Utah Real Estate Broker Exam — All Questions

A Utah licensee markets an undivided fractionalized long-term estate. Rule R162-2f-307 requires the licensee to give each prospective purchaser:

• a.A signed opinion of counsel that the offering is exempt
• b.A copy of the sponsor's most recent federal tax return
• c.An appraisal of the property by a Utah certified appraiser
• d.Written disclosures obtained from the sponsor, including title✓

Rule R162-2f-307 requires a licensee who markets an undivided fractionalized long-term estate to "obtain from the sponsor or seller and provide to each prospective purchaser the required information," in written or documented form and before purchase. The listed items include the sponsor's professional qualifications and experience, material information about a current lease or sublease, the tenant in common agreement defining the interest, a description of improvements, defects known to the sponsor that may materially affect value, known environmental issues, and "a preliminary title report on the real property." An appraisal, a legal opinion, and the sponsor's tax return are not among them. Utah Code Section 57-29-102(8) defines the interest as a tenancy in common or fee estate held by two or more persons, and expressly excludes a joint tenancy.

Under Utah's Timeshare and Camp Resort Act, a purchaser may cancel the agreement by delivering or postmarking written notice no later than midnight of the:

• a.Third calendar day after the day the agreement is signed
• b.Fifth business day after the day the agreement is signed✓
• c.Seventh business day after the day the agreement is signed
• d.Tenth calendar day after the day the agreement is signed

Utah Code Section 57-19-12(1)(a)(ii) requires the written notice of cancellation to be "delivered or postmarked not later than midnight of the fifth business day after the day on which the agreement is signed," delivered by hand or by certified mail, return receipt requested, or a delivery service that provides proof of delivery. Subsection (1)(b) excludes the signing day from the count, and Section 57-19-2(5) defines a business day as a day other than a Saturday, Sunday, or state or federal holiday. Subsection (1)(c) then requires the developer to refund any money or other consideration within 30 days of receiving a timely notice, and Subsection (2) requires the cancellation language in at least 10-point bold upper-case type immediately before the purchaser's signature line.

A Utah farm is sold and the seller's water comes from shares in a mutual water company. Under Utah Code Section 73-1-11 those shares:

• a.Pass with the land whenever the land is irrigated ground
• b.Pass with the land once the buyer records the warranty deed
• c.Are not appurtenant to the land and transfer separately✓
• d.Pass with the land unless the deed reserves them expressly

Section 73-1-11(4)(a) provides that "the right to the use of water evidenced by shares of stock in a corporation is not a water right appurtenant to land," and Subsection (4)(b) directs that such shares transfer only as provided in Section 73-1-10(2), which applies the securities rules of Title 70A, Chapter 8. So the shares do not ride along with the deed and recording it changes nothing. The contrast is Subsection (1)(a): a water right that is appurtenant to land does pass to the grantee unless the grantor reserves it, conveys part of it in the land conveyance document, or conveys it separately beforehand. Section 73-1-10(1)(a) requires an appurtenant water right to be transferred by deed in substantially the same manner as real estate, recorded in the county of the point of diversion and the county of use.

A Utah subcontractor wants to preserve the right to claim a construction lien. Under Utah Code Section 38-1a-501 a preliminary notice must be filed with the State Construction Registry no later than:

• a.90 days after the person commences providing construction work
• b.20 days after the person commences providing construction work✓
• c.180 days after the person commences providing construction work
• d.60 days after the person commences providing construction work

Section 38-1a-501(1)(a) requires a person who wants to claim a construction lien to file a preliminary notice with the registry "no later than 20 days after the day on which the person commences providing construction work on the real property," and Subsection (1)(e) provides that a person who fails to file may not claim a lien. A late filing is possible under Subsection (1)(c) but reaches only work provided from five days after it is filed. The 20 days also fixes priority: Section 38-1a-503(1) relates a construction lien back to the time of the first preliminary notice filing. The longer periods belong elsewhere: Section 38-1a-502(1)(a)(i) allows 180 days after final completion to record the notice of construction lien, and Section 38-1a-701(2)(a) allows 180 days after that filing to bring the action to enforce it.

