Lehi Seller Financing: New Construction, Old Loans, and the Builder Rule
Lehi seller financing for builders and for owners with low-rate loans weighing a wrap: the builder rule, the due-on-sale clause, and a Utah attorney's flat fee.
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 Lehi raises two different questions. A builder who wants to carry paper runs into federal loan-originator rules. An owner with a low-rate loan who wants to sell on a wrap runs into the due-on-sale clause. Both can be planned for. Neither should be skipped.
Can a Lehi builder offer seller financing on a new home?
Not under the federal seller-financer exclusions. The three-property exclusion does not cover a person who built the home in the ordinary course of business (12 CFR § 1026.36(a)(4)). The one-property exclusion leaves out the builder too (12 CFR § 1026.36(a)(5)).
That doesn't make builder financing impossible. It means the builder can't rely on the shortcuts an ordinary homeowner uses. The analysis usually turns to who negotiates the loan terms and whether a licensed loan originator is involved. Have that conversation before the first contract goes out, not after the third sale closes.
If you bought a new Lehi home and are now reselling it yourself, you are not the builder. The exclusions may be available to you. The licensing checker walks through the six questions.
What if I bought in Lehi at a low rate and want to sell on a wrap?
A wrap lets you keep that loan in place while the buyer pays you on a larger note. You keep paying your lender. The buyer pays you. The difference is your spread.
Here is a worked example. You sell for $615,000. The buyer puts $61,500 down. Your existing loan balance is $340,000 at 2.9%. You carry a wrap note of $553,500 at 6.75%. The buyer's payment covers your lender's payment with money left over each month.
Now the risk. If your lender enforces its due-on-sale clause, you owe the $340,000 balance, not the buyer. The buyer's note to you does not change. You need a way to pay the lender. The wrap spread calculator shows both the monthly spread and what you owe if the loan is accelerated.
What does the Seller Financing Addendum say about a wrap?
It gives you the choice and adds a duty. Section 1 of the state addendum offers a note and deed of trust, or a note and all-inclusive deed of trust (Seller Financing Addendum § 1). If you choose the all-inclusive option, you must give the buyer evidence within 10 days that the underlying payments are current (Seller Financing Addendum § 4).
The addendum is a starting point, not the whole deal. The note, the all-inclusive trust deed, and the servicing instructions still need to be drafted for your terms.
How do you reduce the risk on a Lehi wrap?
You plan for acceleration from day one. Nobody can promise your lender won't call the loan. What you can control is how ready you are if it does.
| Risk | What protects you |
|---|---|
| The lender calls the loan | Cash reserves, plus a buyer refinance deadline in the note |
| The buyer stops paying | A trust deed you can foreclose, and a down payment large enough to cushion you |
| You stop paying the lender | A third-party servicer who pays the lender first, every month |
| The house burns or floods | Insurance naming both the lender and you, verified every year |
| Nobody remembers the deal | A written due-on-sale disclosure both sides sign at closing |
The exit plan matters most. Write a date by which the buyer will refinance or sell. Pair it with a balloon so both sides know when the underlying loan will be paid off.
What should a buyer on a Lehi wrap ask for?
Proof, a servicer, and a recorded interest. The buyer is trusting the seller to keep the original loan current. That trust should be checked, not assumed.
Ask for a current statement on the seller's loan before closing. Confirm the balance, the payment, and that nothing is past due. Ask for the servicer's name and how you'll see each month's payment to the lender. Online access is ideal.
Make sure the deed to you and the all-inclusive trust deed are recorded at closing. Ask the Utah title company about an owner's title policy. Then keep your own file: the note, the recorded documents, the signed due-on-sale disclosure, and every payment confirmation.
Buyers should also know their exit. If the lender calls the loan, the buyer's fastest answer is usually a refinance. A buyer who keeps credit clean and income documented is ready for that day.
What does a fast-changing Lehi neighborhood mean for your exit plan?
It means you shouldn't assume the value will rise. A buyer's refinance depends on an appraisal. If nearby new construction competes on price, your buyer may appraise lower than you both expected.
Build slack into the plan. A longer balloon, a larger down payment, or a step-up rate can give the buyer time. Talk through what happens if the refinance comes in short.
Think about the HOA as well. Many newer Lehi neighborhoods have one. Confirm who pays the dues after closing, whether the association charges a transfer fee, and how the buyer will prove dues are current. An unpaid assessment can become a lien that sits ahead of your plans, so treat it like the tax bill and ask for proof each year.
Where does a Lehi wrap get recorded?
With the Utah County Recorder in Provo. 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 deed to the buyer and your all-inclusive trust deed are both recorded. Each document must be 8½ by 11 inches with one-inch margins and a compliant legal description (Utah Code § 17-71-402). Utah recorders have accepted electronic recording statewide since January 1, 2022 (Utah Code Title 17, Chapter 71). Newer Lehi subdivisions may have recent plats, so confirm the lot and plat reference match the recorded map.
Which guides matter most for a Lehi deal?
If you have a loan, start with the selling with a mortgage guide and the article on what happens if the lender calls the due-on-sale clause. If you're a builder, read the Dodd-Frank and SAFE Act guide first. The which-instrument guide compares a plain trust deed, an all-inclusive trust deed, and a contract for deed.
Greg's flat fee of $750 covers the note and the all-inclusive trust deed. Requests for the underlying lender's consent are billed hourly. See the Utah County overview for other cities.
What Greg would tell you
"A wrap on a low-rate Lehi loan can work, but plan for the lender calling the loan, because nobody can rule it out. Before you sign, know where the payoff money would come from. If you can't answer that, the deal isn't ready yet."
Frequently asked questions
Can a Lehi builder carry a note for a buyer on a new home?
Possibly, but not under the federal seller-financer exclusions, which both leave out the builder. A builder should get a licensing analysis before offering terms to anyone.
Can I sell my Lehi home on a wrap if I have a 3% mortgage?
You can structure it, but the lender can still call the loan under its due-on-sale clause. Plan for that possibility with reserves, a servicer, and an exit before you sign.
What happens to me if the lender calls the loan after a wrap?
You owe the lender the full underlying balance. The buyer's note to you stays in place, so you need a plan to pay the lender, usually a buyer refinance, a sale, or your own reserves.
Does the buyer on a Lehi wrap get title?
Yes, typically by deed at closing. The buyer's note to you is secured by an all-inclusive trust deed, and your original loan stays of record behind the scenes.
Who makes the payment on my original loan?
A third-party servicer should. The buyer pays the servicer, the servicer pays your lender first, and you receive the difference with a record of every payment.
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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