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UTAH: An Introduction to Real Estate

The rollout of Utah’s newly approved Business and Chancery Court is going to ease countless headaches for local real estate owners as it is designed to streamline and simplify disputes that have been onerous and time consuming under Utah’s current judicial system.

In March 2023, the state Legislature added Utah to the ranks of states like Georgia, North Carolina, and Delaware, to implement chancery courts. Business in these states – most notably Delaware – have long benefited from the presence of specialized business courts specifically tailored for complex (or even mundane) civil disputes.

Traditionally, Utah’s district courts have been burdened with diverse caseloads, and as a result judges are assigned schedules based on a wide range of criteria that don’t necessarily relate to how equipped they are for any one particular matter. In contrast, the chancery court's streamlined docket allows for more expedited handling of business disputes tailor-made for judges experienced in those areas. State and federal courts must operate under a very generalized set of rules that chancery courts can swiftly move past to the benefit of everyone involved – the litigants, their attorneys, the court system, and the taxpayer, just to name a few.

The Value of Predictability and Consistency

This efficiency is particularly advantageous in the real estate sector, where timely resolutions can make the difference between success and failure. The chancery court's procedural rules are designed to facilitate the swift and fair resolution of disputes by appointing judges who understand the very specific intricacies of their operations. For example, chancery courts are better equipped to resolve unlawful detainer actions, which often require expedited treatment. In the past, these matters have dragged on because of overloaded dockets and judges that lack specialized knowledge of commercial real estate.

Moreover, inconsistent or unpredictable court rulings undermine confidence, complicate negotiations, and inflate the costs of doing business. The chancery court's focus on business law, coupled with its judges; specialized knowledge, is designed to foster a more consistent application of legal principles.

For real estate practitioners, this consistency is invaluable. When advising clients on potential litigation risks or structuring deals, having a clear understanding of how similar disputes have been resolved provides a solid foundation for decision-making. The chancery courts track record of decisions will soon become a rich resource for precedent, guiding attorneys and their clients through the complexities of real estate transactions with greater assurance.

The Current Timetable for Opening Day

The legal and logistical work necessary to get the chancery court’s operations going is still underway. The opportunity for third party comment on the chancery court’s rules closed on June 9, though opportunity for comment on its appellate practice remains open until August 25, 2024. While the rules as proposed bear an unsurprising similarity to the rules adopted by counterparts in Delaware, Georgia and North Carolina, there exist a few unique modifications seemingly designed to push parties towards resolution even more quickly.

Kyle Kaiser, an Assistant Attorney General and Senior Trial Counsel in the Litigation Division of the Utah Attorney General’s Office, notes that the proposed rules for an initial pretrial conference and a required court approval and finding of good cause for extraordinary discovery beyond the “presumptive” limits as evidence of the court’s efforts to expedite its processes.

“All this seems designed to force the parties to set a discovery plan and stick to the presumptive schedule, so that cases move quickly without excessive extensions,” wrote Kaiser in response to the state’s invitation for comment on the chancery court’s rules.

In general, most commenters supported tweaks to the current proposed rules that would speed up the process and keep expert costs low. And while we’re still waiting for an officially adopted set of rules, indications are strong that the rule makers aim to honor that request.

Before these courts are operational, real estate owners should consider how a more streamlined process for business disputes will impact the way they approach their operations.

The Delaware Standard

Established in 1792, Delaware’s chancery court is the nation’s oldest, most famous, and most infamous chancery court. Chancery courts established since have largely followed the state’s lead and Utah appears poised to be no exception.

It feels fair to assume the pros and cons recognized by business owners in Delaware will largely apply here.

In recent years, critics have grown admittedly more vocal about the cons, most notably in recent months, as exemplified by Elon Musk’s criticisms of Delaware Chancery Court after a local judge negated his now re-affirmed USD55 million pay package. Other critics have raised complaints about the costs associated with the highly specialized court, the comparative complexity of its rules, and the lack of jury trials - which many attorneys view as a wildcard they can reliably turn in their favor. And oftentimes, they’re right.

The Delaware court may not be the business-friendly paradise it once was known as - at least reputationally - but most of the complaints lodged against it seem to be from parties with sour grapes about their individual case result, not the validity of the proceedings. For the average business owner in the average case, the advantages in terms of efficiency, dependency, stability and speed seem hard to deny.

We are optimistic that Utah’s new Business and Chancery Court will provide similar advantages for real estate owners and welcome its addition to the legal landscape.