03-07 11:13 1st Sub. (Green) S.B. 294
Jordan D. Teuscher proposes the following substitute bill:
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Uniform Finance Amendments
2025 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Michael K. McKell
House Sponsor: Jordan D. Teuscher
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LONG TITLE
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General Description:
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This bill enacts uniform laws related to finance.
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Highlighted Provisions:
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This bill:
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▸ defines terms;
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▸ establishes the scope of the Uniform Special Deposits Act;
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▸ allows parties to an agreement under the Uniform Special Deposits Act to choose a forum
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in Utah for settling a dispute, regardless of whether the dispute occurred in Utah;
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▸ provides that sections of the Uniform Special Deposits Act may vary by agreement or
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amendment;
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▸ establishes requirements for a special deposit;
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▸ requires that a special deposit serve a permissible purpose;
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▸ provides the conditions under which a bank shall pay a beneficiary funds in the balance of
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a special deposit;
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▸ establishes the interest of a depositor or beneficiary in a special deposit;
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▸ allows a court to grant relief to prevent a bank from paying a depositor or beneficiary of a
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special deposit if a payment would result in fraud;
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▸ provides that except in certain circumstances, a bank may not exercise a right of
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recoupment or set off against a special deposit;
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▸ establishes the duties and liabilities of a bank in regards to a special deposit;
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▸ provides that a special deposit terminates five years after the date on which the special
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deposit was first funded;
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▸ describes the application of governing law over special deposits;
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▸ provides that the provisions of this act only apply to an agreement executed after the
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effective date of this bill, unless the parties to a special deposit amend the agreement;
1st Sub. S.B. 294 1st Sub. (Green) S.B. 294 03-07 11:13
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▸ provides that the provisions of this act are severable if a provision of the act is found
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invalid;
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▸ establishes the scope of the Uniform Mortgage Modification Act;
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▸ codifies the types of modifications that may be made to a mortgage loan that will not
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materially prejudice interest holders; and
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▸ contains safe harbor provisions for mortgage modifications that do not materially
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prejudice the holders of a junior interest.
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Money Appropriated in this Bill:
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None
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Other Special Clauses:
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None
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Utah Code Sections Affected:
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ENACTS:
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7-28-101, Utah Code Annotated 1953
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7-28-102, Utah Code Annotated 1953
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7-28-103, Utah Code Annotated 1953
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7-28-104, Utah Code Annotated 1953
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7-28-105, Utah Code Annotated 1953
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7-28-106, Utah Code Annotated 1953
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7-28-107, Utah Code Annotated 1953
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7-28-108, Utah Code Annotated 1953
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7-28-109, Utah Code Annotated 1953
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7-28-110, Utah Code Annotated 1953
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7-28-111, Utah Code Annotated 1953
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7-28-112, Utah Code Annotated 1953
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7-28-113, Utah Code Annotated 1953
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7-28-114, Utah Code Annotated 1953
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7-28-115, Utah Code Annotated 1953
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7-28-116, Utah Code Annotated 1953
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70D-4-101, Utah Code Annotated 1953
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70D-4-201, Utah Code Annotated 1953
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70D-4-301, Utah Code Annotated 1953
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70D-4-401, Utah Code Annotated 1953
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70D-4-501, Utah Code Annotated 1953
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70D-4-601, Utah Code Annotated 1953
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Be it enacted by the Legislature of the state of Utah:
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Section 1. Section 7-28-101 is enacted to read:
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CHAPTER 28. UNIFORM SPECIAL DEPOSITS ACT
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7-28-101 . Definitions.
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As used in this chapter:
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(1) "Account agreement" means an agreement that:
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(a) is in a record between a bank and one or more depositors;
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(b) may have one or more beneficiaries as additional parties; and
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(c) states the intention of the parties to establish a special deposit governed by this
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chapter.
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(2)(a) "Bank" means a person engaged in the business of banking.
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(b) "Bank" includes a savings bank, savings and loan association, credit union, and trust
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company.
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(c) Each branch or separate office of a bank is a separate bank for the purpose of this
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chapter.
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(3) "Beneficiary" means a person that:
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(a) is identified as a beneficiary in an account agreement; or
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(b) if not identified as a beneficiary in an account agreement, may be entitled to payment
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from a special deposit:
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(i) under the account agreement; or
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(ii) on termination of the special deposit.
