Must judgment creditors record their assignments to receive notice of tax sales? Hall v. NACM Intermountain, Inc. Explained

In Hall v. NACM Intermountain, Inc., the Utah Supreme Court clarified when judgment creditors are entitled to notice of tax sales and the importance of properly recording judgment assignments.

Background and Facts

The Halls purchased property at a Washington County tax sale for $8,800. The property’s former owner, Michael Hill, owed money to Aquarius, which had obtained an assignment of a judgment from NACM against Hill. However, Aquarius never docketed or recorded this assignment on any public record. When Washington County conducted the tax sale, it searched the records and notified all persons with recorded interests, but did not notify Aquarius because the assignment was not recorded. Aquarius later sought to invalidate the tax sale, claiming it should have received notice as a judgment creditor.

Key Legal Issues

The primary issue was whether Aquarius, as an assignee of a judgment that had not been docketed or recorded, was entitled to notice of the tax sale under Utah Code § 59-2-1351(2), which requires notice to “all other interests of record.” The court also addressed whether the failure to provide notice violated due process rights.

Court’s Analysis and Holding

The Utah Supreme Court reversed the trial court’s summary judgment in favor of Aquarius. The court held that even assuming judgment creditors are entitled to notice, Aquarius was not entitled to notice because it failed to docket or record its assignment. The court emphasized that “parties who fail to take the steps necessary for receiving notice waive their constitutional protection and are not entitled to notice.” Since the County had no knowledge of the unrecorded assignment, no statutory or constitutional duty to provide notice existed.

Practice Implications

This decision underscores the critical importance of properly recording judgment assignments and other interests in real property. Practitioners should ensure that clients who acquire judgments through assignment immediately docket the assignment in the appropriate court and consider recording it in the county recorder’s office. The failure to do so can result in the loss of notice rights in foreclosure, tax sale, and other proceedings, potentially rendering the judgment interest worthless against subsequent purchasers.