, Oct. 20, 2021)). It is on the current approved-forms list (Utah Admin. Code R162-2f-401f).

The addendum works alongside the Real Estate Purchase Contract, the state-approved form dated September 1, 2017 (Real Estate Purchase Contract (state-approved form, Sept. 1, 2017)). The REPC carries the deal. The addendum carries the loan terms.

Here is what the key sections do, in plain English.

SectionWhat it coversWhat to watch
Section 1Two choices: Note and Deed of Trust, or Note and All-Inclusive Deed of TrustThis choice drives everything else. If the seller has a mortgage, it matters most.
Section 2.1Principal may be prepaid without penalty; seller provides an amortization schedule, total interest, and APRMake sure someone actually produces the schedule before closing.
Section 4If an all-inclusive deed of trust is used, seller must provide evidence within 10 days that underlying payments are currentCalendar the 10 days like any other deadline.
Section 5Seller discloses the underlying loan documents; if a due-on-sale clause is triggered, the buyer's payoff is credited to the note's principalGet the documents in hand, not just a verbal "the loan is fine."
Section 8Option for a lender's title insurance policyAsk the seller early whether they want one.
Section 9Buyer and seller exchange Social Security or taxpayer ID numbers for IRS interest reportingCollect these through the title company, not by text or email.

Section 1: the instrument choice

Section 1 offers two choices: Note and Deed of Trust, or Note and All-Inclusive Deed of Trust (Seller Financing Addendum § 1). The first is a standard seller carry. The second wraps an existing loan.

If the seller owns the property free and clear, the choice is usually the plain note and deed of trust. If the seller still has a mortgage, the all-inclusive option keeps that loan in place, with all the due-on-sale questions that come with it. The which-instrument tool walks through the options.

Section 2.1: prepayment and the amortization schedule

Under the addendum, principal may be prepaid without penalty. The seller provides an amortization schedule, the total interest, and the APR (Seller Financing Addendum § 2.1). Buyers often ask about the APR first. The seller-carry calculator produces a payment, interest total, balloon, and schedule from the terms you enter.

Sections 4 and 5: the underlying loan

If an all-inclusive deed of trust is used, the seller must provide evidence within 10 days that underlying payments are current (Seller Financing Addendum § 4). Treat that 10-day window like any other REPC deadline.

The seller also discloses the underlying loan documents. If a due-on-sale clause is triggered, the buyer's payoff is credited to the note's principal (Seller Financing Addendum § 5). That credit protects the buyer's math. It does not stop a lender from calling the loan.

Section 8: the lender's title policy

The addendum includes an option for a lender's title insurance policy (Seller Financing Addendum § 8). That policy protects the seller as the lender. Ask the seller early. The Utah title company needs to know before it prepares the commitment.

Section 9: taxpayer ID numbers

Buyer and seller exchange Social Security or taxpayer ID numbers so interest can be reported to the IRS (Seller Financing Addendum § 9). Route that exchange through the title company. Sensitive numbers don't belong in a group text.

For a field-by-field version, see how to fill out the Utah Seller Financing Addendum.

What does the Seller Financing Addendum not do?

The addendum sets terms; it does not create the note, the trust deed, or a compliance review. The form itself warns that real estate brokers are not qualified or licensed to ensure the financing complies with the law (Seller Financing Addendum). That warning protects you. It tells everyone at the table where your role ends.

In practice, here is what the addendum leaves to someone else:

  • The promissory note. The addendum lists the rate, term, and payment. It is not the note the buyer signs.
  • The trust deed. The recordable document that secures the note is a separate instrument.
  • Default terms. Late fees, grace periods, and what happens after a missed payment belong in the note.
  • Servicing. Who collects payments and keeps the ledger is usually a separate agreement.
  • Tax treatment. The seller's installment-sale reporting is a CPA question.
  • Licensing. Whether the seller fits a federal or Utah exemption for seller financers is a legal question.

