I. INTRODUCTION
The passage of LB 84 (2001 Legislative Session) by the Nebraska Legislature, effective September 1, 2001, permits financial institutions to utilize a “short form” trust deed in connection with lending transactions and thereby reduce the costs and filing fees associated with the preparation and recording of trust deeds. The statute relating to trust deeds is found in Neb.Rev.Stat. § 76-2,125. The statute also authorizes a “short form” mortgage, but due to the prevalent use of trust deeds to secure real estate loans, this article focuses on provisions relating to short form trust deeds. The procedures for implementing the new law are discussed in this article. A sample “short form trust deed” follows this article and is labeled “Exhibit A.”
II. MASTER FORM INSTRUMENT
To utilize short form trust deeds, a financial institution must first file a “master form instrument” in the office of the Register of Deeds of each county in which short form trust deeds will be filed by the financial institution. Simply put, the master form instrument is the trust deed currently utilized by your financial institution without the blanks that are specific to a particular lending transaction filled in (e.g., name of trustor [borrower], name of trustee, name of lender [beneficiary], real estate description, date of trust deed, date of promissory note, maximum obligation limit, etc.)
Upon payment of the necessary fees, the register of deeds is required to file the master form instrument, index it under the name of the “person” (lender or beneficiary) causing it to be filed and record it in the manner provided for miscellaneous instruments relating to real estate
COMPLIANCE NOTE: The master form instrument must be entitled on its face “Master form recorded by ________________” (insert name of “person” [lender of beneficiary] causing the instrument to be recorded.
III. SHORT FORM DEED OF TRUST
Once the master form instrument has been filed in a county, a financial institution may elect to utilize short form trust deeds in that county.
COMPLIANCE NOTE: A master form instrument must be filed in each county where short form trust deeds are to be utilized.
The short form trust deed may incorporate, by reference, any of the provisions of the master form instrument for real estate located in Nebraska, provided that the reference in the short form trust deed states: (a) that the master form instrument was recorded in the county in which the trust deed is offered for record; (b) the date when and the book and page or pages or recording number where the master form instrument was recorded; and (c) that a copy of the master form instrument was furnished to the person executing the trust deed.
COMPLIANCE NOTE: A copy of the master form instrument should be provided to each person executing the trust deed.
“Exhibit A” that follows this article is a sample short form trust deed, that you may tailor to your own financial institution’s needs. The sample short from trust deed incorporates by reference the provisions of the master form instrument and contains basic information relating to a specific lending transaction.
COMPLIANCE NOTE: The sample short form trust deed contains language relating to a “future advance clause” which may or may not apply to the particular lending transaction and may be removed or retained as applicable.
The statute also provides that any short form trust deed presented for recording which contains or has attached thereto a copy or reproduction of the master form instrument that is identified by its title as a master form instrument and states the date it was recorded and the book and page or pages or recording number where it was recorded is not to be recorded by the Register of Deeds if it is proceeded by the words “Do Not Record” or “Not To Be Recorded” and is plainly separated from the short form trust deed in such a manner that it will not appear upon a photographic reproduction of any page containing any part of the short form trust deed.
COMPLIANCE NOTE: There is no obligation for a copy or reproduction of the master form instrument to be attached to or accompanied the short form trust deed for recording.
IV. REAL ESTATE TRUST DEED HOMESTEAD WAIVER AND DISCLAIMER
In any trust deed executed on or after November 21, 1986, upon agricultural land, the trustor may make a designation of homestead in the body of such mortgage or trust deed. In any case where the debtor has neither designated a homestead nor waived or disclaimed the right to make a designation of homestead, the act allows the debtor to defer the right to designate a homestead until the decree of foreclosure is entered upon the trust deed.
The Farm Homestead Protection Act provides the disclaimer of right to make a designation of homestead which must be in writing and must contain a statement by the trustor that no part of his or her homestead is presently or in the future will be situated upon the real estate described in the trust deed.
