AN ACT to amend the future advances statutes by distinguishing between a future advance and a future obligation and by making various other changes.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 45‑67 reads as rewritten:
"§ 45‑67.   Definitions.
 The following definitions apply in this Article:
(1)	Advance. – A disbursement of funds or other action that increases the outstanding principal balance owing on an obligation for the payment of money.
(2)	 Security instrument. – 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."
SECTION 2.  G.S. 45‑68 reads as rewritten:
"§ 45‑68.  Requirements.
A security instrument, otherwise valid, shall secure  the following so as to give priority  as provided in  G.S. 45‑70:
(1a)	Existing obligations identified in the security instrument and all advances made at or prior to the registration of the security instrument.
(1b)	 Future advances and future obligations that may from time to time be made or incurred under the security instrument, but only if the security instrument shows all of the following:
a.	That  the security instrument is given wholly or partly to secure future advances and/or future obligations  that may be made or incurred  under the security instrument.
b.	The  maximum principal amount that may be secured  by the security instrument at any one  time.
c.	The period within which  future advances may be made and future obligations may be  incurred, which period shall not extend more than  30 years beyond the date of the security  instrument or, if the security agreement is not dated, the date the security instrument is registered.
		"
SECTION 3.  G.S. 45‑69 reads as rewritten:
"§ 45‑69.  Fluctuation of obligations within maximum amount.
Unless the security instrument provides to the contrary, if the maximum amount secured by the security instrument has not been advanced or if any obligation secured thereby is paid or is reduced by partial payment, further advances may be made and additional obligations secured by the security instrument may be incurred from time to time within the time limit fixed by the security  instrument. Such further advances and obligations shall be secured to the same extent as original advances and obligations  under the security instrument, if the provisions of  G.S. 45‑68 are complied with. However, if at any time the aggregate outstanding principal balance of the obligation or obligations secured by the security instrument exceeds the maximum principal amount that may be secured by the security instrument at any one time, then the excess shall not be secured by the security instrument."
SECTION 4.  G.S. 45‑70 reads as rewritten:
"§ 45‑70.  Priority of security instrument.
(a)	Any security instrument  that 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 and future obligations secured by it, as if all the advances had been made and all the obligations incurred at the time  the security instrument was registered.(b)	Repealed by Session Laws 1989, c. 496, s. 3.
(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  the security instrument was registered. The provisions of  G.S. 45‑68 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."
SECTION 5.  This act applies to all security instruments, whether registered before, after, or on the effective date of this act. Any security instrument registered before the effective date of this act shall be conclusively presumed to comply with the provisions of G.S. 45‑68, as enacted by this act, if the security instrument either (i) complies with the provisions of G.S. 45‑68, as enacted by this act, or (ii) complied with the provisions of G.S. 45‑68 in effect prior to the effective date of this act.

SECTION 6.  This act becomes effective October 1, 2009.
In the General Assembly read three times and ratified this the 16th day of June, 2009.

	s/	 Marc Basnight
	 President Pro Tempore of the Senate

	s/	 Joe Hackney
	 Speaker of the House of Representatives

	s/	 Beverly E. Perdue
	 Governor

Approved 11:48 a.m. this 26th day of June, 2009