Connecticut General Statutes 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 future advance loan, as defined in subsection (c) of § 49-2, without regard to whether the authorized amount of indebtedness of such 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.
Terms Used In Connecticut General Statutes 49-4b
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgagee: The person to whom property is mortgaged and who has loaned the money.
- Mortgagor: The person who pledges property to a creditor as collateral for a loan and who receives the money.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
(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.