(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 (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]