ORS 86.155
Priority of line of credit instrument as to certain advances

  • procedure to limit indebtedness in residential line of credit instrument

(1)

As used in this section:

(a)

“Credit agreement” means any promissory note, loan agreement or other agreement that provides for advances subsequent to the date of recording of the line of credit instrument that secures the note or agreement.

(b)

“Line of credit instrument” means a mortgage or trust deed that secures a consumer or commercial credit agreement and creates a lien on specified real property up to a stated amount, provided that the front page of the mortgage or trust deed, or a memorandum thereof:

(A)

Contains the legend “line of credit mortgage,” “line of credit trust deed” or “line of credit instrument” either in capital letters or underscored above the body of the mortgage or trust deed;

(B)

States the maximum principal amount to be advanced pursuant to the credit agreement; and

(C)

States the term or maturity date, if any, of the credit agreement exclusive of any option to renew or extend the term or maturity date.

(c)

“Residential line of credit instrument” means any line of credit instrument creating a lien on real property upon which are situated or will be constructed four or fewer residential units, one of which, at the time the credit agreement is entered into, is the borrower’s residence or is intended, following construction, to be a residence of the borrower.

(2)

A line of credit instrument shall have priority, regardless of the knowledge of the lienholder of any intervening lien, as of its date of recording as to the following advances whether the advances are optional or obligatory advances:

(a)

Principal advances made any time pursuant to the credit agreement, to the extent the total outstanding advances do not exceed the maximum principal amount stated in the line of credit instrument under subsection (1)(b)(B) of this section;

(b)

Interest, lawful charges and advances made any time pursuant to the credit agreement for the reasonable protection of the real property including, but not limited to, advances to pay real property taxes, hazard insurance premiums, maintenance charges imposed under a declaration or restrictive covenant and reasonable attorney fees, whether or not the interest, lawful charges or advances exceed the maximum principal amount stated in the line of credit instrument under subsection (1)(b)(B) of this section; and

(c)

Advances made any time after the date of recording and pursuant to a credit agreement that is not secured by a residential line of credit instrument to complete construction of previously agreed-upon improvements on the real property, whether or not the advances exceed the maximum principal amount stated in the line of credit instrument under subsection (1)(b)(B) of this section provided, however, that the front page of the instrument states that the maximum principal amount to be advanced pursuant to the credit agreement may be exceeded by advances to complete construction pursuant to this subsection.

(3)

Actions that do not affect the priority granted to the advances set forth in subsection (2) of this section shall include, but not be limited to, those actions set forth in ORS 86.095 (Acts not affecting priority of lien of credit instrument) (1). If any modification to a credit agreement increases the maximum principal amount to be advanced pursuant to the credit agreement, then principal advances that are made that exceed the original maximum principal amount stated in the line of credit instrument shall have priority as of the date of recording an amendment to the line of credit instrument that states the increased maximum principal amount.

(4)

In the case of a residential line of credit instrument, the debtor may limit the indebtedness secured by that line of credit instrument to the amount of the credit outstanding by delivering a notice by personal service upon the lienholder or trust deed beneficiary or by mailing a notice by certified mail, return receipt requested, to the lienholder or trust deed beneficiary at the address given for payment or, if none, to the address of the lienholder or trust deed beneficiary indicated in the line of credit instrument or deed of trust. To be sufficient to limit indebtedness under this subsection, the notice must:

(a)

State that it is made under this section;

(b)

Contain the legal description in the line of credit instrument or the street address of the real property;

(c)

Provide the information necessary to locate the line of credit instrument in the public record;

(d)

State the debtor’s intention to limit the amount of credit secured by the line of credit instrument to the amount owed at the time the notice is received;

(e)

State the date sent; and

(f)

Be signed and acknowledged by all debtors obligated under the line of credit instrument.

(5)

Not later than the 20th day after receipt of the notice described in subsection (4) of this section, the lienholder or trust deed beneficiary shall:

(a)

Indorse on the notice, or on an addendum to the notice, the principal amount of the indebtedness secured by the line of credit instrument on the date the lienholder or trust deed beneficiary received notice;

(b)

Sign and acknowledge the notice or the addendum, if applicable; and

(c)

Record the notice and addendum in the public record where the line of credit instrument was originally recorded.

(6)

If the lienholder or trust deed beneficiary fails to record the notice and addendum, if applicable, within the time period specified in subsection (5) of this section, the debtor may record the notice in the public record where the line of credit instrument was originally recorded, together with proof of receipt by, or personal delivery to, the lienholder or trust deed beneficiary.