The Farm Homestead Protection Act further provides for a written acknowledgement under which a trustor can waive his or her right to make a designation of homestead. The waiver by written acknowledgement of right to make a designation of homestead must contain a statement that the trustor understands that he or she has the right to make a designation of homestead in the trust deed and that the execution of the acknowledgement constitutes the waiver rights otherwise available for the purpose of affording the trustor the opportunity to retain his or her homestead in the event of a default of such trust deed.
Both the written disclaimer and waiver by written acknowledgement must be set forth as a preface to the trust deed and must be filed for record as a part of the trust deed in the office of the Register of Deeds in the county where the real estate is located.
COMPLIANCE NOTE: The written disclaimer or waiver by written acknowledgement must be set forth as a preface to a shortform trust deed and must be filed for record as a part of the short form trust deed.
V. CONCLUSION
Financial institutions utilizing the short form trust deed procedures will realize a savings for their borrowers in the form of reduced filing fees. The decision to utilize the short form trust deed procedure is left up to each individual financial institution as the traditional method of filing long form trust deeds remains in the sole discretion of the financial institution.
EXHIBIT A: SHORT FORM DEED OF TRUST (WITH FUTURE ADVANCE CLAUSE)
1. DATE AND PARTIES. The date of this Short Form Deed of Trust (“Security Instrument”) is and the parties are as follows:
TRUSTOR (“Grantor”):
Whose mailing address is:
TRUSTEE:
BENEFICIARY (“Lender”):
2. CONVEYANCE. For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and to secure the Secured Debt (defined blow) and Grantor’s performance under this Security Instrument, Grantor irrevocably grants, conveys and sells to Trustee, in trust of the benefit of Lender, with power of sale, all of that certain real property located in_______________ County, Nebraska, described as follows:
together with all rights, profits, royalties, income and other benefits derived from the real property; all leases and subleases covering the real property or any portion thereof, now or hereafter existing or entered into, and all right, title and interest of trustor thereunder; all interest, estate or other claims, both in law and in equity, which trustor now has or may hereafter acquire in the real property; all easements, rights-of-way tenements, hereditaments and appurtenances thereof and thereto; all oil and gas rights and profits, water rights and water stocks; all right title interest of trustor, now owned or hereafter acquired, in and to any land lying within the right-of- way of any street or highway adjoining the real property, and in all building fixtures, improvements, and appurtenances now or hereafter erected thereon or belonging thereto; and any and all awards made for the taking by eminent domain or by any proceeding or purchase in lieu thereof, of the whole or any part of the real property.
3. MAXIMUM OBLIGATION LIMIT. The total principal amount secured by this Security Instrument at any one time shall not exceed $_______________________. This limitation of amount does not include interest and other fees and charges validly made pursuant to this Security Instrument. Also, this limitation does not apply to advances made under the terms of this Security Instrument to protect Lender’s security and to perform any of the covenants contained in this Security Instrument.
4. SECURED DEBT AND FUTURE ADVANCES. The term “Secured Debt” is defined as follows:
5. MASTER FORM DEED OF TRUST. By the delivery and execution of this Security Instrument, Grantor agrees that all provisions and sections of the Master Form Deed of Trust (“Master Form”), inclusive, dated __________________, 20____ and recorded as Recording Number__________________or Instrument Number________________________in Book_________________________at Page ____________________________(s) of the Official Records in the Office of the Register of Deeds of _____________________County, Nebraska, are hereby incorporated into, and shall govern, this Security Instrument.
SIGNATURES: By signing below, Grantor agrees to perform all covenants and duties as set forth in this Security Instrument. Grantor also acknowledges receipt of a copy of this document and a copy of the provisions contained in the previously recorded Master Form Deed of Trust (the Deed of Trust-Bank/Customer Copy).
ACKNOWLEDGEMENT:
The foregoing instrument was acknowledged before me on _____________________, 20___, by
_____________________________________________
* NOTE: The language regarding future advances under paragraph 4(b) above may be deleted if the Master Form Deed of Trust utilized by the financial institution contains a future advances clause.