None of that is a knock on the form. It was built to fit inside a purchase contract. The documents that carry its terms after closing are a different job.

"Legally allowed to" and "actually goes well" aren't always the same thing. A clean addendum with no note behind it is how a deal closes fine and goes sideways in year two.

Can I change the approved forms or add my own seller-financing terms?

No. Utah licensees may not alter the boilerplate of state-approved forms and must use approved addenda (Utah Admin. Code R162-2f-401b). Custom terms go into attorney-drafted documents instead.

That rule shapes how you handle a deal with unusual terms. A seller may want a balloon at year seven, a rate step-up, or a special late-fee clause. The buyer may want a right to extend the balloon. You write the agreed business terms into the approved addendum's blanks. The attorney drafts the note and trust deed that carry them.

A common approach, and practice rather than a rule:

  1. Fill in the Seller Financing Addendum with the agreed terms.
  2. Where a term doesn't fit the form, note that the parties will sign attorney-prepared loan documents.
  3. Make the attorney review a condition with a date, so it doesn't drift.
  4. Send the attorney the signed REPC and addendum as soon as they're accepted.

Confirm the wording with your principal broker. Brokerages often have a preferred way to handle this.

What due-on-sale disclosure does a Utah agent have to give?

A Utah licensee must disclose the possible due-on-sale clause in writing, before a binding agreement. The rule requires the licensee to disclose in writing "(i) the existence or possible existence of a due-on-sale clause in an underlying encumbrance on real property; and (ii) the potential consequences of selling or purchasing a property without obtaining the authorization of the holder of an underlying encumbrance" (Utah Admin. Code R162-2f-401a(6)(d)).

Three points about that duty.

It is written. A conversation at the kitchen table does not satisfy it. Put it on paper and get it signed.

It comes before a binding agreement. Once the REPC is signed, the timing has passed. Build it into your listing or buyer-consultation packet for any seller with a mortgage.

It is the licensee's duty. The rule applies to licensees, not to unrepresented private parties. If you're on the deal, it's yours.

The federal side is short. A wrap, a subject-to transfer, and a contract for deed are not on the Garn-St Germain exemption list (12 U.S.C. § 1701j-3(d)). The lender may have the right to call the loan.

How do the parties manage the risk?

Disclosure is the start. Sellers and buyers on a deal with an underlying loan usually plan for these, with an attorney:

  • Third-party servicing. A servicer collects the buyer's payment and pays the underlying lender first. See servicing and taxing a Utah seller-financed note.
  • Reserves. Several months of underlying payments set aside.
  • Insurance. A hazard policy that names the right parties and stays in force.
  • An exit plan. A realistic path for the buyer to refinance and pay off both loans.
  • Written acknowledgment. Both parties signing that they understand the due-on-sale risk.

For the full risk picture you can share with clients, see what happens if the lender calls the due-on-sale clause.

Can a Utah real estate agent draft the promissory note and trust deed, or is that unauthorized practice of law?

Typically, drafting a custom promissory note and trust deed for a client is legal drafting, and that belongs with an attorney. Agents fill in state-approved forms. This is practice guidance, not a cited rule. Confirm the line with your brokerage.

Here is how the work usually divides.

TaskAgent typicallyAttorney typically
Fill in the REPC and Seller Financing AddendumYesReviews on request
Explain what each addendum blank meansYesYes
Give the written due-on-sale disclosureYes, as the licenseeExplains consequences in depth
Draft the promissory noteNoYes
Draft the trust deed or all-inclusive trust deedNoYes
Advise on licensing exemptions for the sellerNoYes
Write closing instructions for the title companyNoYes
Negotiate business terms for the clientYesOnly if hired to

The gray area is usually the "just fill this in" request. A seller hands you a note template from the internet and asks you to type in the terms. It feels like filling in a form. It is closer to drafting a loan document for them. The safest path is to send the template to the attorney.

