District of Columbia
DC Code § 42.2303 gives a Credit Line Deed of Trust priority over other unrecorded instruments. The law also gives any future advances priority over such instruments. A “Credit Line Deed of Trust” is defined as:
“…any deed of trust in which title to real property located in the District of Columbia is conveyed, transferred, encumbered, or pledged to secure repayment of money that is loaned in the form of periodic advances by the noteholder named in the credit line deed of trust.” [DC Code § 42-2301]
This priority is given as long as the front page of the instrument contains the words “THIS IS A HOME EQUITY CREDIT LINE DEED OF TRUST. DEFAULT MAY RESULT IN THE LOSS OF YOUR HOME.” [See DC Code § 42-2302.] Consequently, we are adding these words to our DC security instruments, directly under the document titles. This change will print when the loan purpose is Construction Only, Construction to Permanent, or a rehab/renovation loan. Note also that this change only applies to single-family residential properties, per DC Code § 42-2302(c), and does not necessarily mean that the loan is a “home equity” loan as commonly understood in the industry. The documents impacted are:
- DC Deed of Trust (Cx315)
- DC Deed of Trust Second (Cx474)
- FHA DC Deed of Trust (Cx19366)
Additionally, DC model form FP-7/C, used to apply for the NY Homestead Tax Deduction (9 DMCR § 337), was recently updated. Pursuant to this update, we are updating our DC Real Property Recordation and Transfer Tax Form FP 7/C (Cx2485) to match the new version of the model form.
RI General Law § 34-25-9 requires that whenever a security instrument is clearly entitled “Open-end mortgage to secure present and future loans under chapter 25 of title 34,” the security instrument shall secure future advances, so long as the aggregate principal amount does not exceed the stated amount. In accordance with this provision, we are changing the title of our Rhode Island security instruments for Construction Only and Construction to Permanent loans from “MORTGAGE” to “OPEN-END MORTGAGE TO SECURE PRESENT AND FUTURE LOANS UNDER CHAPTER 25 OF TITLE 34 OF THE RHODE ISLAND GENERAL LAWS.” The documents being modified are:
- RI Mortgage (Cx348)
- RI Mortgage Second (Cx506)
- FHA RI Mortgage (Cx19397)
These changes will be in effect on December 12, 2018. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
DR 277531 and 277516
Update: For Nebraska, NE ST § 52-127(10) says:
“(10) Construction security interest shall mean a security interest created by a security agreement that contains a legend on the first page clearly stating that it is a Construction Security Agreement and that secures an obligation which the debtor incurred for the purpose of making an improvement of the real estate in which the security interest is given if the instrument recorded to perfect the interest states that it is a construction security interest”
Accordingly, on our Nebraska security instruments, we have added the statement: “This Deed of Trust constitutes a Construction Security Agreement and secures an obligation which the debtor incurred for the purpose of making an improvement of the real estate in which the security interest is given and is intended to create a construction security interest.” This will appear on the Nebraska security instruments for construction only, construction to permanent, and rehabilitation/renovation loans. The specific documents impacted are:
- NE Deed of Trust (Cx338)
- NE Deed of Trust Second (Cx496)
- HELOC Deed of Trust – NE (Cx3044)
- FHA NE Deed of Trust (Cx19385)
This change will be in effect on December 22, 2018. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.