Tool 04 Which Seller-Financing Instrument?
Four ways to carry the financing. Usually one fits best.
Answer four questions about the seller, the buyer, and what matters most. The tool ranks what typically fits and shows the trade-offs of each.
Utah's Seller Financing Addendum offers two choices: a note and trust deed, or a note and all-inclusive trust deed (Seller Financing Addendum § 1). A contract for deed and a lease option sit outside the state forms. The 1987 Uniform Real Estate Contract is no longer on the approved list (Utah Admin. Code R162-2f-401f).
| Note + trust deed | All-inclusive trust deed (wrap) | Contract for deed | Lease option | |
|---|---|---|---|---|
| Who holds title | Buyer, at closing | Buyer, at closing | Seller, until paid | Seller, until the option is exercised |
| Seller's existing loan | Paid off at closing | Stays in place | Often stays in place | Stays in place |
| On the state addendum? | Yes (Addendum § 1) | Yes (Addendum § 1) | No | No |
| If the buyer defaults | Nonjudicial foreclosure with a 3-month reinstatement right (§ 57-1-31) | Same trust-deed process | Forfeiture under the contract; no statute governs it (Title 57, Ch. 1) | Landlord remedies under the lease |
| Due-on-sale exposure | None once the loan is paid off | Yes | Yes, if a loan stays in place | Yes, with a purchase option |
The full comparison guide goes through each one in detail.
01 · typical fit
Promissory note + trust deed
- Free and clear is the cleanest case: the buyer takes title, you hold a recorded first-position trust deed.
- A trust deed gives you a statutory nonjudicial foreclosure with a known timeline — roughly four to five months at minimum.
02 · poor fit
All-inclusive trust deed (wrap)
- There's no underlying loan to wrap.
03 · poor fit
Contract for deed
- Under a contract for deed the seller keeps legal title until the contract is paid.
- No Utah statute governs forfeiture. Courts refuse forfeitures that shock the conscience, so the outcome is less predictable.
04 · poor fit
Lease with an option to buy
- A lease option transfers no ownership until the option is exercised.
This is general information, not legal advice. Confirm with an attorney before you rely on it.
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