Missouri Revised Statutes
Chapter 443 - Mortgages, Deeds of Trust and Mortgage Brokers
Section 443.055 - Future advances may be secured, how — definitions — requirements — limitations — priorities — termination procedure, exceptions.

Effective - 28 Aug 1992
443.055. Future advances may be secured, how — definitions — requirements — limitations — priorities — termination procedure, exceptions. — 1. As used in this section, the following terms mean:
(1) "Borrower", a person who is a mortgagor, deed of trust grantor, or debtor of any lender or a successor in interest to any of the persons described in this subdivision;
(2) "Business or agricultural loan transaction", a loan or extension of credit or indebtedness of a borrower to a lender, arising under a note, guarantee or other evidence of indebtedness, where the proceeds or benefits thereof are used primarily for agricultural purposes, or for purposes other than personal, family or household purposes;
(3) "Construction loan", a loan:
(a) Which is secured by a security instrument; and
(b) The proceeds of which, by agreement of the borrower and lender, are intended to be used for the construction, alteration, modification or addition of improvements to real property; and
(c) The proceeds of which are disbursed in whole or in part by means of future advances or future obligations. The term "construction loan" includes loan proceeds used for expenses reasonably related to the construction, alteration, modification or addition of improvements to real property including governmental fees, taxes, interest, attorneys' and accountants' fees, architects' fees, engineers' fees, utility charges, hook-up or tap-on fees, title insurance, surveys, rents, loan origination or servicing fees, and similar expenses;
(4) "Face amount", subject to the provisions of this section, the stated amount of the obligations which may be secured at any given time by the security instrument;
(5) "Future advance", any advance of funds, disbursement of loan proceeds or other exchange of value or consideration from a lender to, or on behalf of, a borrower that occurs after the date of the security instrument securing such future advance, regardless of whether such advance is made under a note, contract, guarantee or other evidence of indebtedness that was executed prior to or contemporaneously with such security instrument or made under a future obligation;
(6) "Future obligation", an obligation or debt of a borrower to a lender arising under a note, contract, guarantee or other evidence of indebtedness that was executed or otherwise became effective after the date of the instrument securing such future obligation, including, without limitation, any note or agreement that renews, extends, or otherwise modifies an obligation of a borrower to a lender that is secured by a security instrument under this section;
(7) "Lender", any mortgagee, deed of trust beneficiary, or creditor holding a security instrument;
(8) "Owner", the owner of the interest in the real property encumbered by the security instrument, not including the trustee, mortgagee, or beneficiary under a deed of trust;
(9) "Person", a natural person, firm, partnership, association, or corporation;
(10) "Security instrument", a mortgage, deed of trust, or other real property security instrument securing the repayment of any obligation, containing, within the body of the instrument, the provisions described in subsection 2 of this section and containing a provision expressly stating that the instrument is to be governed by this section.
2. Security instruments may secure future advances or other future obligations of a borrower to a lender, whether the advances or obligations are optional or obligatory with the lender. The future advances or future obligations may be evidenced by one or more notes, guarantees or other documents evidencing indebtedness of a borrower to lender, which documents shall not be required to be executed or delivered prior to the date of the security instrument securing them. Neither the existence nor priority of a security instrument otherwise complying with the provisions of this section shall be adversely affected if at any time on or after the date of such security instrument there are no obligations then secured by the security instrument or the obligations secured by the security instrument are reduced to zero. The fact that a security instrument secures future advances or future obligations shall be clearly stated within the body of the security instrument, or within the body of any amendment if such amendment is made to cause the original instrument to become a security instrument and secure future advances or future obligations as provided in this section, and the security instrument shall state the face amount. The total amount of obligations that may be secured by such a security instrument may decrease or increase from time to time, but except as to advances made pursuant to subsection 3 of this section, the total principal amount of the obligations secured at any given time may not exceed the face amount stated in the security instrument.
3. (1) Future advances made by a lender or future obligations incurred by a borrower for the reasonable protection of the lender's security interest are secured by the security instrument and shall have the priority specified in subsection 5 of this section even though the security instrument does not provide for such future advances or such future obligations, or even though such future advances or such future obligations cause the total indebtedness to exceed the face amount stated in the security instrument, or even though a notice of termination has been issued pursuant to subsection 6 of this section. Such advances or obligations may include, but shall not be limited to, real property taxes, hazard insurance premiums, assessments or maintenance charges imposed under a condominium declaration or restrictive covenant, subdivision assessments, reasonable repairs and maintenance, amounts due under prior mortgages or deeds of trust, leases, or other encumbrances, and reasonable costs and attorneys' fees incurred in enforcing the security instrument or the indebtedness which it secures.
(2) Future advances made or future obligations incurred under a construction loan are secured by the security instrument and shall have the priority specified by subsection 5 of this section even though the future advances or future obligations cause the total indebtedness to exceed the face amount stated in the security instrument, or even though a notice of termination has been issued pursuant to subsection 6 of this section if the lender complies with paragraph (d) of subdivision (2) of subsection 9 of this section.
