I. INTRODUCTION
Section 76-1002 establishes a procedure by which a trustor or his or her successor in title under a trust deed may limit an “optional future advances” clause in a prior recorded trust deed for purposes of establishing priority and also establishes the procedure by which a subsequent beneficiary under a trust deed, mortgagor, lienholder or claimant may establish priority over subsequent optional future advances under a prior recorded trust deed.
II. PROCEDURES
Section 76-1002 establishes two methods by which optional future advances may be impacted.
First, the trustor (borrower) or his or her successor in title under a trust deed may limit the amount of optional future advances secured by a prior recorded trust deed by filing a notice for record in the office of the Register of Deeds of each county in which the trust property or some part thereof is located. A copy of the notice to the beneficiary (lender) under the prior recorded trust deed must be sent by certified mail by the trustor to the beneficiary at the address of the beneficiary set forth in the trust deed or, if the trust deed has been assigned, to the address of the most recent assignee reflected in a recorded assignment of the trust deed. Upon satisfaction of the notice requirement, the amount of secured optional future advances under the prior recorded trust deed is limited to not less than the amount actually advanced at the time of receipt of notice by the beneficiary.
Second, the filing for record of a subsequent trust deed, mortgage, lien or claim against the trust property combined with the receipt of written notice of the filing for record of such trust deed, mortgage, lien or claim against the trust property by the beneficiary of the prior recorded trust deed serves to place the beneficiary of the prior recorded trust deed “on notice” of the subsequent filing.
Any optional future advances made by the beneficiary of the prior recorded trust deed subsequent to receiving written notice of the filing shall be junior in priority to the subsequently filed trust deed, mortgage, lien or claim. The notice of filing of the subsequent trust deed mortgage lien or claim must be sent by certified mail to the beneficiary at the address of the beneficiary set forth in the trust deed or, if the trust deed has been assigned, to the address of the most recent assignee reflected in a recorded assignment of the trust deed.
III. FUTURE ADVANCES NECESSARY TO PROTECT THE SECURITY
The 2011 Nebraska Legislature adopted amendments to Neb.Rev.Stat. § 76-1002 which served to clarify that the ability of a borrower to limit the amount of optional future advances secured by a prior trust deed does not apply to “future advances necessary to protect the security.” Under these provisions, an optional future advances clause is not impacted by the procedures to limit optional future advances described above, to the extent of “future advances necessary to protect the security.” Under Nebraska law, future advances necessary to protect the security include, but are not limited to, advances for payment of real property taxes, special assessments, prior liens, hazard insurance premiums, maintenance charges imposed under a condominium declaration or other covenant, and costs of repair, maintenance, or improvements.
IV. UNLIMITED OPTIONAL FUTURE ADVANCES
Under prior law, there were concerns regarding the ability to secure “unlimited” optional future advances under a trust deed. Optional future advances secured by mortgages were subject to specific statutory limitations, while the statutes pertaining to trust deeds were silent on this subject. Under Neb.Rev.Stat. § 76-238.01 (mortgages) and Neb.Rev.Stat. § 76-1002 (trust deeds), the law has been clarified to allow unlimited optional future advances to be secured by a mortgage or a trust deed, unless otherwise limited in the mortgage or trust deed.