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(4) "Contingency" means an event or circumstance stated in an account agreement that is
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not certain to occur but shall occur before the bank is obligated to pay a beneficiary.
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(5) "Creditor process" means attachment, garnishment, levy, notice of lien, sequestration, or
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similar process issued by or on behalf of a creditor or other claimant.
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(6) "Depositor" means a person that establishes or funds a special deposit.
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(7) "Good faith" means honesty in fact and observance of reasonable commercial standards
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of fair dealing.
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(8) "Knowledge of a fact" means:
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(a) with respect to a beneficiary, actual knowledge of the fact; or
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(b) with respect to a bank holding a special deposit:
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(i) if the bank:
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(A) has established a reasonable routine for communicating material information
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to an individual to whom the bank has assigned responsibility for the special
99
deposit; and
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(B) maintains reasonable compliance with the routine, actual knowledge of the
101
fact by that individual; or
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(ii) if the bank has not established and maintained reasonable compliance with a
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routine described in Subsection (8)(b)(i) or otherwise exercised due diligence,
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implied knowledge of the fact that would have come to the attention of an
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individual to whom the bank has assigned responsibility for the special deposit.
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(9) "Obligated to pay a beneficiary" means a beneficiary is entitled under the account
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agreement to receive from the bank a payment when:
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(a) a contingency has occurred; and
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(b) the bank has knowledge the contingency has occurred.
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(10)(a) "Permissible purpose" means a governmental, regulatory, commercial,
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charitable, or testamentary objective of the parties stated in an account agreement.
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(b) "Permissible purpose" includes an objective to:
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(i) hold funds:
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(A) in escrow, including for a purchase and sale, lease, buyback, or other
115
transaction;
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(B) as a security deposit of a tenant;
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(C) that may be distributed to a person as remuneration, retirement or other
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benefit, or compensation under a judgment, consent decree, court order, or
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other decision of a tribunal; or
120
(D) for distribution to a defined class of persons after identification of the class
121
members and the class members' interest in the funds;
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(ii) provide assurance with respect to an obligation created by contract, such as
123
earnest money to ensure a transaction closes;
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(iii) settle an obligation that arises in the operation of a payment system, securities
125
settlement system, or other financial market infrastructure;
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(iv) provide assurance with respect to an obligation that arises in the operation of a
127
payment system, securities settlement system, or other financial market
128
infrastructure; or
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(v) hold margin, other cash collateral, or funds that support the orderly functioning of
130
financial market infrastructure or the performance of an obligation with respect to
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the infrastructure.
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(11)(a) "Person" means an individual, estate, business or nonprofit entity, government or
133
governmental subdivision, agency, or instrumentality, or other legal entity.
134
(b) "Person" includes a protected series, however denominated, of an entity if the
135
protected series is established under law that limits, or limits if conditions specified
136
under law are satisfied, the ability of a creditor of the entity or of any other protected
137
series of the entity to satisfy a claim from assets of the protected series.
138
(12) "Record" means information:
139
(a) inscribed on a tangible medium; or
140
(b) stored in an electronic or other medium and retrievable in perceivable form.
141
(13) "Special deposit" means a deposit that satisfies Section 7-28-104.
142
(14)(a) "State" means a state of the United States, the District of Columbia, Puerto Rico,
143
the United States Virgin Islands, or any other territory or possession subject to the
144
jurisdiction of the United States.
145
(b) "State" includes an agency or instrumentality of the state.
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Section 2. Section 7-28-102 is enacted to read:
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7-28-102 . Scope -- Choice of law -- Forum.
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(1) This chapter applies to a special deposit under an account agreement that states the
149
intention of the parties to establish a special deposit governed by this chapter, regardless
150
of whether a party to the account agreement or a transaction related to the special
151
deposit, or the special deposit itself, has a reasonable relation to this state.
152
(2) The parties to an account agreement may choose a forum in this state for settling a
153
dispute arising out of the special deposit, regardless of whether a party to the account
154
agreement or a transaction related to the special deposit, or the special deposit itself, has
155
a reasonable relation to this state.