4. The future advances and future obligations which may be secured by a security instrument shall be limited to those obligations which are contractual in nature and those obligations referred to in subsection 3 of this section.
5. As to any third party who may acquire or claim any rights in or a lien upon the encumbered real property, the priority of the lien of a security instrument securing future advances or future obligations shall date from the time the security instrument is recorded, whether or not any third party has actual notice of any such advances or obligations and whether or not such advances or obligations are optional or obligatory with the lender. If an amendment to a mortgage, deed of trust, or other real property security instrument securing the repayment of any obligation has been recorded which causes such instrument to become a security instrument or if an amendment to a security instrument has been recorded which increases the total amount of the obligations which may be secured thereby, the priority of advances made or additional obligations incurred thereafter which exceed the original face amount shall date from the date the amendment was recorded, as to any third parties who may acquire any rights in or lien upon the encumbered real property, whether or not any third party has actual notice thereof and whether or not the advances or additional obligations are optional or obligatory with the lender.
6. At any time subsequent to the execution of a security instrument, the owner at that time may give a notice by sending it certified mail, return receipt requested, or by personal delivery (the affidavit of the party personally delivering the notice to be prima facie proof of such delivery), to the lender by sending or delivering it to the lender if such person is an individual, or otherwise by sending or delivering it to the person specified in the security instrument for such purpose, or by sending or delivering to any person on behalf of the lender, upon whom personal service of process may be served as provided for in section 506.150, other than the secretary of state, and the notice shall state therein that the party sending the notice is the present owner of the interest in the real property encumbered by the security instrument and that the prior owner elects to terminate the operation of the instrument as security for future advances or future obligations made or incurred after the date the lender receives the notice. The lender shall be entitled to rely on a statement received from a party purporting to be the then owner as a statement received from the proper party unless the statement was relied upon in bad faith. Within fifteen days of the receipt of such a notice, the lender shall at its own cost record where the original security instrument was recorded, a statement referring to the original security instrument, legally describing the real property therein, setting forth the fact of the receipt of the notice, stating the date of the receipt of such notice, and stating the total principal amount as of the date it received the notice of all the then outstanding debts and obligations secured by the security instrument. Except as otherwise provided in this section:
(1) No advances made by the lender to the borrower or other obligations incurred by the borrower to the lender, after the date the lender receives the notice contemplated in this subsection, shall be secured by the security instrument; and
(2) The total debts so secured after receipt of such notice shall be limited in principal amount to the amount stated by the lender in its recorded notice, by which statement the lender shall be irrevocably bound; and
(3) Should the lender fail to file the statement specified in this subsection within the time period specified, the then owner may file a similar statement, and the lender shall be irrevocably bound by that party's statement of the total principal amount of the outstanding debts and obligations secured by the security instrument, so long as the statement is made in good faith. Except as to the effect of the statement described in subdivision (3) of this subsection, with regard to the amount specified in the statement, the lender's receipt of such a notice from the prior owner shall not affect the amount or priority position of advances previously made, or obligations previously incurred, or interest thereafter accruing on such obligations or advances. Any limitation upon the operation of a security instrument to secure future advances and future obligations imposed as a result of the notice given in accordance with this subsection shall not affect the security or priority of subsequent advances made or subsequent obligations incurred, as described in subdivision (1) or (3) of subsection 3 of this section, or subdivision (2) of subsection 3 of this section if lender complies with paragraph (d) of subdivision (2) of subsection 9 of this section, or the right of the lender to seek recourse from the borrower for indebtedness in excess of the amount secured by the security instrument.
7. A security instrument providing for the securing of future advances or future obligations, as provided in this section, may secure a guarantee of other obligations. The priority of the lien of the security instrument securing the guarantee, up to the face amount stated in the security instrument, shall be as provided in this section as if the obligations guaranteed were future obligations.
