Written by Kat Ashby, Principal Broker and Realtor® at RootQuest Realty LLC in Saratoga Springs, Utah. Kat holds a Utah Division of Real Estate Principal Broker license (Credential #10382396-PB00) — a designation that requires demonstrated experience, additional coursework, and a separate licensing exam beyond the standard agent license. She has been actively selling in Utah County since 2020, with deep experience across Lehi, Eagle Mountain, Saratoga Springs, and the broader Wasatch Front, specializing in buyer representation, new construction, and corporate relocation through Altair Global. She is fluent in English and Portuguese, earned her bachelor's degree in Psychology from Brigham Young University, and lives in the community she sells in.
This post is informational only and does not constitute legal or financial advice. Seller financing involves significant legal complexity. Always work with a licensed Utah real estate attorney and a professional escrow company before proceeding.
Seller financing sounds appealing when a buyer approaches you with a creative offer. No bank. Faster closing. Monthly income instead of a lump sum. They seem motivated, they seem capable, and the deal seems simpler than going the traditional route.
I want to walk you through what can go wrong — because in Utah, sellers are getting hurt by these arrangements in ways they never anticipated. Some are losing equity. Some are getting property back in worse condition than they sold it. And in the most extreme cases, some are losing their homes entirely through arrangements they didn't fully understand when they signed.
This post is for sellers. If you're a buyer considering seller financing, I've written a separate guide for buyers here.
First: The Difference Between Offering and Being Approached
There is a meaningful difference between a seller who proactively decides to offer seller financing on their own terms — and a seller who is approached by a buyer or investor who proposes it.
When you're approached — especially by a company or investor rather than an individual family — understand that you may be talking to someone who does this regularly and understands the legal structure far better than you do. That information asymmetry is where sellers get hurt.
If someone approaches you with an offer involving seller financing, "subject to" financing, or any arrangement where your mortgage stays in place, my honest advice: talk to a real estate attorney before you respond. Not after you sign — before.
What Seller Financing Actually Means for a Seller
When you offer seller financing, you become the lender. You are no longer done with this property when the deal closes.
Here's what you are taking on:
You carry the credit risk. If the buyer stops making payments, you are the lender who must pursue foreclosure — a process that in Utah can take 180–210 days minimum from the first default, per Fennemore Law's analysis of Utah foreclosure timelines. During that time, you are not receiving payments. You may still owe your underlying mortgage. And at the end, you get the property back in whatever condition the buyer left it in.
You may get a damaged asset back. Real estate attorneys Conrad Trosch & Kemmy have documented a recurring pattern: sellers who financed homes at peak value, then got the property back after a buyer default, found that the home was worth less than the seller-financed balance. The market moved. The buyer didn't maintain it. The seller takes a net loss on a property they thought they'd already sold.
Your underlying mortgage may still be your problem. If you still have a mortgage on the property and you enter a seller financing arrangement, your existing loan almost certainly contains a due-on-sale clause — a provision that allows your lender to demand full repayment the moment the property transfers or is encumbered. This risk doesn't disappear just because the buyer is making payments on time.
The "Subject To" Trap: What's Happening to Utah Sellers Right Now
One of the most dangerous seller financing structures is the "subject to" arrangement — where a buyer or investor takes title to your home but your mortgage remains in your name. You signed over the deed. But you still owe the bank.
This structure is being actively marketed to financially distressed homeowners in Utah by investors and companies who frame it as a rescue. The pitch sounds like help: "We'll take over your payments, you can move on, rebuild your credit, and buy your home back." What some sellers don't realize until too late: their name stays on the mortgage, they remain legally liable if payments stop, and the company controls the property.
The public record on this is growing — and it is specific to Utah.
BBB review, filed June 2025: A publicly filed review on the Better Business Bureau's website documents one Utah woman's account of a transaction with Banded Properties LLC, a Utah-based real estate company. According to her review, she was approached during a health crisis and a difficult financial situation, was told she could buy her home back in two years, and signed an agreement she later described as misleading about who held title and who remained responsible for the mortgage. In her words: "The mortgage is still in my name... they already knew I was having a hard time to begin with so they were counting on me not to get my home back and only gave me $30,000 in cash yet the agreement says they paid $142,000 which means they lied because they didn't pay off the mortgage they just took over the title." Banded Properties responded publicly on the BBB platform disputing her characterization of the transaction. Their full response is available on the BBB page.
Federal bankruptcy court case: Public federal court records show a case filed in the U.S. Bankruptcy Court for the District of Utah on July 28, 2023 — Hofmann v. Banded Properties LLC, case number 2:23-ap-02059 — with status listed as pending. I am reporting a public court docket, not making a legal finding.
