Sec. 49-4b. Open-end mortgage as security for guaranty of an open-end loan. Mortgage deed requirements. Description of loan and secondary liability.
Sec. 49-4b. Open-end mortgage as security for guaranty of an open-end loan.
Mortgage deed requirements. Description of loan and secondary liability. (a) If an
open-end mortgage meets the requirements of this section, such mortgage shall be
deemed to give sufficient notice of the nature of the obligation to secure the obligation
of any person who is secondarily liable for an open-end loan, including (1) a commercial
revolving loan, as defined in subsection (c) of section 49-2, without regard to whether the
authorized amount of indebtedness of such revolving loan constituting the underlying
obligation shall at that time or at any time have been fully advanced, (2) future advances
under such open-end loan, to the extent that such mortgagor is secondarily liable for
such future advances, and (3) a letter of credit. Such mortgagor's secondary liability for
such future advances shall be secured by such open-end mortgage equally with the
obligation secured by such mortgage at the time of recording such mortgage deed and
shall have the same priority over the rights of others who may acquire any rights in, or
liens upon, the mortgaged real estate subsequent to the recording of such mortgage deed.
(b) The heading of such mortgage deed shall be clearly entitled "Open-End
Mortgage".
(c) The loan constituting the underlying obligation for which the mortgagor is secondarily liable, which secondary liability is secured by such open-end mortgage, shall
be described in such open-end mortgage deed. A description of such loan meets the
requirements of this subsection if such open-end mortgage deed states: (1) The name
and address of the person who is primarily liable for such loan; (2) that such underlying
obligation specifically permits such advancements and, if applicable, that such advancements are made pursuant to a revolving loan agreement; (3) the full amount of the loan
authorized; and (4) the maximum term of the loan.
(d) The secondary liability of the mortgagor shall be described in such open-end
mortgage deed. A description of such secondary liability meets the requirements of this
subsection if such open-end mortgage deed states: (1) The full amount of the obligation
of the mortgagor if such amount is different from the full amount of the loan authorized
for the underlying obligation; and (2) the date, if any, on which the secondary liability
of the mortgagor will terminate.
(e) As used in this section, "mortgagee" includes any assignee of the mortgagee, and
"mortgagor" includes any assignee of the mortgagor, and "any person who is secondarily
liable" includes any person who has guaranteed or endorsed an open-end loan.
(f) Nothing in this section, as in effect both before and after July 10, 1997, invalidates
any mortgage that would be valid without this section.
(P.A. 79-359, S. 2; P.A. 80-423, S. 2, 3; P.A. 82-243, S. 2; P.A. 97-320, S. 2, 11.)
History: P.A. 80-423 included letters of credit in Subsec. (a) and made minor changes in wording; P.A. 82-243 amended
Subsec. (e) by adding a definition of "any person who is secondarily liable"; P.A. 97-320 amended Subsec. (a) by adding
"be deemed to give sufficient notice of the nature of the obligation", deleted Subsec. (d)(3) and (4) and added Subsec. (f)
providing nothing in effect before and after July 10, 1995, invalidates any mortgage, effective July 10, 1997.
Cited. 202 C. 566. Legislature authorized a type of secured guaranty not enforced under common law of state; mortgage
subject to this section enforceable only if deed satisfies the section's requirements. 232 C. 294.