Ruesch Reeve Werrett & Jones PLLC recently secured a significant result for a client in a complex Utah real estate dispute involving thousands of acres, competing property claims, and a private transfer fee covenant.

The dispute centered on a recorded covenant that purported to require payment of 1% of the property's sale price whenever the property was transferred. Although the court determined that the covenant was capable of running with the land, an important question remained: had the legal requirements necessary to keep the transfer fee enforceable actually been satisfied?

After examining the applicable Utah law, the court concluded they had not. The court ultimately extinguished the transfer fee covenant and quieted title in favor of our client, free and clear of the covenant.

The court later awarded $69,610.00 in attorney fees and $1,264.78 in costs, for a total award of $70,874.78.

A Complex Property and Title History

This was not a simple disagreement over a property line or a single document.

The property involved several thousand acres of Utah real estate and had a complicated title history. A recorded Declaration of Covenant dating to 2009 imposed a 1% reconveyance or transfer fee on future conveyances of the property.

As ownership and other interests involving the property changed over time, the covenant remained an important title issue. Multiple parties eventually asserted competing claims and rights involving the property.

Our client sought a judicial determination of its rights and removal of the covenant as an encumbrance on the property's title.

What Is a Private Transfer Fee?

A private transfer fee generally requires a payment to a designated private party when real property is sold or otherwise transferred.

Unlike ordinary expenses associated with a particular sale, a recorded transfer fee covenant can potentially affect future transfers of the property. That makes its validity important not only to the current owner but also to the property's title and future transactions.

In this case, the recorded covenant called for a fee equal to 1% of the property's sale price upon future transfers.

The dispute therefore involved more than simply determining whether the covenant had once been valid. The court also had to determine whether it continued to be enforceable under Utah law.

Utah Law Requires More Than Recording a Covenant

Utah law imposes specific requirements governing private transfer fee obligations.

The covenant at issue predated changes to Utah's private-transfer-fee statutes, and notices had been recorded in an effort to preserve the fee's enforceability.

One such notice was recorded in 2010 pursuant to Utah Code § 57-1-46.

A later statutory notice became central to the dispute.

Under the applicable statutory requirements examined by the court, maintaining the private transfer fee required more than simply filing another document in the county records. The required notice also had to receive the necessary written approval from those holding the relevant beneficial interests.

The court determined that those statutory requirements had not been satisfied.

That distinction proved critical.

The Court Extinguishes the Covenant and Clears the Client's Title

The case was ultimately resolved through summary judgment, allowing the court to decide the relevant issues based on the record and applicable law without requiring a full trial.

The court granted our client's amended motion for summary judgment and quieted title in our client's favor, free and clear of the 2009 Declaration of Covenant.

The court expressly declared the covenant extinguished and invalid and dismissed the opposing third-party claims with prejudice.

In practical terms, the ruling removed the transfer fee covenant as a continuing claim against our client's title.

The court subsequently awarded our client $70,874.78 in attorney fees and costs, consisting of $69,610.00 in attorney fees and $1,264.78 in costs.

What This Case Can Teach Utah Property Owners

Property disputes are not always obvious when someone purchases real estate. Recorded covenants, old deeds, liens, trust deeds, easements, competing ownership claims, and other documents can create questions long after they were originally recorded.

And the existence of a recorded document does not necessarily answer every question about whether the rights described in that document remain enforceable.

This case illustrates why a careful examination of both the property's title history and current Utah law can matter. A dispute involving a document recorded years ago may turn on later events, statutory requirements, notices, or other facts affecting whether a claimed property right remains valid.

For a property owner, these issues can have real consequences. An unresolved title claim may complicate a sale, financing, development, or other plans for the property.