2005 North Carolina Code - General Statutes Article 9 - Instruments to Secure Equity Lines of Credit.

Article 9.

Instruments to Secure Equity Lines of Credit.

§ 45‑81.  Definition.

(a)       The term "equity line of credit" means an agreement in writing between a lender and a borrower for an extension of credit pursuant to which:

(1)       At any time within a specified period not to exceed 30 years the borrower may request and the lender is obligated to provide, by honoring negotiable instruments drawn by the borrower or otherwise, advances up to an agreed aggregate limit;

(2)       Any repayments of principal by the borrower within the specified period will reduce the amount of advances counted against the aggregate limit; and

(3)       The borrower's obligation to the lender is secured by a mortgage or deed of trust relating to real property which mortgage or deed of trust shows on its face the maximum principal amount which may be secured at any one time and that it secures an equity line of credit governed by the provisions of this Article.

(b)       As used in subdivision (a)(1) of this section, "lender is obligated" means that the lender is contractually bound to provide advances. The contract must set forth any events of default by the borrower, or other events not within the lender's control, which may relieve the lender from his obligation, and must state whether or not the lender has reserved the right to cancel or terminate the obligation.

(c)       At any time when the balance of all outstanding sums secured by a mortgage or deed of trust pursuant to the provisions of this Article is zero, the lender shall, upon the request of the borrower, make written entry upon the security instrument showing payment and satisfaction of the instrument; provided, however, that such security instrument shall remain in full force and effect for the term set forth therein absent the borrower's request for such written entry. No prepayment penalty may be charged with respect to an equity line of credit loan. (1985, c. 207, s. 2; 1995, c. 237, s. 1.)

 

§ 45‑82.  Priority of security instrument.

A mortgage or deed of trust which shows on its face that it secures an equity line of credit governed by the provisions of this Article, shall, from the time of its registration, have the same priority to the extent of all advances secured by it as if the advances had been made at the time of the execution of the mortgage or deed of trust, notwithstanding the fact that from time to time during the term of the loan no balance is outstanding. Payments made by the lender for insurance, taxes, and assessments and other payments made by the lender pursuant to the deed of trust shall have the same priority as if made at the time of the execution of the mortgage or deed of trust, notwithstanding the maximum principal amount set forth in the mortgage or deed of trust. (1985, c. 207, s. 2.)

 

§ 45‑82.1.  Extension of period for advances.

(a)       The period for advances agreed to pursuant to G.S. 45‑81(a)(1) may be extended by written agreement of the lender and borrower executed prior to termination of the equity line of credit or the borrower's obligation to repay any outstanding indebtedness.  Any extended period shall not exceed 30 years from the end of the preceding period for advances.

(b)       A mortgage or deed of trust that secures an equity line of credit to which the lender and borrower have agreed to an extended period for advances shall have priority with respect to advances made after the preceding loan period from a date not later than the date of registration of the certificate described in subsection (c) of this section.

(c)       The priority provided in subsection (b) of this section shall be accorded only if the grantor of the mortgage or the deed of trust securing the obligation, and other record owners of the real property therein conveyed, execute a certificate evidencing the extension and register the certificate in the office of the register of deeds where the mortgage or deed of trust is registered.  The failure of any record owner to execute the certificate shall affect only that record owner's interest in the property, and executions by other owners shall have full effect to the extent of their interests in the property.  For purposes of this section, the term "record owner" means any person owning a present or future interest of record in the real property which would be affected by the lien of the mortgage or deed of trust, but does not mean the trustee in a deed of trust or the owner or holder of a mortgage, deed of trust, mechanic's or materialman's lien, or any other lien or security interest in the real property.

(d)       The certificate described in subsection (c) of this section may be in any form that fulfills the requirements of subsection (c) of this section, including the following:

 

"Certificate of Extension of Period for Advances Under Home Equity Line of Credit

 

Please take notice that the borrower and lender under the home equity line of credit secured by the (deed of trust) (mortgage) recorded on _______________ in Book _______________, at Page ________, records of this County, have agreed to extend the period within which the borrower may request advances as set forth in G.S. 45‑82.1.  The borrower's obligations to repay advances and related undertakings are secured by the (deed of trust) (mortgage).

 

WITNESS the signatures and seals of the undersigned, this _______ day of _______________, __________.

 

      (SEAL)

(Grantor (s))

 

      (SEAL)

Other record owner(s)

 

      (SEAL)

(Mortgagee or Beneficiary)

(Acknowledgment as required by law)." (1995, c. 237, s. 2.)

 

§ 45‑83.  Future advances statute shall not apply.

The provisions of Article 7 of this Chapter shall not apply to an equity line of credit or the instrument securing it, if the instrument shows on its face that it secures an equity line of credit governed by the provisions of this Article. (1985, c. 207, s. 2.)

 

§ 45‑84.  Article not exclusive.

Except as otherwise provided in G.S. 45‑83, the provisions of this Article are not exclusive, and no mortgage or deed of trust which secures a line of credit or other obligation shall be invalidated by failure to comply with the provisions of this Article. (1985, c. 207, s. 2.)