Request By:
Ms. Yvonne Guy,
Warren County Clerk
429 East Tenth Street
Bowling Green, Kentucky 42101
Opinion
Opinion By: Frederic J. Cowan, Attorney General; Rosemary F. Center, Assistant Attorney General
This is in response to your letter in which you attach two forms styled "Agreement for Release as to Future Advances" and request an opinion regarding whether the forms comply with KRS 382.520(3)(B) for purposes of recording.
KRS 382.520(1) and (2) provide that a real estate mortgage may secure additional sums of money if that mortgage stipulates the maximum amount of indebtedness which may be secured. The statute further requires a mortgagee to release any amount in excess of the actual amount of indebtedness when requested by the mortgagor.
In reference to the release, KRS 382.520(3)(a) in pertinent part provides that:
The written request referred to in subsection (2) of this section shall be signed by the mortgagor or his agent or attorney, and shall set forth a description of the real property to which the request relates , the date, parties to, the volume and initial page of the record of the mortgage referred to in subsection (1) of this section, and a description of the nature, amount and holder of the lien or encumbrance which the mortgagor intends to place upon such real property . . . .
[Emphasis added.]
The question which you raise regarding the two drafts of the "release" is whether a description of the real property should be included. In response, the language contained in subsection (3) requires that a release contain a description of the property. After reviewing the two drafts, it appears that one contains a more detailed description than the other. We refer you to OAG 81-100 (enclosed) for a discussion of the sufficiency of description for purposes of recording instruments pursuant to KRS 382.110.
You also ask whether KRS 382.520 is applicable to instruments other than open-ended mortgages, specifically, vendor liens. KRS 382.520 is applicable "In all cases where a loan is secured by a real estate mortgage . . . . [Emphasis added.] Subsection (2) further restricts the application of the statute to a real estate mortgage "if the mortgage by its terms stipulates the maximum additional indebtedness which may be secured thereby." A vendor lien is retained by the grantor in a deed to secure any indebtedness on the purchase price whereas a real estate mortgage is a separate instrument. Therefore, KRS 382.520(3)(b) would not be applicable to vendor liens or to real estate mortgages which by their terms fail to secure additional amounts.