GENERAL ASSEMBLY OF NORTH CAROLINA
1989 SESSION

CHAPTER 496
HOUSE BILL 602

AN ACT TO AMEND THE LAW CONCERNING INSTRUMENTS TO SECURE FUTURE ADVANCES AND FUTURE OBLIGATIONS TO MAKE THAT LAW AVAILABLE FOR DEEDS OF TRUST SECURING BONDS; TO MAKE CLEAR THAT THE REQUIREMENT OF STATING THE MAXIMUM AMOUNT SECURED BY A FUTURE ADVANCE DEED OF TRUST MEANS THE MAXIMUM PRINCIPAL AMOUNT; TO EXTEND THE PERIOD WITHIN WHICH FUTURE OBLIGATIONS MAY BE INCURRED; AND TO ELIMINATE THE REQUIREMENT THAT FUTURE ADVANCES BE OBLIGATORY IN ORDER TO QUALIFY FOR THE PRIORITY PROTECTION AFFORDED BY THIS LAW AS RECOMMENDED BY THE GENERAL STATUTES COMMISSION.

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 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 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 shall, from the time and date of registration thereof, 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. 
	(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 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 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.