156
(3) This chapter does not affect:
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(a) a right or obligation relating to a deposit other than a special deposit under this
158
chapter; or
159
(b) the voidability of a deposit or transfer that is fraudulent or voidable under other law.
160
Section 3. Section 7-28-103 is enacted to read:
161
7-28-103 . Variation by agreement or amendment.
162
(1)(a) The effect of Sections 7-28-101 through 7-28-105, Sections 7-28-107 through
163
7-28-110, and Section 7-28-113 may not be varied by agreement, except as provided
164
in those sections.
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(b) Subject to Subsection (2), the effect of Sections 7-28-106, 7-28-111, and 7-28-112
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may be varied by agreement.
167
(2) A provision in an account agreement or other record that substantially excuses liability
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or substantially limits remedies for failure to perform an obligation under this chapter is
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not sufficient to vary the effect of a provision of this chapter.
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(3) If a beneficiary is a party to an account agreement, the bank and the depositor may
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amend the agreement without the consent of the beneficiary only if the agreement
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expressly permits the amendment.
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(4) If a beneficiary is not a party to an account agreement and the bank and the depositor
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know the beneficiary has knowledge of the agreement's terms, the bank and the
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depositor may amend the agreement without the consent of the beneficiary only if the
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amendment does not adversely and materially affect a payment right of the beneficiary.
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(5) If a beneficiary is not a party to an account agreement and the bank and the depositor do
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not know whether the beneficiary has knowledge of the agreement's terms, the bank and
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the depositor may amend the agreement without the consent of the beneficiary only if
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the amendment is made in good faith.
181
Section 4. Section 7-28-104 is enacted to read:
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7-28-104 . Requirements for special deposit.
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A deposit is a special deposit if the deposit is:
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(1) a deposit of funds in a bank under an account agreement;
185
(2) for the benefit of at least two beneficiaries, one or more of which may be a depositor;
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(3) denominated in a medium of exchange that is currently authorized or adopted by a
187
domestic or foreign government;
188
(4) for a permissible purpose stated in the account agreement; and
189
(5) subject to a contingency.
190
Section 5. Section 7-28-105 is enacted to read:
191
7-28-105 . Permissible purpose.
192
(1) A special deposit must serve at least one permissible purpose stated in the account
193
agreement from the time the special deposit is created in the account agreement until
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termination of the special deposit.
195
(2) If, before termination of the special deposit, the bank or a court determines the special
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deposit no longer satisfies Subsection (1), Sections 7-28-107 through 7-28-110 cease to
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apply to any funds deposited in the special deposit after the special deposit ceases to
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satisfy Subsection (1).
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(3) If, before termination of a special deposit, the bank determines the special deposit no
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longer satisfies Subsection (1), the bank may take action the bank believes is necessary
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under the circumstances, including terminating the special deposit.
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Section 6. Section 7-28-106 is enacted to read:
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7-28-106 . Payment to beneficiary by bank.
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(1) Unless the account agreement provides otherwise, the bank is obligated to pay a
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beneficiary if there are sufficient actually and finally collected funds in the balance of
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the special deposit.
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(2) Except as provided in Subsection (3), the obligation to pay the beneficiary is excused if
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the funds available in the special deposit are insufficient to cover such payment.
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(3)(a) Unless the account agreement provides otherwise, if the funds available in the
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special deposit are insufficient to cover an obligation to pay a beneficiary, a
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beneficiary may elect to be paid the funds that are available or, if there is more than
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one beneficiary, a pro rata share of the funds available.
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(b) Payment to the beneficiary making the election under this Subsection (3) discharges
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the bank's obligation to pay a beneficiary and does not constitute an accord and
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satisfaction with respect to another person obligated to the beneficiary.
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(4) Unless the account agreement provides otherwise, the obligation of the bank obligated
217
to pay a beneficiary is immediately due and payable.
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(5) The bank may discharge the bank's obligation under this section by:
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(a) crediting another transaction account of the beneficiary; or
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(b) taking other action that:
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(i) is permitted under the account agreement for the bank to obtain a discharge; or
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(ii) otherwise would constitute a discharge under law.
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(6) If the bank obligated to pay a beneficiary has incurred an obligation to discharge the
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obligation of another person, the obligation of the other person is discharged if action by
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the bank under Subsection (5) would constitute a discharge of the obligation of the other
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person under law that determines whether an obligation is satisfied.