Multiple accounts on social media: A public Threads post from February 2025 by account @terricrookdoty describes being forced out of a home after 20 years following what they describe as being "tricked into signing my house over." The comments on that post include responses from other users describing active court cases against the same company as recently as April and May 2026 — including accounts of counterclaims filed for fraud in the inducement, misrepresentation, deceptive practices, and quiet title. One commenter described their mortgage company placing a fraud hold when the company attempted to pay off the underlying mortgage. These are public accounts posted voluntarily by individuals; I cannot independently verify their accuracy.
Salt Lake Tribune, 2016: A Salt Lake Tribune investigation noted Banded Properties of North Salt Lake in connection with a substandard rental unit administered through a federal housing program in Taylorsville — a separate context from the seller financing situations described above, but part of a documented pattern of complaints against the company spanning nearly a decade.
OpenCorporates public business records show Banded Properties LLC registered in multiple states including Utah, Kentucky, Tennessee, Louisiana, and California — indicating this is not a small local operation.
I am sharing this public record because I believe Utah sellers deserve to know it exists before they sign anything. This is not a legal finding, and both sides of the publicly filed BBB dispute are documented there. If you have questions about your legal rights in a transaction involving any company or individual, speak with a Utah real estate attorney.
What Can Go Wrong: The Full Risk Picture for Sellers
The buyer stops paying
When a seller-financed buyer defaults, the seller's options depend entirely on how the deal was structured:
Promissory note and deed of trust: The seller can initiate non-judicial foreclosure under Utah law. Per Fennemore Law, this takes a minimum of 180–210 days from the first missed payment — with required notices and waiting periods at each stage. During that entire time, if you still have an underlying mortgage, you must continue making those payments or face default yourself.
Land contract / contract for deed: The seller retains legal title. Recovery may be faster — but the legal requirements vary and need to be drafted correctly from the start.
In either case, you are not done with the property the moment payments stop. You are the lender in a default situation.
The buyer damages the property
While the buyer is living in the home and not paying, they are also occupying it. When you eventually regain possession, the condition is unpredictable. Sellers who go through this process often report thousands of dollars in deferred maintenance or damage beyond normal wear and tear.
The lender calls your underlying mortgage
If you still have a mortgage on the property and the lender discovers it has been transferred or encumbered, they can invoke the due-on-sale clause and demand full payoff immediately. This is a federal right established by the Garn-St. Germain Depository Institutions Act of 1982. If you can't pay — and most sellers can't write a check for their full remaining mortgage balance — the lender can foreclose on the property. A property the buyer is living in, that you thought you'd sold.
The SAFE Act may apply
Federal SAFE Act regulations require sellers who finance more than a limited number of properties annually to obtain a mortgage originator license. One-time transactions on a primary residence generally fall outside this requirement — but confirm with an attorney if you are considering seller financing on more than one property.
When Seller Financing Can Actually Work for a Seller
Seller financing isn't always the wrong choice. Here's when it can make genuine sense:
You own the property free and clear. No underlying mortgage means no due-on-sale risk. You hold the note, the buyer makes payments, and if they default, you follow the foreclosure process without the added complexity of your own lender being involved. This is the cleanest version of seller financing.
You have a specific tax reason. An installment sale under IRS rules can spread your capital gains across multiple years, which in some situations meaningfully reduces your tax burden. Discuss with a CPA.
You've thoroughly vetted the buyer. Credit report, income verification, employment history, debt-to-income ratio. If a buyer couldn't qualify for a conventional mortgage, understand specifically why — and ask yourself honestly whether that reason makes you comfortable carrying their note for 5–10 years.
You have independent legal representation. Not the buyer's attorney. Your own attorney who has reviewed the buyer's financial situation, drafted the note and deed of trust, confirmed the escrow arrangement, and explained every risk in writing.
What to Do If You Receive a Seller Financing Offer
Do not respond without an attorney. Not a phone call, not an email. Talk to a Utah real estate attorney first.
Ask why they can't get conventional financing. Is it a temporary documentation issue? A credit event they're recovering from? Or is it that no lender will approve them because the payment is genuinely unaffordable? That last scenario is the most important information you can have as the potential lender.
Insist on professional escrow. Your payment must flow through an escrow specialist who pays your underlying mortgage first, if you have one.
Get a full title search. Know exactly what encumbrances exist on the property before you agree to carry financing on top of them.
Walk through the foreclosure scenario with your attorney. What does 180+ days of non-payment cost you? What do you get back and in what condition? Is the buyer's down payment large enough to cover those losses?
If you're in financial distress and being approached by a company: Be especially cautious. Distress is when information asymmetry is most dangerous. The fact that a company found you through public real estate records during a difficult time is itself worth noting.