The other gray area is advice about consequences. "What happens if the buyer stops paying?" is a fair client question. The general answer is on this site. The answer for their deal is a legal one.

A few scripts that keep you on the right side of the line, and keep you helpful:

  • When a seller asks you to draft the note: "I'll fill in the state addendum with your terms. The note and trust deed come from an attorney, and I'll send them the file today."
  • When a buyer asks whether a wrap is legal: "The lender's due-on-sale clause is the main risk to understand. Here's the written disclosure, and here's who can walk you through the rest."
  • When either side asks about taxes: "That's a CPA question. I'll make sure the taxpayer ID exchange happens through the title company."
  • When a seller wants a clause the form doesn't have: "We can't change the form, but the attorney can put that in the note."

Each answer does two things. It keeps the deal moving, and it shows the client you know where your role ends. Naming the right next person is part of being helpful.

Why this protects the agent, too

Bringing in an attorney doesn't take the deal away from you. You still negotiate the terms, manage the deadlines, and hold the client relationship. What moves off your desk is the part the addendum itself says brokers aren't licensed to handle.

For more on this line, see can a Utah agent draft a promissory note.

How does the agent get paid at closing on a seller-financed deal?

Commission is usually paid at closing from the seller's proceeds, through the Utah title company. On a seller-financed deal, the buyer's down payment is most of the cash at the table. When the down payment is thin, there may not be enough to cover commission and costs. This is practice guidance, not a rule.

A worked example with a healthy down payment

Suppose the sale price is $450,000. The buyer puts $45,000 down. The seller carries a $405,000 note. The seller owns the home free and clear.

  1. Cash from the buyer toward the price: $45,000.
  2. Commissions under the listing agreement, for this example: $22,500.
  3. Other seller costs for this example, including title charges and prorated taxes: $3,000.
  4. Seller's cash at closing: $45,000 minus $25,500, or $19,500.

Everyone is paid at closing. The seller walks away with $19,500 and a $405,000 note.

The same deal with a thin down payment

Now the buyer puts $13,500 down, and the seller carries $436,500.

  1. Cash from the buyer toward the price: $13,500.
  2. Commissions: still $22,500.
  3. Other seller costs: still $3,000.
  4. Shortfall: $25,500 minus $13,500, or $12,000.

The seller would need to bring $12,000 to closing. Sellers are often surprised by that. Better they hear it at the listing appointment than at the closing table.

What the parties typically do about it

  • Raise the down payment. It helps the seller's security and the closing math at the same time.
  • Don't count on a higher price. A higher price with the same down payment doesn't close the cash gap, and a percentage commission grows with it.
  • Agree on a different commission arrangement. Some brokerages will agree in writing to receive part of a commission later. That is a brokerage decision. Get it in writing through the brokerage before the REPC is signed.

If the seller has a mortgage that must be paid off at closing, the math changes again. A small down payment usually can't retire an existing loan. That is often why a wrap comes up. It is also why the due-on-sale disclosure matters. See seller financing with a mortgage in Utah.

What goes to the title company, and what should the closing checklist look like?

The title company needs signed loan documents, clear closing instructions, and a list of what to record. The attorney usually supplies the first two. The title company records the trust deed at the county recorder. Recording gives constructive notice of the trust deed to everyone (Utah Code § 57-3-102).

The title-company handoff

Three pieces usually move from the attorney to the title company:

  • A closing-instruction letter. It lists the documents, who signs what, what gets recorded, and how funds flow. It also flags any underlying loan that stays in place.
  • The recordable trust deed. Drafted to meet recording standards, with the correct legal description.
  • The lender's title policy request, if chosen. The addendum's Section 8 option (Seller Financing Addendum § 8). The title company adds it to the commitment.

The promissory note is signed at closing. It is not recorded. The seller keeps the original.