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Section 7. Section 7-28-107 is enacted to read:
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7-28-107 . Property interest of depositor or beneficiary.
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(1) Neither a depositor nor a beneficiary has a property interest in a special deposit.
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(2)(a) Any property interest with respect to a special deposit is only in the right to
231
receive payment if the bank is obligated to pay a beneficiary and not in the special
232
deposit itself.
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(b) Any property interest under this Subsection (2) is determined under other law.
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Section 8. Section 7-28-108 is enacted to read:
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7-28-108 . When creditor process enforceable against bank.
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(1) Subject to Subsection (2), creditor process with respect to a special deposit is not
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enforceable against the bank holding the special deposit.
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(2) Creditor process is enforceable against the bank holding a special deposit with respect
239
to an amount the bank is obligated to pay a beneficiary or a depositor if the process:
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(a) is served on the bank;
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(b) provides sufficient information to permit the bank to identify the depositor or the
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beneficiary from the bank's books and records; and
243
(c) gives the bank a reasonable opportunity to act on the process.
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(3)(a) Creditor process served on a bank before the creditor process is enforceable
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against the bank under Subsection (2) does not create a right of the creditor against
246
the bank or a duty of the bank to the creditor.
247
(b) Other law determines whether creditor process creates a lien enforceable against the
248
beneficiary on a contingent interest of a beneficiary, including a depositor as a
249
beneficiary, even if not enforceable against the bank.
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Section 9. Section 7-28-109 is enacted to read:
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7-28-109 . Injunction or similar relief.
252
A court may enjoin, or grant similar relief that would have the effect of enjoining, a
253
bank from paying a depositor or beneficiary only if payment would constitute a material fraud
254
or facilitate a material fraud with respect to a special deposit.
255
Section 10. Section 7-28-110 is enacted to read:
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7-28-110 . Recoupment or set off.
257
(1) Except as provided in Subsection (2) or (3), a bank may not exercise a right of
258
recoupment or set off against a special deposit.
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(2) An account agreement may authorize the bank to debit the special deposit:
260
(a) when the bank becomes obligated to pay a beneficiary, in an amount that does not
261
exceed the amount necessary to discharge the obligation;
262
(b) for a fee assessed by the bank that relates to an overdraft in the special deposit
263
account;
264
(c) for costs incurred by the bank that relate directly to the special deposit; or
265
(d) to reverse an earlier credit posted by the bank to the balance of the special deposit
266
account, if the reversal occurs under an event or circumstance warranted under other
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law of this state governing mistake and restitution.
268
(3) The bank holding a special deposit may exercise a right of recoupment or set off against
269
an obligation to pay a beneficiary, even if the bank funds payment from the special
270
deposit.
271
Section 11. Section 7-28-111 is enacted to read:
272
7-28-111 . Duties and liability of bank.
273
(1) A bank does not have a fiduciary duty to any person with respect to a special deposit.
274
(2) When the bank holding a special deposit becomes obligated to pay a beneficiary, a
275
debtor-creditor relationship arises between the bank and beneficiary.
276
(3) The bank holding a special deposit has a duty to a beneficiary to comply with the
277
account agreement and this chapter.
278
(4)(a) If the bank holding a special deposit does not comply with the account agreement
279
or this chapter, the bank is liable to a depositor or beneficiary only for damages
280
proximately caused by the noncompliance.
281
(b) Except as provided by other law of this state, the bank is not liable for consequential,
282
special, or punitive damages.
283
(5) The bank holding a special deposit may rely on records presented in compliance with
284
the account agreement to determine whether the bank is obligated to pay a beneficiary.
285
(6)(a) If the account agreement requires payment on presentation of a record, the bank
286
shall determine within a reasonable time whether the record is sufficient to require
287
payment.
288
(b) If the agreement requires action by the bank on presentation of a record, the bank is
289
not liable for relying in good faith on the genuineness of the record if the record
290
appears on the record's face to be genuine.
291
(7) Unless the account agreement provides otherwise, the bank is not required to determine
292
whether a permissible purpose stated in the agreement continues to exist.