8. At any time subsequent to the execution of a security instrument securing a guarantee, the owner at that time may give a notice, by sending it certified mail, return receipt requested, or by personal delivery (the affidavit of the party personally delivering the notice to be prima facie proof of such delivery) to* the person guaranteed by sending or delivering it to such person if such person is an individual, or otherwise by sending or delivering it to the person specified in the security instrument for such purpose, or by sending or delivering to any person on behalf of the person guaranteed, upon whom personal service of process may be served as provided in section 506.150, other than the secretary of state, and the notice shall state therein that the party sending the notice is the present owner of the interest in the real property encumbered by the security instrument and that the owner at that time elects to terminate the operation of the security instrument as security for the guarantee as to debts and obligations made or incurred after the date the person guaranteed receives the notice. The person guaranteed shall be entitled to rely upon a statement received from a party purporting to be the then owner as a statement received from the proper party, unless the statement was relied upon in bad faith. Within fifteen days of his receipt of such a notice, the person guaranteed shall, at his own cost, record where the original security instrument was recorded, a statement referring to the original security instrument, legally describing the real property therein, setting forth the fact of its receipt of the notice, stating the date of its receipt of such notice, and stating the total principal amount as of the date it received the notice of all the then outstanding debts and obligations guaranteed by the guarantee secured by the security instrument. Except as otherwise provided in this section, no guaranteed debts or guaranteed obligations incurred after the date the person guaranteed receives the notice contemplated in this subsection shall be secured by the security instrument. Except as otherwise provided in this section, the total guaranteed debts and guaranteed obligations so secured shall be limited in principal amount to the amount stated by the person guaranteed in his recorded notice, by which statement the person guaranteed will be irrevocably bound. Should the person guaranteed fail to record the statement specified in this subsection within the time period specified, the owner at that time may record a similar statement, and the person guaranteed shall be irrevocably bound by that party's statement of the total principal amount of the then outstanding guaranteed debts and guaranteed obligations secured by the security instrument, so long as the statement is made in good faith. Except as to the effect of the statement described in this subsection which may be recorded by the owner at that time with regard to the amount specified therein, the receipt of such notice from the guarantor by the person guaranteed shall not affect the amount or priority position of the security instrument for those debts or obligations previously incurred, or interest thereafter accruing on such obligations or debts which are guaranteed by the guarantee secured by the security instrument. Any limitation upon the operation of a security instrument to secure the guarantee imposed as a result of the notice given in accordance with this subsection shall not affect the security or priority of subsequent advances made or obligations thereafter incurred by the person guaranteed pursuant to subdivision (1) or (3) of subsection 3 of this section or subdivision (2) of subsection 3 of this section if the lender complies with paragraph (d) of subdivision (2) of subsection 9 of this section, the payment of which is guaranteed by the guarantee secured by the security instrument, or the right of the lender to seek recourse from the guarantor for guaranteed indebtedness in excess of the amount secured by the security instrument.
9. (1) Notwithstanding the provisions of subsections 6 and 8 of this section, if the conditions of subdivision (2) of this subsection are fulfilled, the notice of termination shall be ineffective:
(a) To the extent of the liability of the lender obligated under an irrevocable letter of credit and to the extent the security instrument secures the repayment of obligations to the lender arising therefrom; or
(b) To the extent of the liability of the guarantor to a person guaranteed and to the extent the guarantee is secured by the security instrument, and was given in a business or agricultural loan transaction; or
(c) To the extent that a security instrument secures the liability of a third party in a business or agricultural loan transaction; or
(d) As to those future advances made or future obligations incurred and described in subdivision (2) of subsection 3 of this section after receipt by the lender or person guaranteed of a notice of termination and relating to the construction project existing on the date of receipt of the notice.
(2) For the notice of termination to be ineffective as set forth in subdivision (1) of this subsection, the statement to be recorded by the lender must contain, in addition to the other information required by subsections 6 and 8 of this section, the following:
(a) Notice that the security instrument secures the repayment of obligations or advances arising from liability under an irrevocable letter of credit and the total current amount of such liability, if it secures such a liability; or
(b) Notice that the security instrument secures repayment of obligations or advances arising from a guarantee given in a business or agricultural loan transaction, if it secures such a liability; or
(c) Notice that the security instrument secures the liability of a third party in a business or agricultural loan transaction, if it secures such a liability; or
(d) Notice that the security instrument secures a construction loan and the total amount of the loan determined as if the principal amount committed to be advanced, whether or not the lender is obligated to advance all such amounts, pursuant to a construction loan was fully funded as of the date of the receipt of the notice, if it secures such a liability.
(3) Notwithstanding the provisions of subsections 6 and 8 of this section, no notice of termination shall be effective as to those future advances made or future obligations incurred and described in subdivision (1) or (3) of subsection 3 of this section.
(4) Once given, the additional information required by subdivision (2) of this subsection in the statement to be recorded shall be for informational purposes only and shall not constitute a limitation on the amount of future advances or future obligations secured, or to be secured in the future, under the security instrument.
10. Any mortgage or deed of trust which does not fall within the definition of a security instrument as set forth in subsection 1 of this section shall be governed as otherwise provided by the laws of this state without reference to this section.
11. Nothing contained in this section shall invalidate, or adversely affect the priority or validity of, any security instrument duly recorded prior to September 1, 1992. To the extent that such instrument was in compliance with the provisions of this section in effect prior to September 1, 1992, it shall continue to be governed by those provisions as if such provisions had not been repealed unless an amendment is made to such security instrument clearly indicating that the security instrument is to be governed by the provisions of this section in existence after September 1, 1992, whereupon the security instrument shall be governed hereby from and after the date the amendment is recorded. The fact that such security instrument is amended so as to be governed by this section shall not affect the rights of third parties in the encumbered real property existing on the date of the recordation of the amendment.
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(L. 1981 S.B. 40, A.L. 1982 H.B. 1781, A.L. 1984 H.B. 1409, A.L. 1991 S.B. 31, A.L. 1992 S.B. 688)
*Word "to" does not appear in original rolls.

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