Sec. 49-3. Mortgage securing future advancements.
Sec. 49-3. Mortgage securing future advancements. (a) Any mortgage to secure
future advancements of money for construction or repair of buildings or improvements
on land in this state, including site improvements of every kind with or without the
construction or repair of any buildings, is sufficiently definite and certain and valid to
secure all money actually advanced under and in accordance with its provisions, up to
but not exceeding the amount of the full loan therein authorized, with the same priority
as if it had been advanced at the time the mortgage was delivered, (1) if the mortgage
contains a description of the loan in substantially the following form: "Whereas buildings or improvements on said premises are in process of construction or repair, or to be
erected or repaired; and whereas the said grantee has agreed to make the loan herein
described to be paid over to said grantor in installments as the work progresses, the time
and amount of each advancement to be at the sole discretion and upon the estimate of
said grantee, so that when all of the work on said premises shall have been completed
to the satisfaction of said grantee, said grantee shall then pay over to said grantor any
balance necessary to complete the full loan of $....; and whereas the grantor agrees to
complete the erection or repair of said buildings to the satisfaction of said grantee within
a reasonable time from the date hereof or at the latest on or before .... months from this
date", or (2) whenever one or more advances are to be made when a certain event or
condition occurs, if the mortgage contains the pertinent portions of the above clause,
and such additional clauses as shall set forth with reasonable certainty and accuracy the
particular sums which are to be advanced and the event or condition which determines
when such sums are to be advanced to the grantor. A mortgage that otherwise complies
with subdivision (1) of this subsection shall be valid notwithstanding any provision in
any other agreement between the mortgagee and mortgagor that sets forth either particular sums which are to be advanced or the event or condition which determines when
such sums are to be advanced, or both, whether or not such other agreement is recorded
on the land records. Nothing herein invalidates any mortgage which would be valid
without this subsection.
(b) The parties may subsequently modify the time set forth in the mortgage for the
grantor to complete the erection or repair of said buildings or improvements as well as
the payment dates for interest and principal necessitated by the change in the completion
date by a writing to that effect, signed by the parties and recorded upon the proper land
records. The modification shall in no way affect or limit the priority of the mortgage.
(c) If the mortgagor under a mortgage to secure future advances containing a description of the loan as specified in subsection (a) hereof is in default under the mortgage
or note, the mortgagee may complete the erection or repair and the cost thereof shall be
a part of the debt due the mortgagee and secured by the mortgage, provided in no such
case may the total debt due exceed the face amount of the note.
(1949 Rev., S. 7194; 1949, S. 2970d; 1971, P.A. 809; P.A. 73-545; P.A. 79-178; 79-602, S. 62.)
History: 1971 act specifically included site improvements in previous provisions and added Subsecs. (b) to (d); P.A.
73-545 incorporated former Subsec. (b) in Subsec. (a) as Subdiv. (2), relettering as necessary; P.A. 79-178 added provision
in Subsec. (a) validating mortgages which comply with Subdiv. (1) notwithstanding other agreements re particular sums
to be advanced or conditions determining advances, etc.; P.A. 79-602 made minor changes in wording but made no
substantive changes.
Statute does not annul Matz v. Arick, which still provides the test for future advances not framed in the form suggested
by the statute. 143 C. 582. Cited. 146 C. 523. Cited. 185 C. 463. Cited. 202 C. 566. Cited. 219 C. 772. Cited. 232 C. 294.
Cited. 10 CA 251.
Cited. 17 CS 52.
Subsec. (a):
Cited. 33 CA 563.