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<br />(3) "Obligatory advance" means any advance which, under the terms of the credit
<br />line deed of trust or other agreement, the secured party has legally obligated itself to make in the absence of
<br />a default, breach, or other such event. Obligatory advances include, but are not limited to, advances which
<br />the secured party has agreed to make as a term or condition of the credit line deed of trust or other related
<br />agreement; obligations arising out of the occurrence of a condition, event or circumstance contemplated by
<br />the agreement; obligations arising on a specified date or time; or advances made upon application therefor
<br />by the grantor under the credit line deed of trust or by another obligor whose indebtedness is secured by the
<br />deed of trust.
<br />(b) A credit line deed of trust shall comply with all the provisions of this article and shall
<br />either (i) have clearly entitled at the beginning thereof either in capital letters or in language underscored,
<br />the words, "A CREDIT LINE DEED OF TRUST ", or (ii) state conspicuously either immediately above or
<br />beneath the caption at the top of the first page of the credit line deed of trust the words, "This instrument
<br />secures an obligation that may increase and decrease from time to time." A credit line deed of trust shall
<br />be, from the time it is duly recorded as required by law, security for all indebtedness or other obligations
<br />secured thereby at the time of recording and for all future advances secured thereby in an aggregate
<br />principal amount outstanding at any time not to exceed the maximum amount stated in the credit line deed
<br />of trust, without regard to whether the future advances are contracted for at the time of recordation of the
<br />credit line deed of trust or whether the secured party under the credit line deed of trust readvances principal
<br />sums repaid. The credit line deed of trust shall also be security for interest on the principal sums and for
<br />taxes, insurance premiums and other obligations, including interest thereon, undertaken by the secured
<br />party in the credit line deed of trust or in the related Loan Documents, note, contract, or other agreement or
<br />evidences of indebtedness or obligations secured thereby. The interest, taxes, insurance premiums and other
<br />obligations when added to the total principal amount of the obligations outstanding at any time may
<br />increase the amount secured by the credit line deed of trust above the stated maximum amount.
<br />(c) A credit line deed of trust, in addition to other provisions of this code, shall conform with
<br />the following:
<br />(1) The credit line deed of trust shall contain specific provisions permitting or
<br />requiring future advances and stating whether the future advances are intended to be obligatory or
<br />nonobligatory;
<br />(2) At no time may the unpaid principal balance of the obligation or indebtedness
<br />secured by the credit line deed of trust exceed the maximum amount stated therein, except as specifically
<br />provided for in subsection (b) of this section; and
<br />(3) The original credit line deed of trust must be executed and recorded after the
<br />sixth day of June, one thousand nine hundred eighty-four.
<br />(d) Except as otherwise provided herein, a credit line deed of trust, to the extent of the
<br />principal amount of the loan indebtedness or obligation secured thereby, interest thereon, taxes, insurance
<br />premiums and other obligations, including interest thereon, secured hereby, has priority over all other deeds
<br />of trust, liens and encumbrances of every nature, however created or arising, to the same extent and for the
<br />same amount as if all the amounts were advanced on the date and at the time the credit line deed of trust is
<br />recorded.
<br />(e) Any mechanic's lien, abstract of judgment, notice of lis pendens, other deed of trust or
<br />other lien of encumbrance, which affects the property encumbered by the credit line deed of trust and
<br />which is duly recorded and perfected as required by law after the recording of the credit line deed of trust,
<br />shall have priority over any advances secured by the credit line deed of trust that are not obligatory and that
<br />are made by the secured party under the credit line deed of trust after receipt by the secured party, at the
<br />address provided for the purpose of notification in the credit line deed of trust, of written notice of such
<br />mechanic's lien, judgment lien, notice of lis pendens, other deed of trust or other lien or encumbrance.
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