(7)

Notwithstanding subsection (4) of this section, the line of credit instrument shall continue to have priority as of its date of recording as to:

(a)

Principal advances, including any advance the creditor is required to honor, that were made before a notice under subsection (4) of this section is received;

(b)

Interest, lawful charges and advances described in subsection (2)(b) and (c) of this section; and

(c)

All advances made after a notice under subsection (4) of this section is received that are within the amount owed at the time the notice under subsection (4) of this section is given. [1987 c.716 §4; 1989 c.198 §1; 1991 c.313 §1; 1991 c.438 §1; 1997 c.152 §1; 2001 c.20 §2; 2007 c.71 §18]

Source: Section 86.155 — Priority of line of credit instrument as to certain advances; procedure to limit indebtedness in residential line of credit instrument, https://www.­oregonlegislature.­gov/bills_laws/ors/ors086.­html.

Law Review Citations

69 OLR 847 (1990)

86.010
Nature of mortgagee’s interest
86.020
Covenant to pay money not implied
86.030
Absolute deed as a mortgage
86.040
Improvements on mortgaged lands
86.050
Payment of taxes and other charges by mortgagee
86.060
Assignment of mortgage
86.080
Record of assignment not notice to mortgagor
86.095
Acts not affecting priority of lien of credit instrument
86.100
Discharge of mortgage
86.110
Discharge of record by owner and holder of mortgage note who is not the mortgagee of record
86.120
Discharge of mortgage on real property
86.130
Discharge by foreign executors, administrators, conservators and guardians
86.140
Liability of mortgagee for failure to discharge mortgage
86.150
Loan agreements and promissory notes to state maximum prepayment privilege penalty
86.155
Priority of line of credit instrument as to certain advances
86.157
Action for residual debt after short sale of residential property
86.160
Definitions for ORS 86.160 to 86.185
86.165
Late charge
86.170
Prohibited mortgage provisions
86.175
Scope
86.180
ORS 86.160 to 86.185 not applicable to certain mortgagees
86.185
ORS 86.160 to 86.185 not applicable to certain loans
86.205
Definitions for ORS 86.205 to 86.275
86.210
Types of lender security protection provisions allowed
86.214
Application of ORS 86.210 and 86.245 to real estate loan agreements
86.240
Limit on amount required in security protection escrow account
86.245
Interest on security protection deposits
86.250
Service charge prohibited where interest required
86.255
Arrangements where security protection provisions not required
86.260
Payment of taxes where security protection provision required
86.265
Effect of lender violation of ORS 86.205 to 86.275
86.270
ORS 86.205 to 86.275 inapplicable to certain loan agreements
86.275
Severability
86.405
Secretary of State to furnish statement of mortgages filed before September 1, 1963
86.440
Discharge of mortgage recorded with county recording officer
86.460
Discharge of mortgage filed with Secretary of State
86.470
Discharge, assignment and foreclosure of mortgages on chattels registered and licensed by Department of Transportation
86.610
Power of financial institutions, fiduciaries and others to make loans secured by property insured by Federal Housing Administration
86.620
Investment of funds of financial institutions, fiduciaries and others in bonds and mortgages accepted by Federal Housing Administration, debentures issued thereby, and obligations of national mortgage associations
86.630
Eligibility of securities described in ORS 86.620 as security for deposits, investment or reserve of securities
86.640
Applicability of other laws requiring security or regulating loans and investments
86.705
Definitions for ORS 86.705 to 86.815
86.707
Additional definitions for ORS 86.726, 86.729, 86.732, 86.736, 86.741, 86.744 and 86.748
86.710
Trust deeds authorized to secure performance of obligation
86.713
Qualifications of trustee
86.715
Trust deed deemed to be mortgage on real property
86.720
Reconveyance upon performance
86.722
Correction of error concerning status or effect of trust deed
86.726
Resolution conference for foreclosure
86.729
Scheduling and notice for resolution conference
86.732
Attendance at resolution conference
86.736
Certificate of compliance
86.741
Attorney General duties and powers
86.744
Foreclosure Avoidance Fund
86.748
Determination of ineligibility for foreclosure avoidance measure
86.752
Foreclosure by advertisement and sale
86.756
Notice to grantor
86.761
Failure to give notice to grantor
86.764
Notice of sale for certain persons
86.767
Failure to give notice of sale
86.771
Contents of notice of sale
86.774
Service and publication of notice
86.778
Discontinuance of foreclosure proceedings after cure of default
86.782
Sale of property
86.786
Request for information from trustee
86.789
Information provided by trustee
86.794
Disposition of proceeds of sale
86.797
Effect of sale
86.800
Contents of trustee’s deed to purchaser
86.803
Recitals in trustee’s deed and certain affidavits as prima facie or conclusive evidence
86.806
Requests for copies of notice of default or notice of sale
86.809
Compensation of trustee
86.812
Impermissible conditions for approving short sale or sale of note
86.815
Time within which foreclosure must be commenced
86.990
Penalties
Green check means up to date. Up to date