§ 410. Lien priorities

(a) Definitions. For purposes of this section, the following definitions shall apply:

(1) “Debtor” means a person who owes payment or other performance of an obligation secured, but if the debtor and the owner of real estate are not the same person, the term means the owner of real estate in any provision of this section dealing with collateral.

(2) “Future advances” means funds advanced to a debtor, or other obligations incurred on behalf of a debtor, by a mortgagee after the debtor executes a mortgage.

(3) “Future advances made to protect collateral” means future advances made or incurred:

(A) for the reasonable protection of the mortgagee’s interest in the collateral, such as payment of real property taxes, hazard insurance premiums, or maintenance charges imposed under a common interest community declaration or other restrictive covenant; or

(B) under a mortgage, created to enable completion of a contemplated improvement, that secures an obligation which the debtor incurred at the time of execution of the mortgage for the purpose of making an improvement of the real estate in which the mortgage interest is given.

(4) A future advance is made “pursuant to commitment” if the mortgagee is bound at the time the mortgage is created to make it, whether or not a default or other event not within its control has relieved or may relieve it from its obligation. A future advance made “pursuant to commitment” shall also include advances and readvances made pursuant to an agreement whereby the debtor is entitled to borrow and reborrow sums advanced under it.

(b) Lien priorities; future advances.

(1) An obligation secured by a mortgage may include future advances, whether or not future advances are made pursuant to commitment.

(2) A future advance made to protect collateral is secured by a mortgage even though the mortgage does not provide for future advances.

(3) Except as expressly set forth in 9 Vt. Stat. Ann. chapter 51, subchapter 1, a future advance made under a recorded mortgage takes priority as of the date of the recording:

(A) if made pursuant to commitment, to the extent of the outstanding future advances that do not exceed the maximum amount stated in the mortgage;

(B) if not made pursuant to commitment, to the extent of future advances that are outstanding before the mortgagee receives written notice of the intervening interest.

(4) A future advance made to protect collateral takes priority as of the date a mortgage is recorded, even though the mortgagee has received written notice of an intervening interest at the time the future advance is made.

(c) If a mortgaged property includes a homestead within the meaning of chapter 3 of this title, any future advance made pursuant to commitment shall not require spousal consent pursuant to section 141 of this title, provided that such written spousal consent to the mortgage was previously obtained or was not required at the time of the making of the mortgage.

(d) In the case of conflict between this section and any other provision of law, except for the provisions of Title 9A, this section shall control. (Added 1999, No. 153 (Adj. Sess.), § 32, eff. May 24, 2000; amended 2023, No. 6, § 333, eff. July 1, 2023.)