GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
SESSION LAW 2009-197
HOUSE BILL 1368
AN ACT to amend the future advances statutes by distinguishing between a future advance and a future obligation and by making various other changes.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 45-67 reads as rewritten:
"§ 45-67. Definition.
Definitions.
As used in this Article, The following definitions
apply in this Article:
(1) Advance. - A disbursement of funds or other action that increases the outstanding principal balance owing on an obligation for the payment of money.
(2) "security
instrument" means a Security instrument. - A mortgage, deed of
trust, or other instrument relating to real property securing an obligation or
obligations to a person, firm, or corporation specifically named in such
instrument for the payment of money."
SECTION 2. G.S. 45-68 reads as rewritten:
"§ 45-68. Requirements.
A security instrument, otherwise valid, shall secure future
obligations which may from time to time be incurred thereunder the
following so as to give priority thereto as provided in G.S. 45-70,
if: G.S. 45-70:
(1a) Existing obligations identified in the security instrument and all advances made at or prior to the registration of the security instrument.
(1)(1b) Such security instrument shows: Future
advances and future obligations that may from time to time be made or incurred
under the security instrument, but only if the security instrument shows all of
the following:
a. That it
the security instrument is given wholly or partly to secure future advances
and/or future obligations which that may be made or
incurred thereunder; under the security instrument.
b. The amount
of present obligations secured, and the maximum principal amount,
including present and future obligations, which amount that may be
secured thereby by the security instrument at any one time;
time.
c. The period
within which such future advances may be made and future obligations
may be incurred, which period incurred, which period shall not
extend more than 15 30 years beyond the date of the security instrument;
and instrument or, if the security agreement is not dated, the date the
security instrument is registered.
(2) At the
time of incurring any such future obligations, each obligation is evidenced by
a written instrument or notation, signed by the obligor and stipulating that
such obligation is secured by such security instrument; provided, however, that
this subsection shall apply only if the obligor and obligee have contracted in
writing that each future obligation shall be evidenced by a written instrument
or notation; and
(3) At any
time a security instrument securing future advances is transferred or assigned
by the owner thereof that the amount, date and due date of each note, bond, or
other undertaking for the payment of money representing a future obligation
secured by such security instrument be noted in writing thereon."
SECTION 3. G.S. 45-69 reads as rewritten:
"§ 45-69. Fluctuation of obligations within maximum amount.
Unless the security instrument provides to the contrary, if
the maximum amount secured by the security instrument has not been
advanced or if any obligation secured thereby is paid or is reduced by partial
payment, further advances may be made and additional obligation obligations
secured by the security instrument may be incurred from time to time within
the time limit fixed by the security instrument, provided the unpaid balance
of principal outstanding shall never exceed the maximum amount authorized
pursuant to G.S. 45-68(1)b. instrument. Such further advances
and obligations shall be secured to the same extent as original advances
and obligations thereunder, under the security instrument, if
the provisions of G.S. 45-68(2) and (3) G.S. 45-68 are
complied with. However, if at any time the aggregate outstanding principal
balance of the obligation or obligations secured by the security instrument
exceeds the maximum principal amount that may be secured by the security
instrument at any one time, then the excess shall not be secured by the
security instrument."
SECTION 4. G.S. 45-70 reads as rewritten:
"§ 45-70. Priority of security instrument.
(a) Any security
instrument which that conforms to the requirements of this
Article shall, from the time and date of registration thereof, have the same
priority to the extent of all future advances and future obligations
secured by it, as if all the advances had been made and all the obligations
incurred at the time of the execution of the instrument. the
security instrument was registered.
(b) Repealed by Session Laws 1989, c. 496, s. 3.
(c) Payments made
by the secured creditor for fire and extended coverage insurance, taxes,
assessments, or other necessary expenditures for the preservation of the
security shall be secured by the security instrument and shall have the same
priority as if such payments had been made at the time of the execution of
the instrument. the security instrument was registered. The
provisions of G.S. 45-68(2) and (3) G.S. 45-68 shall
not be applicable to such payments, nor shall such payments or accrued interest
be considered in computing the maximum principal amount which may be secured by
the instrument.
(d) Notwithstanding any other provision of this Article, any security instrument hereafter executed which secures an obligation or obligations of an electric or telephone membership corporation incorporated or domesticated in North Carolina to the United States of America or any of its agencies, or to any other financing institution, or of an electric or gas utility operating in North Carolina, shall from the time and date of registration of said security instrument have the same priority to the extent of all future advances secured by it as if all the advances had been made at the time of the execution of the instrument, regardless of whether the making of such advances is obligatory or whether the security instrument meets the requirements of G.S. 45-68."
SECTION 5. This act applies to all security instruments, whether registered before, after, or on the effective date of this act. Any security instrument registered before the effective date of this act shall be conclusively presumed to comply with the provisions of G.S. 45-68, as enacted by this act, if the security instrument either (i) complies with the provisions of G.S. 45-68, as enacted by this act, or (ii) complied with the provisions of G.S. 45-68 in effect prior to the effective date of this act.
SECTION 6. This act becomes effective October 1, 2009.
In the General Assembly read three times and ratified this the 16th day of June, 2009.
s/ Marc Basnight
President Pro Tempore of the Senate
s/ Joe Hackney
Speaker of the House of Representatives
s/ Beverly E. Perdue
Governor
Approved 11:48 a.m. this 26th day of June, 2009