293
Section 12. Section 7-28-112 is enacted to read:
294
7-28-112 . Term and termination.
295
(1) Unless otherwise provided in the account agreement, a special deposit terminates five
296
years after the date the special deposit was first funded.
297
(2) Unless otherwise provided in the account agreement, if the bank cannot identify or
298
locate a beneficiary entitled to payment when the special deposit is terminated, and a
299
balance remains in the special deposit, the bank shall pay the balance to the depositor or
300
depositors as a beneficiary or beneficiaries.
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(3) A bank that pays the remaining balance as provided under Subsection (2) has no further
302
obligation with respect to the special deposit.
303
Section 13. Section 7-28-113 is enacted to read:
304
7-28-113 . Principles of law and equity.
305
Title 70A, Uniform Commercial Code, consumer protection law, law governing deposits
306
generally, law related to escheat and abandoned or unclaimed property, and the principles of
307
law and equity, including law related to capacity to contract, principal and agent, estoppel,
308
fraud, misrepresentation, duress, coercion, mistake, and bankruptcy, supplement this chapter
309
except to the extent inconsistent with this chapter.
310
Section 14. Section 7-28-114 is enacted to read:
311
7-28-114 . Uniformity of application and construction.
312
In applying and construing this uniform act, a court shall consider the promotion of
313
uniformity of the law among jurisdictions that enact this uniform act.
314
Section 15. Section 7-28-115 is enacted to read:
315
7-28-115 . Transitional provision.
316
This chapter applies to:
317
(1) a special deposit made under an account agreement executed on or after May 7, 2025;
318
and
319
(2) a deposit made under an agreement executed before May 7, 2025, if:
320
(a) all parties entitled to amend the agreement agree to make the deposit a special
321
deposit governed by this chapter; and
322
(b) the special deposit referenced in the amended agreement satisfies Section 7-28-104.
323
Section 16. Section 7-28-116 is enacted to read:
324
7-28-116 . Severability.
325
If a provision of this chapter or the chapter's application to a person or circumstance is
326
held invalid, the invalidity does not affect another provision or application that can be given
327
effect without the invalid provision.
328
Section 17. Section 70D-4-101 is enacted to read:
70D-4-101 . Definitions.
329a
(1) "Electronic" means relating to technology having electrical, digital, magnetic, wireless,
329b
optical, electromagnetic, or similar capabilities.
329c
(2) "Financial covenant" means an undertaking to demonstrate an obligor's creditworthiness
329d
or the adequacy of security provided by an obligor.
329e
(3) "Modification" includes change, amendment, revision, correction, addition,
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supplementation, elimination, waiver, and restatement.
329g
(4)(a) "Mortgage" means an agreement that creates a consensual interest in real property
329h
to secure payment or performance of an obligation regardless of how the agreement
329i
is denominated, including a mortgage, deed of trust, trust deed, security deed,
329j
indenture, or deed to secure debt, and regardless of whether the agreement also
329k
creates a security interest in personal property.
329l
(b) "Mortgage" does not include an agreement that creates a consensual interest to
329m
secure a liability owed by a unit owner to a condominium association, owners
329n
association, or cooperative housing association for association dues, fees, or
329o
assessments.
329p
(5) "Mortgage modification" means modification of:
329q
(a) a mortgage;
329r
(b) an agreement that creates an obligation, including a promissory note, loan
329s
agreement, or credit agreement; or
329t
(c) an agreement that creates other security or credit enhancement for an obligation,
329u
including an assignment of leases or rents or a guaranty.
329v
(6) "Obligation" means a debt or other duty or liability secured by a mortgage.
329w
(7) "Obligor" means a person that:
329x
(a) owes payment or performance of an obligation;
329y
(b) signs a mortgage; or
329z
(c) is otherwise accountable, or whose property serves as collateral, for payment or
329aa
performance of an obligation.
329bb
(8) "Person" means an individual, estate, business or nonprofit entity, government or
329cc
governmental subdivision, agency, instrumentality, or other legal entity.
329dd
(9) "Recognized index" means an index to which changes in the interest rate may be linked
329ee
that is readily available to, and verifiable by, the obligor and is beyond the control of the
329ff
person to whom the obligation is owed.