Utah's Residence Lien Recovery Fund under Utah Code Title 38, Chapter 11 is designed to protect:

• a.A broker who is not paid an earned sales commission
• b.A lender whose construction loan has gone into default
• c.An owner-occupant who paid in full but faces a lien✓
• d.A tenant who is charged for repairs after moving out

Section 38-11-107(1)(a) bars a person entitled to lien an owner-occupied residence, who provided qualified services under an agreement other than directly with the owner, from maintaining that lien or recovering a judgment against the owner where the owner meets the conditions in Section 38-11-204(4)(a) and (b): a written contract with a licensed or exempt original contractor, and payment of that contractor in full. The unpaid subcontractor's remedy shifts to the fund created by Section 38-11-201. Note the administering agency, because Utah runs two funds through two departments: Section 38-11-103 puts this one under the Division of Professional Licensing, while the Division of Real Estate administers the Real Estate Education, Research, and Recovery Fund under Title 61. A broker's unpaid commission, a defaulted construction loan, and a tenant's repair charge raise no residential construction lien at all.

Utah Code Section 59-2-103 allows a residential exemption against the fair market value of residential property. The exemption is:

• a.A 35% reduction, limited to five acres per residential unit
• b.A 55% reduction, limited to three acres per residential unit
• c.A 20% reduction, limited to two acres per residential unit
• d.A 45% reduction, limited to one acre per residential unit✓

Section 59-2-103(3) allows residential property in Utah "a residential exemption equal to a 45% reduction in the value of the property," which leaves 55% of fair market value subject to tax and is the source of the common mix-up between the two figures. Subsection (5) provides that "no more than one acre of land per residential unit may qualify," and Subsection (6)(a) limits the exemption to one primary residence per household, with Subsection (6)(b) allowing it for each residential property that is a tenant's primary residence. Subsection (2) sets the valuation date: all tangible taxable property is assessed at fair market value "as valued on January 1." Section 59-2-1331(1)(a) then makes property taxes due on November 30 of each year following the date of levy.

A Utah trust deed goes into default. Under Utah Code Section 57-1-24 the trustee may not exercise the power of sale until a notice of default is recorded and:

• a.Not less than 30 days have elapsed since the recording
• b.Not less than three months have elapsed since the recording✓
• c.Not less than 12 months have elapsed since the recording
• d.The beneficiary obtains a judgment against the trustor

Section 57-1-24 lets the trustee exercise the power of sale only after recording a notice of default in each county where the trust property sits, and then only when "(2) not less than three months has elapsed from the time the trustee filed for record under Subsection (1); and (3) after the lapse of at least three months the trustee shall give notice of sale as provided in Sections 57-1-25 and 57-1-26." Section 57-1-25(1)(a) sets the publication schedule for that notice of sale, three times, once a week for three consecutive weeks, with the last publication at least 10 but not more than 30 days before the sale, and Subsection (1)(b) requires posting at least 20 days before. No judgment is needed, because the whole point of a trust deed under Section 57-1-23 is a nonjudicial sale.

Utah Code Section 53-29-102, which creates the state's offender registry, states that the chapter:

• a.Imposes no duty on any individual to request registry information✓
• b.Requires a buyer's agent to give the registry link at first contact
• c.Bars any person from using registry data in a real estate deal
• d.Requires a seller's agent to search the registry before listing

Section 53-29-102(2) provides that "this chapter does not create or impose any duty on any individual to request or obtain information regarding any offender from the department." Subsection (1) requires the Department of Public Safety to operate the registry and to make the information listed in Section 53-29-404(3) available to the public, and Section 53-29-404(1) requires a public internet site indexed by surname and by postal code. Because the information is public and searchable, the statute leaves it to the buyer to look, and imposes no search or notification duty on a licensee. Note the citation has moved: this is the Sex, Kidnap, and Child Abuse Offender Registry in Title 53, Chapter 29, not the Title 77 chapter older Utah study material still cites.

A Utah house was the site of a felony some years ago. Under Utah Code Section 57-1-37 the failure of the owner to disclose that the property is stigmatized is:

• a.A material fact, so the owner's agent shares the liability
• b.Not a material fact that must be disclosed in the transaction✓
• c.A material fact only where the buyer asks a direct question
• d.Not a material fact, but the agent remains liable for silence

Section 57-1-37(1) provides that "the failure of an owner of real property to disclose that the property being offered for sale is stigmatized is not a material fact that must be disclosed in the transaction of real property," and Subsection (2) adds that "neither an owner nor the owner's agent is liable for failing to disclose that the property is stigmatized." The protection reaches the agent as well as the owner, which is what defeats the choice that leaves the agent liable for silence. Section 57-1-1(8) defines stigmatized as the site or suspected site of a homicide, other felony, or suicide; the dwelling place of an individual infected or suspected of being infected with HIV or a comparable disease that cannot be transferred by occupancy; or property found contaminated and since decontaminated under Title 19, Chapter 6, Part 9. A known physical defect is a different matter and stays disclosable under Rule R162-2f-401a(1)(c).