Carrying a Large Note on a Park City Home? What Summit County Sellers Should Check
Seller financing on higher-priced Park City and Summit County homes and second homes: the Reg Z one-property and three-property exclusions, balloons, and servicing a large note.
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 on a Park City or Summit County home follows the same Utah rules as anywhere else. What changes is the size of the note. A larger note makes three questions more important: which federal loan-originator exclusion you fit, whether a balloon is allowed, and who services the loan.
Why a larger note raises the stakes
The rules don't change with the price. The consequences do. A missed step on a $250,000 note is a problem. The same missed step on a $1,500,000 note is a much bigger one.
Take a $1,850,000 sale with $370,000 down. You would carry $1,480,000. At 7% amortized over 30 years, the payment is about $9,846 a month. A five-year balloon would leave most of that balance due in one payment. The seller-carry calculator shows the balance at any month you choose.
If that buyer stops paying, your exposure is the unpaid balance, plus foreclosure costs, plus the time the property sits. Structure matters more when the number is this large.
One property or three: which Reg Z exclusion fits?
A Utah seller who carries a note usually wants to stay outside the federal definition of a loan originator. Reg Z offers two seller-financer exclusions. They look similar and work very differently.
The one-property exclusion covers a natural person, estate, or trust financing one owned property in 12 months. The seller can't be the builder. The note can't negatively amortize, a balloon is permitted, and the rate must be fixed or adjustable only after five years with reasonable caps (12 CFR § 1026.36(a)(5)).
The three-property exclusion covers any person, including an entity, financing three or fewer owned properties in 12 months. The seller can't be the builder. The note must fully amortize, with no balloon. The seller must determine in good faith that the buyer can reasonably repay, and the rate must be fixed or adjustable only after five years with caps (12 CFR § 1026.36(a)(4)).
| Question | One-property exclusion | Three-property exclusion |
|---|---|---|
| Who can use it | Natural person, estate, or trust | Any person, including an LLC |
| How many properties in 12 months | One | Three or fewer |
| Balloon allowed | Yes | No, must fully amortize |
| Ability-to-repay determination | Not required | Good-faith determination required |
| Rate | Fixed, or adjustable after five years with caps | Fixed, or adjustable after five years with caps |
These are exclusions from the loan-originator definition, not from the Truth in Lending Act as a whole (12 CFR § 1026.36). The licensing checker walks through both in six questions.
Entities, trusts, and second-home owners
Some second homes are held in an LLC or a trust. That choice matters here. A trust can use the one-property exclusion if it meets the other conditions. An LLC cannot, so it usually looks to the three-property exclusion instead.
That means no balloon for the LLC seller. It also means documenting the buyer's ability to repay. Ask for income records, bank statements, and a credit report, and keep them with the note. If the owner wants a balloon, talk with your attorney before closing about who should be the seller of record.
Balloons and the ability-to-repay rule
A separate federal rule applies to TILA creditors. A person becomes a creditor only after more than five dwelling-secured consumer credit extensions in the current or preceding calendar year (12 CFR § 1026.2). A seller below that threshold falls outside the Reg Z ability-to-repay rule (12 CFR § 1026.43).
A one-time seller usually stays below that line. Investors who carry several notes a year should count carefully. A balloon that works for a one-time seller may not work for someone on their sixth note this year.
Servicing a large note
On a large note, servicing is where small mistakes become expensive. A payment credited to the wrong month, a lapsed insurance policy, or an unpaid association assessment can all cost you.
Utah exempts a casual lender making fewer than five mortgage loans a year from notifying the Department of Financial Institutions. It also exempts a mortgage loan of two years or less (Utah Code § 70D-2-103). A one-time seller usually fits the casual-lender exemption. That does not mean you should collect the payments yourself.
A third-party servicer does the work a bank's servicing department would do:
- Collects and records every payment, with a year-end interest statement for both sides.
- Escrows property taxes and insurance, so a lapse doesn't go unnoticed.
- Tracks association dues, which matter on a condo or a home in a managed community.
- Sends late notices on a fixed schedule, so enforcement doesn't depend on a phone call.
- Keeps a clean payment history, which you'll want if you ever enforce or sell the note.
Second homes: insurance, associations, and vacancy
A second home sits empty part of the year. The buyer's insurance should fit that, and name you as lender. If the home is in a community with an association, get the declaration and rules, and assign dues and assessments to the buyer in writing.
If the buyer plans to rent the home short term, check the local rules before you agree to terms. Those rules are set locally and can change. The trust deed should keep the buyer responsible for following them, and for any permit the rental needs.
A second-home buyer often lives somewhere else. Ask where notices should go, and put a mailing address and email in the note. A default notice that never reaches the buyer helps no one.
Which guides matter most here
Start with the Dodd-Frank and SAFE Act guide for Utah sellers, which covers both exclusions in depth. The servicing and taxes guide explains setup and reporting. If you want a balloon, read the balloon payment article. Other counties are on the locations page.
Recording in Summit County
Greg's office is in Provo, in Utah County, and he works with clients statewide. A Summit County sale can be documented and recorded from anywhere in Utah. Electronic recording has been accepted statewide since January 1, 2022 (Utah Code Title 17, Chapter 71).
Utah's statewide recording-fee section sets $40 per instrument (Utah Code § 17-71-407). Fees were amended again in 2026, so verify the current amount with the county recorder before closing.Confirm the current fee and submission rules with the Summit County Recorder before closing.
What Greg would tell you
On a note this size, I want to know who the seller of record is before we talk about a balloon. An LLC and a trust fit different federal exclusions, and that changes the terms we can write. Then I'd set up a servicer before the first payment, not after the first problem.
Frequently asked questions
Can I put a balloon payment in a seller-financed note on my Park City home?
Yes, if you qualify for the Reg Z one-property exclusion. That exclusion is for a natural person, estate, or trust financing one property in 12 months, and it permits a balloon. The three-property exclusion does not.
My second home is owned by an LLC. Does that change anything?
Yes. An LLC cannot use the one-property exclusion, which is limited to natural persons, estates, and trusts. It may fit the three-property exclusion, which requires full amortization and a good-faith ability-to-repay determination.
Do I have to check the buyer's ability to repay?
It depends on which exclusion you rely on. The three-property exclusion requires a good-faith determination that the buyer can repay. The one-property exclusion does not.
Should I service a large note myself?
You can, but a third-party servicer is worth considering on a large note. It keeps records, escrows taxes and insurance, and gives you a clean history if you ever need to enforce or sell the note.
Do I need a Summit County attorney?
No. Any Utah-licensed attorney can prepare the documents. Greg works from Provo with clients statewide, and Summit County documents can be recorded electronically.
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.
Related reading · Utah locations
- 01
A Wholesaler Pitched You a Sub-To. Read This First.
A calm, seller-side checklist for Utah homeowners offered a subject-to deal: the due-on-sale clause, your credit, and what to ask before you sign. - 02
Can I Seller-Finance My Utah Home If I Still Have a Mortgage?
Yes, through a wrap or all-inclusive trust deed, but the due-on-sale clause stays with you. The risks, the math, and the safeguards, from a Utah attorney with a flat fee. - 03
Contract for Deed in Utah: What the Buyer Gives Up and What the Seller Gets
A Utah attorney's plain-English guide to contracts for deed: forfeiture versus foreclosure, the court cases that limit forfeiture, and how buyers protect themselves.