329gg
(10) "Record" means information:
329hh
(a) inscribed on a tangible medium; or
329ii
(b) stored in an electronic or other medium and retrievable in perceivable form.
329jj
(11) "Sign" means, with present intent to authenticate or adopt a record:
329kk
(a) to execute or adopt a tangible symbol; or
329ll
(b) to attach to or logically associate with the record an electronic symbol, sound, or
329mm
process.
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329nn
Section 18. Section 70D-4-201 is enacted to read:
70D-4-201 . Scope.
330a
(1) Except as provided in Subsection (3), this chapter applies to a mortgage modification.
330b
(2) This chapter does not affect the following law of this state:
330c
(a) law governing the required content of a mortgage;
330d
(b) a statute of limitations or other law governing the expiration or termination of a right
330e
to enforce an obligation or a mortgage;
330f
(c) a recording statute;
330g
(d) a statute governing the priority of a tax lien or other governmental lien;
330h
(e) a statute of frauds; or
330i
(f) except as provided in Subsection 70D-4-301(2)(h), law governing the priority of a
330j
future advance.
330k
(3) This chapter does not apply to:
330l
(a) a release of, or addition to, property encumbered by a mortgage;
330m
(b) a release of, addition of, or other change in an obligor; or
330n
(c) an assignment or other transfer of a mortgage or an obligation.
330o
Section 19. Section 70D-4-301 is enacted to read:
70D-4-301 . Effect of mortgage modification.
331a
(1) For a mortgage modification described in Subsection (2):
331b
(a) the mortgage continues to secure the obligation as modified;
331c
(b) the priority of the mortgage is not affected by the modification;
331d
(c) the mortgage retains the mortgage's priority regardless of whether a record of the
331e
mortgage modification is recorded; and
331f
(d) the modification is not a novation.
331g
(2) Subsection (1) applies to one or more of the following:
331h
(a) an extension of the maturity date of an obligation;
331i
(b) a decrease in the interest rate of an obligation;
331j
(c) if there is any change as specified in Subsection (2)(c)(i) through (iv) that does not
331k
result in an increase in the interest rate as calculated on the date the modification
331l
becomes effective:
331m
(i) a change to a different recognized index if the previous index is no longer
331n
available;
331o
(ii) a change in the differential between the index and the interest rate;
331p
(iii) a change from a floating or adjustable rate to a fixed rate; and
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331q
(iv) a change from a fixed rate to a floating or adjustable rate based on a recognized
331r
index;
331s
(d) a capitalization of unpaid interest or other unpaid obligation;
331t
(e) a forgiveness, forbearance, or other reduction of principal, accrued interest, or other
331u
monetary obligation;
331v
(f) a modification of a requirement for maintaining an escrow or reserve account for
331w
payment of an obligation, including taxes, insurance premiums, or another obligation;
331x
(g) a modification of a requirement for acquiring or maintaining insurance;
331y
(h) a modification of an existing condition to advance funds;
331z
(i) a modification of a financial covenant; and
331aa
(j) a modification of the payment amount or schedule resulting from another
331bb
modification described in this Subsection (2).
331cc
(3) The effect of a mortgage modification not described in Subsection (2) is governed by
331dd
other law.
331ee
Section 20. Section 70D-4-401 is enacted to read:
70D-4-401 . Uniformity of application and construction.
332a
In applying and construing this uniform act, a court shall consider the promotion of
332b
uniformity of the law among jurisdictions that enact it.
332c
Section 21. Section 70D-4-501 is enacted to read:
70D-4-501 . Relation to Electronic Signatures in Global and National Commerce
333a
Act.
333b
This chapter modifies, limits, or supersedes the Electronic Signatures in Global and
333c
National Commerce Act, 15 U.S.C. Sec. 7001 et seq. , but does not modify, limit, or supersede
333d
15 U.S.C. Sec. 7001(c), or authorize electronic delivery of any of the notices described in 15
333e
U.S.C. Sec. 7003(b).
333f
Section 22. Section 70D-4-601 is enacted to read:
70D-4-601 . Transitional Provision.
334a
This chapter applies to a mortgage modification made on or after May 7, 2025,
334b
regardless of when the mortgage or the obligation was created.
334c
Section 23. Effective Date.
334d
This bill takes effect on May 7, 2025.
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