Is Utah a Title Theory or Lien Theory State?

Most websites list Utah as a Title Theory state. In a Title State, the lender holds title to the property in the name of the borrower through a Deed of Trust. When the loan is completely paid off, the lender issues and records a Deed of Reconveyance in favor of the borrower who then has clear title to the property. The Deed of Reconveyance removes any interests that the lender may have in the property.

Unfortunately, with Utah, it's not that clear-cut. 

The headline case that really addresses this topic is Bybee v Stuart. That case is a frequently cited case in discussing that issue. In that case, the Utah Supreme Court addressed what lien theory was and addressed that Utah has conflicting statutes on the matter. The Court had to make sense of the statutes and ultimately held that in lien theory in Utah, the title to the mortgaged property remains with the mortgagor: "Utah, along with most of the other western states, has long been recognized as a ‘lien theory’ state. This court has repeatedly said that a mortgage in this state does not vest title in the mortgagee, but merely creates a lien in his favor. These cases are based largely on a statutory provision which appears in our 1943 Code as Sec. 104–57–7 and is as follows: ‘A mortgage of real property shall not be deemed a conveyance, whatever its terms, so as to enable the owner of the mortgage to recover possession of the real property without a foreclosure and sale . . . We adhere to the now well-established doctrine that the mortgagor retains title to the mortgaged lands, and all that is created in favor of the mortgagee is a lien—a right to resort to the land to satisfy the mortgage debt." (pp 470 (123) and 471).

The Utah Court of Appeals later acknowledged Bybee's holding in BMBT, LLC v. Miller, 2014 UT App 64.

So, in Bybee, the Court was quite clear that Utah is lien-theory and the borrower retains title subject to a lien. However, the issue gets muddy in Interstate Land Corp. v. Patterson, 797 P.2d 1101 (Utah App. 1990), where the Utah Court of Appeals outlined the parties' arguments on page 1106. The Court agreed with Interstate's argument that title remained with the trustee in that case. The big difference, in that case, appears to be that it involved a trust deed where Bybee did not. 

If the title stays with the borrower this is the definition of Lien Theory and results in a non-judicial foreclosure with the Power of Sale being entrusted to a Trustee and not the lender. In a Judicial/Mortgage foreclosure, the Title is held by the lender. Utah is known as a Trust Deed and Promissory Note state. There are references to a foreclosure being allowed under the law, typically in a Contract for Deed transaction but this is certainly not the standard.