GENERAL ASSEMBLY OF NORTH CAROLINA
1989 SESSION
CHAPTER 496
The General Assembly of North Carolina enacts:
Section 1. G.S. 45-67 reads as rewritten:
"§ 45-67. Definition.
As used in this Article, 'security instrument' means 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, as distinguished from being included in a class of
security holders referred to therein, instrument for the payment of
money."
Sec. 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 so as to give priority thereto as provided in G.S. 45-70, if:
(1) Such security instrument shows:
a. That it is given wholly or partly to secure future obligations which may be incurred thereunder;
b. The amount of present obligations secured, and the maximum principal amount, including present and future obligations, which may be secured thereby at any one time;
c. The period
within which such future obligations may be incurred, which period shall not
extend more than 10 15 years beyond the date of the security
instrument; and
(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."
Sec. 3. G.S. 45-70 reads as rewritten:
"§ 45-70. Priority of security instrument.
(a) Any security
instrument which conforms to the requirements of this Article and which on
its face shows that the making of future advances is obligatory, shall,
from the time and date of registration thereof, have the same priority to the
extent of all obligatory future advances secured by it, as if all the
advances had been made at the time of the executions execution of
the instrument. An advance shall be deemed obligatory if the secured party
has bound himself to make it, whether or not a subsequent event of default or
other event not within his control has relieved or may relieve him from his
obligation.
(b) Any
security instrument which conforms to the requirements of this Article, which
on its face does not show that the making of future advances is obligatory,
shall, from the time and date of registration thereof, have the same priority
to the extent of all obligations secured by it, as if all the advances had been
made at the time of the execution of the instrument, except that when an
intervening lienor or encumbrancer gives actual notice as hereinafter provided
that an intervening lien or encumbrance has been perfected on the property
covered by the security instrument, or is being incurred and when perfected
will relate back to the time when incurred, any future advances made subsequent
to the receipt of such notice shall not take priority over such intervening
perfected lien or encumbrance. Such notice shall be in writing and shall be
given to the secured creditor named in the security instrument; but if the
security instrument is registered and if any assignment of the security
instrument has been noted on the margin of the record showing the name and
address of the assignee, such notice shall be given to the last assignee so
noted at the address so shown.
(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,
whether or not notice has been given as provided in subsection (b) of this
section. instrument. The provisions of G.S. 45-68(2) and (3) 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."
Sec. 4. G.S. 45-72(a) reads as rewritten:
"(a) The holder of a
security instrument conforming to the provisions of this Article, which on
its face does not show that the making of future advances is obligatory, Article
shall, at the request of the maker of the security instrument or his
successor in title promptly furnish to him a statement duly executed and
acknowledged in such form as to meet the requirements for the execution and
acknowledgment of deeds, setting forth in substance the following:
'This is to certify that the total outstanding balance of all obligations, the payment of which is secured by that certain instrument executed by __________, dated__________, recorded in book _____ at page _____ in the office of the Register of Deeds of _____ County, North Carolina, is $________, of which amount $________ represents principal.
No future advances will be made under the aforesaid instrument, except such expense as it may become necessary to advance to preserve the security now held.
This _______________ day of ________, 19_____
___________________________
(Signature and Acknowledgment)'."
Sec. 5. This act shall become effective October 1, 1989, and shall apply only to security instruments executed on or after that date.
In the General Assembly read three times and ratified this the 28th day of June, 1989.