A seller-financing closing checklist

  1. Listing appointment. Ask whether the seller has a mortgage. If yes, give the written due-on-sale disclosure (Utah Admin. Code R162-2f-401a(6)(d)).
  2. Offer. Fill in the REPC and the Seller Financing Addendum. Pick the instrument in Section 1.
  3. Acceptance. Send the signed REPC and addendum to the attorney the same day.
  4. Within 10 days, if an all-inclusive deed of trust. Seller provides evidence that underlying payments are current (Seller Financing Addendum § 4).
  5. Underlying loan documents. Seller delivers them to the buyer (Seller Financing Addendum § 5).
  6. Title order. Open title with a Utah title company. Note whether a lender's policy is wanted.
  7. Amortization schedule. Seller provides it, with total interest and APR (Seller Financing Addendum § 2.1).
  8. Attorney drafts. Note, trust deed, and closing-instruction letter go out for review.
  9. Servicer chosen. The parties pick a servicer and sign its setup forms.
  10. Insurance. Buyer binds a hazard policy that names the seller as note holder.
  11. Closing numbers. Review the settlement statement for the commission math and any seller shortfall.
  12. Closing. Parties sign. Taxpayer ID numbers are exchanged through the title company (Seller Financing Addendum § 9).
  13. Recording. The title company records the deed and the trust deed.
  14. After closing. The seller keeps the original note. The servicer gets copies of everything.

What does the attorney do on a seller-financed deal an agent brings in?

The attorney drafts the loan documents, reviews the addendum, and gives the title company its instructions. The agent keeps the client and the transaction. Greg's flat fee is $750.

That fee covers:

  • A promissory note drafted for the agreed terms.
  • A trust deed or all-inclusive trust deed, ready to record.
  • A review of the Seller Financing Addendum and REPC terms.
  • A closing-instruction letter to the title company.
  • A servicer setup letter.
  • One round of revisions.
  • A 30-minute planning call.

Work that falls outside it is billed hourly. That includes negotiating with the other side's attorney, requests for the underlying lender's consent, multi-property or entity-structured deals, and litigation or default work.

For agents, the practical part is timing. Send the signed REPC and addendum at acceptance, not the week of closing. That keeps the 10-day and due-diligence deadlines comfortable.

There's a one-page summary built for clients at the agent one-pager. More on working together is on the agents page. State forms are collected on the forms page.

What Greg would tell you

Send me the addendum when it's signed, not when it's due. Give the written due-on-sale disclosure at the listing appointment, and run the closing math before the REPC goes out. You keep your client; I'll draft the documents and the title company's instructions.

Frequently asked questions

How do I fill out the Utah Seller Financing Addendum to the REPC?

Fill in the terms the parties agreed on, section by section, and leave legal drafting to an attorney. Pick the instrument in Section 1, then the price, down payment, rate, term, and any balloon. Complete the underlying-loan disclosures if the seller has a mortgage. Confirm your brokerage's practice before you submit it.

Can a Utah real estate agent draft the promissory note and trust deed?

Typically no; drafting a custom note and trust deed for a client is legal drafting. Agents fill in state-approved forms. An attorney drafts the documents that carry the addendum's terms into a signed note and a recordable trust deed. Confirm the line with your brokerage.

How does the agent get paid at closing on a seller-financed deal?

Commission is usually paid at closing from the seller's proceeds at the title company. On a seller-financed deal, those proceeds come mostly from the buyer's down payment. If the down payment is small, the seller may need to bring cash to closing to cover commission and costs.

What due-on-sale disclosure does a Utah agent have to give?

A written disclosure of the possible due-on-sale clause and its potential consequences, before a binding agreement. The duty sits in the Division of Real Estate's rules for licensees. It applies whenever an underlying loan may stay in place after the sale.

What does the attorney do on a seller-financed deal an agent brings in?

The attorney drafts the note and trust deed, reviews the addendum, and writes the title company's closing instructions. Greg's flat fee also covers a servicer setup letter, one round of revisions, and a planning call. The agent keeps the relationship and the transaction.

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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