Enrolled Copy S.B. 294
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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 provisions related to finance.
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Highlighted Provisions:
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This bill:
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▸ modifies the exclusions to the definition of title loan;
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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; S.B. 294 Enrolled Copy
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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;
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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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AMENDS:
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7-24-102, as last amended by Laws of Utah 2015, Chapter 284
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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 7-24-102 is amended to read:
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7-24-102 . Definitions.
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As used in this chapter:
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(1) "Nationwide database" means the Nationwide Mortgage Licensing System and
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Registry, authorized under 12 U.S.C. Sec. 5101 for federal licensing of mortgage loan
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originators.
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(2) "Rollover" means the extension or renewal of the term of a title loan.
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(3)(a) "Title lender" means a person that extends a title loan.
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(b) "Title lender" includes a person that:
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(i) arranges a title loan on behalf of a title lender;
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(ii) acts as an agent for a title lender; or
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(iii) assists a title lender in the extension of a title loan.
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(4)(a) "Title loan" means a loan secured by the title to a:
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(i) motor vehicle, as defined in Section 41-6a-102;
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(ii) mobile home, as defined in Section 41-6a-102; or
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(iii) motorboat, as defined in Section 73-18-2.
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(b) "Title loan" includes a title loan extended at the same premise on which any of the
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following are sold:
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(i) a motor vehicle, as defined in Section 41-6a-102;
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(ii) a mobile home, as defined in Section 41-6a-102; or
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(iii) a motorboat, as defined in Section 73-18-2.
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(c) "Title loan" does not include:
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(i) a purchase money loan;
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(ii) a loan made in connection with the sale of a:
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(A) motor vehicle, as defined in Section 41-6a-102;
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(B) mobile home, as defined in Section 41-6a-102; or
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(C) motorboat, as defined in Section 73-18-2;[ or]
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(iii) a loan extended by an institution listed in Section 7-24-305[.] ; or
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(iv) a loan with a repayment term that is longer than 364 days.
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Section 2. 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
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deposit; and
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(B) maintains reasonable compliance with the routine, actual knowledge of the
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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
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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
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(D) for distribution to a defined class of persons after identification of the class
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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
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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
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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
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payment system, securities settlement system, or other financial market
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infrastructure; or
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(v) hold margin, other cash collateral, or funds that support the orderly functioning of
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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
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governmental subdivision, agency, or instrumentality, or other legal entity.
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(b) "Person" includes a protected series, however denominated, of an entity if the
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protected series is established under law that limits, or limits if conditions specified
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under law are satisfied, the ability of a creditor of the entity or of any other protected
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series of the entity to satisfy a claim from assets of the protected series.
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(12) "Record" means information:
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(a) inscribed on a tangible medium; or
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(b) stored in an electronic or other medium and retrievable in perceivable form.
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(13) "Special deposit" means a deposit that satisfies Section 7-28-104.
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(14)(a) "State" means a state of the United States, the District of Columbia, Puerto Rico,
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the United States Virgin Islands, or any other territory or possession subject to the
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jurisdiction of the United States.
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(b) "State" includes an agency or instrumentality of the state.
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Section 3. 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
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intention of the parties to establish a special deposit governed by this chapter, regardless
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of whether a party to the account agreement or a transaction related to the special
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deposit, or the special deposit itself, has a reasonable relation to this state.
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(2) The parties to an account agreement may choose a forum in this state for settling a
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dispute arising out of the special deposit, regardless of whether a party to the account
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agreement or a transaction related to the special deposit, or the special deposit itself, has
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a reasonable relation to this state.
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(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
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chapter; or
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(b) the voidability of a deposit or transfer that is fraudulent or voidable under other law.
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Section 4. Section 7-28-103 is enacted to read:
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7-28-103 . Variation by agreement or amendment.
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(1)(a) The effect of Sections 7-28-101 through 7-28-105, Sections 7-28-107 through
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7-28-110, and Section 7-28-113 may not be varied by agreement, except as provided
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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.
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(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.
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Section 5. 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;
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(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
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domestic or foreign government;
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(4) for a permissible purpose stated in the account agreement; and
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(5) subject to a contingency.
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Section 6. Section 7-28-105 is enacted to read:
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7-28-105 . Permissible purpose.
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(1) A special deposit must serve at least one permissible purpose stated in the account
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agreement from the time the special deposit is created in the account agreement until
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termination of the special deposit.
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(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 7. 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
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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 8. 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
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receive payment if the bank is obligated to pay a beneficiary and not in the special
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deposit itself.
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(b) Any property interest under this Subsection (2) is determined under other law.
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Section 9. 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
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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
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(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
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the bank or a duty of the bank to the creditor.
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(b) Other law determines whether creditor process creates a lien enforceable against the
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beneficiary on a contingent interest of a beneficiary, including a depositor as a
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beneficiary, even if not enforceable against the bank.
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Section 10. Section 7-28-109 is enacted to read:
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7-28-109 . Injunction or similar relief.
