GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2005
SESSION LAW 2005-212
SENATE BILL 667
AN ACT to validate certain subordination agreements and to clarify the law on the priority of instruments registered in the office of the register of deeds, as recommended by the general statutes commission.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 39-6.6 reads as rewritten:
"§ 39-6.6. Subordination agreements.
(a) A written
commitment or agreement to subordinate or that subordinates an interest in real
property signed by a person entitled to priority subordination agreement
shall be given effect in accordance with its terms and is not required to
state any interest rate, principal amount secured, or other financial terms.
For purposes of this section, an "interest in real property" shall
include all rights, title, and interest in and to land, buildings, and other
improvements of an owner, tenant, subtenant, secured lender, materialman,
judgment creditor, lienholder, or other person, whether the interest in real
property is evidenced by a deed, easement, lease, sublease, deed of trust,
mortgage, assignment of leases and rents, judgment, claim of lien, or any other
record, instrument, document, or entry of court.
(b) The trustee of a deed of trust shall not be a necessary party to a subordination agreement unless the deed of trust provides otherwise.
(c) For purposes of
G.S. 1-47, a commitment or subordination agreement described
in subsection (a) of this section is deemed a conveyance of an interest in
real property.
(d) The This section
is not exclusive. No subordination agreement that is otherwise valid
shall be invalidated by failure to comply with the provisions of this
section.
(e) This section applies to a subordination agreement regardless of when the agreement was signed by the party or parties thereto, except that this section does not apply to an agreement that (i) is the subject of litigation pending on the effective date of this subsection, and (ii) was filed or recorded before October 1, 2003.
(f) In this section:
(1) 'Interest in real property' includes all rights, title, and interest in and to land, buildings, and other improvements of an owner, tenant, subtenant, secured lender, materialman, judgment creditor, lienholder, or other person, whether the interest in real property is evidenced by a deed, easement, lease, sublease, deed of trust, mortgage, assignment of leases and rents, judgment, claim of lien, or any other record, instrument, document, or entry of court.
(2) 'Subordination agreement' means a written commitment or agreement to subordinate or that subordinates an interest in real property signed by a person entitled to priority."
SECTION 2. G.S. 47-18(a) reads as rewritten:
"(a) No (i) conveyance of
land, or (ii) contract to convey, or (iii) option to convey, or (iv) lease of
land for more than three years shall be valid to pass any property interest as
against lien creditors or purchasers for a valuable consideration from the
donor, bargainer or lesser but from the time of registration thereof in the
county where the land lies, or if the land is located in more than one county,
then in each county where any portion of the land lies to be effective as to
the land in that county. Unless otherwise stated either on the recorded registered
instrument or on a separate recorded registered instrument duly
executed by the party whose priority interest is adversely affected, (i)
instruments registered in the public record shall be presumed to office
of the register of deeds shall have priority based on the order of recordation
registration as determined by the time of recordation. If registration,
and (ii) if instruments are recorded registered
simultaneously, then the order of recordation the instruments
shall be presumed as follows, in order of priority: to have priority
as determined by:
(1) The earliest document
number set forth on the recorded registered instrument.
(2) The sequential book
and page number set forth on the document registered instrument
if no document number is set forth on the recorded registered
instrument.
The presumptions presumption created by this
subsection are is rebuttable."
SECTION 3. G.S. 47-20(a) reads as rewritten:
"(a) No deed of trust or
mortgage of real or personal property, or of a leasehold interest or other
chattel real, or conditional sales contract of personal property in which the
title is retained by the vendor, shall be valid to pass any property as against
lien creditors or purchasers for a valuable consideration from the grantor,
mortgagor or conditional sales vendee, but from the time of registration
thereof as provided in this Article; provided however that any transaction
subject to the provisions of the Uniform Commercial Code (Chapter 25 of the
General Statutes) is controlled by the provisions of that act and not by this
section. Unless otherwise stated either on the recorded registered
instrument or on a separate recorded registered instrument duly
executed by the party whose priority interest is adversely affected, (i)
instruments registered in the public record shall be presumed to office
of the register of deeds shall have priority based on the order of recordation
registration as determined by the time of recordation. If registration,
and (ii) if instruments are recorded registered
simultaneously, then the order of recordation the instruments
shall be presumed as follows, in order of priority: to have priority
as determined by:
(1) The earliest document
number set forth on the recorded registered instrument.
(2) The sequential book
and page number set forth on the document registered instrument
if no document number is set forth on the recorded registered
instrument.
The presumptions presumption created by this
subsection are is rebuttable."
SECTION 4. This act is effective when it becomes law.
In the General Assembly read three times and ratified this the 11th day of July, 2005.
s/ Marc Basnight
President Pro Tempore of the Senate
s/ James B. Black
Speaker of the House of Representatives
s/ Michael F. Easley
Governor
Approved 1:59 p.m. this 20th day of July, 2005