55-58.2 - Credit line deed of trust defined; relative priority of credit line deed of trust and other instruments of judgment. - Virginia Statutes

§ 55-58.2. Credit line deed of trust defined; relative priority of creditline deed of trust and other instruments of judgment.

1. For the purpose of this title, the term "credit line deed of trust" isany deed of trust, mortgage, bond or other instrument, entered into afterJuly 1, 1982, in which title to real property located in this Commonwealth isconveyed, transferred, encumbered or pledged to secure payment of moneyincluding advances to be made in the future by the noteholder named in thecredit line deed of trust.

2. A credit line deed of trust shall set forth on the front page thereof,either in capital letters or in language underscored, the words "THIS IS ACREDIT LINE DEED OF TRUST." Such phrase shall convey notice to all partiesthat the noteholder named therein and the grantors and other borrowersidentified therein have an agreement whereby the noteholder may make orcontemplates making advances from time to time against the security describedin the deed of trust. Such deed of trust shall specify therein the maximumaggregate amount of principal to be secured at any one time.

3. From the date of the recording of a credit line deed of trust, the lienthereof shall have priority (i) as to all other deeds, conveyances, or otherinstruments, or contracts in writing, which are unrecorded as of such dateand of which the noteholder has no knowledge or notice and (ii) as tojudgment liens subsequently docketed, except as provided in subsection 4 ofthis section. Such priority shall extend to any advances made following therecordation of the credit line deed of trust. Amounts outstanding, togetherwith interest thereon, and other items provided by § 55-59, shall continue tohave priority until paid or curtailed. Mechanics' liens created under Title43 shall continue to enjoy the same priority as created by that title.Purchase money security interests in goods and fixtures shall have the samepriority as provided in §§ 8.9A-317 et seq.

4. Notwithstanding the provisions of subsections 1, 2 and 3 of this section,if a judgment creditor gives notice to the noteholder of record at theaddress indicated in the credit line deed of trust, such credit line deed oftrust shall have no priority as to such judgment for any advances orextensions of credit made under such deed of trust from the day followingreceipt of that notice except those which have been unconditionally andirrevocably committed prior to such date.

5. In addition to the language specified in subsection 1 of this section, thecredit line deed of trust shall set forth the name of the noteholder securedand the address at which communications may be mailed or delivered to him.Such name or address may be changed or modified by duly recorded instrumentexecuted by the noteholder only. If the note or indebtedness secured by thecredit line deed of trust is assigned or transferred, the name and address ofthe new noteholder may be set forth in the certificate of transfer providedby § 55-66.01. Such original name or address, or if changed, such changedname or address, shall be the address for delivery of notices contemplated bythis section. Receipt of notice at such address shall be deemed receipt bythe noteholder.

6. [Repealed.]

7. The grantor may require, at any time, a modification under the credit linedeed of trust, whereby any priority over subsequently recorded deeds of trustis surrendered as to future advances, which advances are in the discretion ofthe party secured by the credit line deed of trust.

8. Notwithstanding the provisions of subsections 1, 2 and 3 of this section,if a deed of trust under this section is a subordinate mortgage, as definedin § 55-58.3, upon the recording of a refinance mortgage, as defined in §55-58.3, the credit line deed of trust shall retain the same subordinateposition with respect to the refinance mortgage as it had with the priormortgage, as defined in subsection A of § 55-58.3, provided that therefinance mortgage complies with the requirements of § 55-58.3.

(1982, c. 230; 1983, c. 124; 1984, c. 19; 1989, c. 346; 1997, c. 205; 2000,c. 971.)