Resources If You Believe You've Been Harmed
If you are a Utah homeowner who believes you signed a seller financing or "subject to" agreement under misleading circumstances, you have options:
- Utah Attorney General's Office — ag.utah.gov — handles consumer protection complaints
- Utah Division of Real Estate — realestate.utah.gov — licensing and complaint filings against licensed real estate professionals
- Consumer Financial Protection Bureau — consumerfinance.gov — federal consumer financial protection complaints
- Federal Trade Commission — reportfraud.ftc.gov — fraud reports
- Utah courts — a lis pendens filed with the county recorder's office can cloud the title and protect your interest while legal proceedings are underway
Talk to a Utah real estate attorney before taking any of these steps to understand which are appropriate for your specific situation.
The Bottom Line for Sellers
Seller financing is not a simple transaction. It is a multi-year lending relationship with someone who couldn't or wouldn't get a bank to say yes. That's not automatically disqualifying — but it's the correct frame.
The sellers who get hurt are almost always the ones who didn't have independent legal representation, didn't fully understand what they were signing, or were in a vulnerable enough financial position that someone with more information took advantage of that gap.
If you're in Utah County and a seller financing offer has come your way — or if someone has already approached you about a "subject to" arrangement — I'm happy to talk through your specific situation before you sign anything.
Let's Chat Before You Decide →
Related Articles
- Seller Financing in Utah: What Buyers Need to Know Before You Sign Anything
- What Is an Assumable Mortgage — A Safer Alternative Worth Understanding
- Should You Sell Your Saratoga Springs Home If You Have a Low Interest Rate?
- I Can't Afford to Sell My Utah County Home — But What If Staying Is Costing You More?
- Home Appraisal vs. CMA — What Sellers Need to Know
Sources: Fennemore Law — Seller financing defaults and Utah foreclosure timelines, February 2026; Garn-St. Germain Depository Institutions Act of 1982 — Congress.gov; Federal Reserve History — Garn-St. Germain Act analysis; CFPB — SAFE Act overview; Conrad Trosch & Kemmy — seller financing risks documentation, February 2024; Banded Properties LLC — BBB Customer Review filed June 2025, company response July 2025; Hofmann v. Banded Properties LLC — U.S. Bankruptcy Court, District of Utah, Case No. 2:23-ap-02059, filed July 28, 2023; OpenCorporates — Banded Properties LLC business registration records; Salt Lake Tribune — Federal housing program rental standards investigation, 2016, referencing Banded Properties of North Salt Lake; Clearly Acquired — SAFE Act and seller financing; BiggerPockets — Bank Called My Due-on-Sale Clause forum.
Frequently Asked Questions
What risks do sellers take on with seller financing? Sellers become the lender — meaning if the buyer stops paying, the seller must pursue foreclosure, a process that takes 180–210 days minimum in Utah. During that time, if the seller still has an underlying mortgage, they must continue making those payments. When they get the property back, it may be worth less than the outstanding seller-financed balance.
What is a "subject to" arrangement and why is it dangerous for sellers? A "subject to" deal means a buyer or investor takes title to the property while the seller's original mortgage stays in the seller's name. The seller remains legally liable if the buyer stops making payments to the lender. Some investors and companies target financially distressed homeowners with this structure. Public records in Utah — including a BBB review, a federal bankruptcy court filing, and multiple social media accounts — document sellers who say they did not fully understand what they signed. If you are approached with any arrangement where your mortgage remains in your name, get independent legal representation before signing.
Can a seller's lender call the loan if they do seller financing? Yes. Most mortgages contain a due-on-sale clause. The Garn-St. Germain Act of 1982 gives lenders federal authority to demand full repayment if the property is transferred or encumbered without their consent. If the seller can't pay the full remaining balance, the lender can foreclose — on a home the buyer believes they own.
When is seller financing reasonable for a seller? When the seller owns the property free and clear (no underlying mortgage), has independently verified the buyer's financial ability to make payments, has independent legal representation, and has a professional escrow company managing payment flow. An installment sale for tax purposes can also be a legitimate reason — discuss with a CPA.
What should I do if I've already signed a seller financing or "subject to" agreement I don't fully understand? Contact a Utah real estate attorney immediately. Depending on your situation, options may include filing a lis pendens with the county recorder's office, filing a complaint with the Utah Attorney General's consumer protection division, or contacting the CFPB or FTC. Keep all written communications. Do not sign additional documents without legal representation.
What should I do if I receive a seller financing offer? Do not respond without first consulting a Utah real estate attorney. Ask why the buyer can't obtain conventional financing. Insist on professional escrow. Get a full title search. Walk through the foreclosure scenario with your attorney before agreeing to anything.