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A court may enjoin, or grant similar relief that would have the effect of enjoining, a
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bank from paying a depositor or beneficiary only if payment would constitute a material fraud
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or facilitate a material fraud with respect to a special deposit.
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Section 11. Section 7-28-110 is enacted to read:
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7-28-110 . Recoupment or set off.
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(1) Except as provided in Subsection (2) or (3), a bank may not exercise a right of
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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:
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(a) when the bank becomes obligated to pay a beneficiary, in an amount that does not
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exceed the amount necessary to discharge the obligation;
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(b) for a fee assessed by the bank that relates to an overdraft in the special deposit
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account;
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(c) for costs incurred by the bank that relate directly to the special deposit; or
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(d) to reverse an earlier credit posted by the bank to the balance of the special deposit
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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.
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(3) The bank holding a special deposit may exercise a right of recoupment or set off against
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an obligation to pay a beneficiary, even if the bank funds payment from the special
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deposit.
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Section 12. Section 7-28-111 is enacted to read:
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7-28-111 . Duties and liability of bank.
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(1) A bank does not have a fiduciary duty to any person with respect to a special deposit.
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(2) When the bank holding a special deposit becomes obligated to pay a beneficiary, a
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debtor-creditor relationship arises between the bank and beneficiary.
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(3) The bank holding a special deposit has a duty to a beneficiary to comply with the
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account agreement and this chapter.
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(4)(a) If the bank holding a special deposit does not comply with the account agreement
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or this chapter, the bank is liable to a depositor or beneficiary only for damages
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proximately caused by the noncompliance.
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(b) Except as provided by other law of this state, the bank is not liable for consequential,
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special, or punitive damages.
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(5) The bank holding a special deposit may rely on records presented in compliance with
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the account agreement to determine whether the bank is obligated to pay a beneficiary.
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(6)(a) If the account agreement requires payment on presentation of a record, the bank
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shall determine within a reasonable time whether the record is sufficient to require
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payment.
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(b) If the agreement requires action by the bank on presentation of a record, the bank is
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not liable for relying in good faith on the genuineness of the record if the record
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appears on the record's face to be genuine.
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(7) Unless the account agreement provides otherwise, the bank is not required to determine
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whether a permissible purpose stated in the agreement continues to exist.
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Section 13. Section 7-28-112 is enacted to read:
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7-28-112 . Term and termination.
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(1) Unless otherwise provided in the account agreement, a special deposit terminates five
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years after the date the special deposit was first funded.
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(2) Unless otherwise provided in the account agreement, if the bank cannot identify or
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locate a beneficiary entitled to payment when the special deposit is terminated, and a
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balance remains in the special deposit, the bank shall pay the balance to the depositor or
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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
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obligation with respect to the special deposit.
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Section 14. Section 7-28-113 is enacted to read:
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7-28-113 . Principles of law and equity.
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Title 70A, Uniform Commercial Code, consumer protection law, law governing deposits
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generally, law related to escheat and abandoned or unclaimed property, and the principles of
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law and equity, including law related to capacity to contract, principal and agent, estoppel,
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fraud, misrepresentation, duress, coercion, mistake, and bankruptcy, supplement this chapter
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except to the extent inconsistent with this chapter.
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Section 15. Section 7-28-114 is enacted to read:
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7-28-114 . Uniformity of application and construction.
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In applying and construing this uniform act, a court shall consider the promotion of
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uniformity of the law among jurisdictions that enact this uniform act.
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Section 16. Section 7-28-115 is enacted to read:
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7-28-115 . Transitional provision.
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This chapter applies to:
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(1) a special deposit made under an account agreement executed on or after May 7, 2025;
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and
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(2) a deposit made under an agreement executed before May 7, 2025, if:
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(a) all parties entitled to amend the agreement agree to make the deposit a special
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deposit governed by this chapter; and
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(b) the special deposit referenced in the amended agreement satisfies Section 7-28-104.
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Section 17. Section 7-28-116 is enacted to read:
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7-28-116 . Severability.
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If a provision of this chapter or the chapter's application to a person or circumstance is
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held invalid, the invalidity does not affect another provision or application that can be given
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effect without the invalid provision.
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Section 18. Section 70D-4-101 is enacted to read:
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CHAPTER 4. UNIFORM MORTGAGE MODIFICATION ACT
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70D-4-101 . Definitions.
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(1) "Electronic" means relating to technology having electrical, digital, magnetic, wireless,
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optical, electromagnetic, or similar capabilities.
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(2) "Financial covenant" means an undertaking to demonstrate an obligor's creditworthiness
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or the adequacy of security provided by an obligor.
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(3) "Modification" includes change, amendment, revision, correction, addition,
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supplementation, elimination, waiver, and restatement.
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(4)(a) "Mortgage" means an agreement that creates a consensual interest in real property
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to secure payment or performance of an obligation regardless of how the agreement
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is denominated, including a mortgage, deed of trust, trust deed, security deed,
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indenture, or deed to secure debt, and regardless of whether the agreement also
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creates a security interest in personal property.
