(1)(a) Any mortgage or other instrument given for the purpose of creating a lien on real property, or on any interest in a leasehold upon real property, may, and when so expressed therein shall, secure not only existing indebtedness, but also such future advances, whether such advances are obligatory or to be made at the option of the lender, or otherwise, as are made within 20 years from the date thereof, to the same extent as if such future advances were made on the date of the execution of such mortgage or other instrument, although there may be no advance made at the time of the execution of such mortgage or other instrument and although there may be no indebtedness outstanding at the time any advance is made. Such lien, as to third persons without actual notice thereof, shall be valid as to all such indebtedness and future advances from the time the mortgage or other instrument is filed for record as provided by law.
Terms Used In Florida Statutes 697.04
- Amortization: Paying off a loan by regular installments.
- Lien: A claim against real or personal property in satisfaction of a debt.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgage loan: A loan made by a lender to a borrower for the financing of real property. Source: OCC
- 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.
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- Revolving credit: A credit agreement (typically a credit card) that allows a customer to borrow against a preapproved credit line when purchasing goods and services. The borrower is only billed for the amount that is actually borrowed plus any interest due. (Also called a charge account or open-end credit.) Source: OCC
- Truth in Lending Act: The Truth in Lending Act is a federal law that requires lenders to provide standardized information so that borrowers can compare loan terms. In general, lenders must provide information on Source: OCC
(b) The total amount of indebtedness that may be so secured may decrease or increase from time to time, but the total unpaid balance so secured at any one time shall not exceed a maximum principal amount which must be specified in such mortgage or other instrument, plus interest thereon; except that the mortgagor or her or his successor in title is authorized to file for record a notice limiting the maximum principal amount that may be so secured to an amount not less than the amount actually advanced at the time of such filing, provided a copy of such filing is also sent by certified mail to the mortgagee and, in the case of an open-end or revolving credit agreement, the mortgagor surrenders to the mortgagee all credit cards, checks, or other devices used to obtain further advances at the time of filing the notice, which notice shall be recorded and shall be effective from the date of filing. Notwithstanding the foregoing, any increase in the principal balance as a result of negative amortization or deferred interest shall be secured by the mortgage; and any disbursements made for the payment of taxes, levies, or insurance on the property covered by the lien, and any advances or disbursements made under a construction loan agreement referred to in a mortgage to enable completion of the contemplated improvement, with interest on such advances or disbursements, are secured by the mortgage or other instrument even though the mortgage or other instrument does not provide for future advances, or the advances or disbursements cause the total indebtedness to exceed the face amount stated in the instrument. This subsection does not apply to any mortgages, shipping contracts, or other instruments made and given by naval stores operators and producers to secure existing loans and future advances by naval stores factors.
(2) As against the rights of creditors or subsequent purchasers for a valuable consideration, actual notice or record notice of advances to be made at the option of the lender, under the terms of such mortgage or other instrument, shall be valid only as to such advances as are to be made within 20 years from the date of such mortgage or other instrument; however, this subsection does not apply to any mortgages, shipping contracts, or other instruments made and given by naval stores operators and producers to secure existing loans and future advances by naval stores factors. Notwithstanding anything in this section to the contrary, future advances made pursuant to the terms of a reverse mortgage loan (as defined in s. 103(bb) of the federal Truth in Lending Act, 15 U.S.C. ss. 1601 et seq.) shall be secured to the same extent as if such future advances were made on the date of execution of the mortgage, irrespective of the date of any such advance.
(3) Any such mortgage or other instrument shall be prior in dignity to all subsequent encumbrances, including statutory liens, except landlords’ liens.