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(b) "Mortgage" does not include an agreement that creates a consensual interest to
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secure a liability owed by a unit owner to a condominium association, owners
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association, or cooperative housing association for association dues, fees, or
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assessments.
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(5) "Mortgage modification" means modification of:
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(a) a mortgage;
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(b) an agreement that creates an obligation, including a promissory note, loan
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agreement, or credit agreement; or
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(c) an agreement that creates other security or credit enhancement for an obligation,
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including an assignment of leases or rents or a guaranty.
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(6) "Obligation" means a debt or other duty or liability secured by a mortgage.
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(7) "Obligor" means a person that:
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(a) owes payment or performance of an obligation;
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(b) signs a mortgage; or
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(c) is otherwise accountable, or whose property serves as collateral, for payment or
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performance of an obligation.
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(8) "Person" means an individual, estate, business or nonprofit entity, government or
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governmental subdivision, agency, instrumentality, or other legal entity.
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(9) "Recognized index" means an index to which changes in the interest rate may be linked
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that is readily available to, and verifiable by, the obligor and is beyond the control of the
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person to whom the obligation is owed.
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(10) "Record" means information:
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(a) inscribed on a tangible medium; or
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(b) stored in an electronic or other medium and retrievable in perceivable form.
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(11) "Sign" means, with present intent to authenticate or adopt a record:
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(a) to execute or adopt a tangible symbol; or
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(b) to attach to or logically associate with the record an electronic symbol, sound, or
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process.
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Section 19. Section 70D-4-201 is enacted to read:
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70D-4-201 . Scope.
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(1) Except as provided in Subsection (3), this chapter applies to a mortgage modification.
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(2) This chapter does not affect the following law of this state:
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(a) law governing the required content of a mortgage;
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(b) a statute of limitations or other law governing the expiration or termination of a right
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to enforce an obligation or a mortgage;
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(c) a recording statute;
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(d) a statute governing the priority of a tax lien or other governmental lien;
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(e) a statute of frauds; or
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(f) except as provided in Subsection 70D-4-301(2)(h), law governing the priority of a
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future advance.
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(3) This chapter does not apply to:
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(a) a release of, or addition to, property encumbered by a mortgage;
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(b) a release of, addition of, or other change in an obligor; or
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(c) an assignment or other transfer of a mortgage or an obligation.
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Section 20. Section 70D-4-301 is enacted to read:
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70D-4-301 . Effect of mortgage modification.
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(1) For a mortgage modification described in Subsection (2):
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(a) the mortgage continues to secure the obligation as modified;
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(b) the priority of the mortgage is not affected by the modification;
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(c) the mortgage retains the mortgage's priority regardless of whether a record of the
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mortgage modification is recorded; and
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(d) the modification is not a novation.
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(2) Subsection (1) applies to one or more of the following:
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(a) an extension of the maturity date of an obligation;
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(b) a decrease in the interest rate of an obligation;
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(c) if there is any change as specified in Subsection (2)(c)(i) through (iv) that does not
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result in an increase in the interest rate as calculated on the date the modification
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becomes effective:
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(i) a change to a different recognized index if the previous index is no longer
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available;
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(ii) a change in the differential between the index and the interest rate;
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(iii) a change from a floating or adjustable rate to a fixed rate; and
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(iv) a change from a fixed rate to a floating or adjustable rate based on a recognized
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index;
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(d) a capitalization of unpaid interest or other unpaid obligation;
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(e) a forgiveness, forbearance, or other reduction of principal, accrued interest, or other
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monetary obligation;
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(f) a modification of a requirement for maintaining an escrow or reserve account for
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payment of an obligation, including taxes, insurance premiums, or another obligation;
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(g) a modification of a requirement for acquiring or maintaining insurance;
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(h) a modification of an existing condition to advance funds;
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(i) a modification of a financial covenant; and
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(j) a modification of the payment amount or schedule resulting from another
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modification described in this Subsection (2).
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(3) The effect of a mortgage modification not described in Subsection (2) is governed by
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other law.
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Section 21. Section 70D-4-401 is enacted to read:
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70D-4-401 . Uniformity of application and construction.
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In applying and construing this uniform act, a court shall consider the promotion of
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uniformity of the law among jurisdictions that enact it.
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Section 22. Section 70D-4-501 is enacted to read:
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70D-4-501 . Relation to Electronic Signatures in Global and National Commerce
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Act.
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This chapter modifies, limits, or supersedes the Electronic Signatures in Global and
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National Commerce Act, 15 U.S.C. Sec. 7001 et seq., but does not modify, limit, or supersede
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15 U.S.C. Sec. 7001(c), or authorize electronic delivery of any of the notices described in 15
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U.S.C. Sec. 7003(b).
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Section 23. Section 70D-4-601 is enacted to read:
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70D-4-601 . Transitional Provision.
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This chapter applies to a mortgage modification made on or after May 7, 2025,
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regardless of when the mortgage or the obligation was created.
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Section 24. Effective Date.
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This bill takes effect on May 7, 2025.
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