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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

Kansas

The instrument is a mortgage, not a deed of trust. There is a statutory form, but it is seldom used. K.S.A. 58-2303. Property occasionally is seller-financed by “contract for deed,” which creates an “equitable mortgage.” The buyer should file an Affidavit of Equitable Interest to place its interest of record. (K.S.A. 79-3102(d)(5)). Such arrangements, though lawful, should be avoided because of unpredictable enforcement.

SECURITY INSTRUMENT USED

For the mortgage to be recorded: (1)&nbsp;margins should be 3” at top of first page and 1” elsewhere, (2)&nbsp;all mortgagors must acknowledge their signatures before a notary, and (3)&nbsp;the recording fee ($21 first page, $17 each additional page) must be paid. K.S.A. 58-2221. The mortgage should use the exact legal description of the encumbered property. Kansas adopted the Uniform Real Property Electronic Recording Act effective July&nbsp;1, 2007. K.S.A. 58-4401 et seq. Standards to implement the Act were adopted by the Kansas Electronic Recording Commission, and revised July 1, 2015. The standards (see Kansas Government Information (KGI) Online Library, Electronic Recording Commission, Kansas) are based on those issued by the Property Records Industry Association (PRIA).

RECORDING REQUIREMENTS

The right of redemption may be waived, except on loans involving 1- to 2-family residences and agricultural land. K.S.A. 60-2414(a).

STATUTES TO BE WAIVED

No prepayment penalty is allowed on home loans paid off more than 6 months after execution of the note.

UNUSUAL TREATMENT OF STANDARD PROVISIONS

It is customary to include such provisions in a mortgage.

SECURING FUTURE ADVANCES TO PROTECT THE COLLATERAL, INCLUDING PAYMENT OF TAXES AND INSURANCE

For a mortgage to secure future advances, the advances must be of the same kind or quality or relate to the same transaction or series of transactions as the original advancements under the mortgage, or the new note must state that the new debt is secured by the mortgage. The lien of the mortgage “. . . shall not exceed at any one time the maximum amount stated in the mortgage.” K.S.A. 58-2336.

FUTURE ADVANCES

TRUSTEE UNDER DEED OF TRUST

Kansas is a judicial foreclosure state. Suit is filed as a civil case, joining debtor and those with interests of record. Service of process is obtained as in civil suits, usually including publication service upon parties not found and appointment of counsel to defend unknowns and persons in military service. The judgment is for the debt, foreclosure, determination of lien priorities and other interests and quiet title and authorizes a sheriff's sale at public auction. The judgment is final at that time. The sheriff's sale is final when the court, upon motion and notice, confirms it.

BRIEF DESCRIPTION OF PROCEDURE

6 months, including redemption period.

TYPICAL LENGTH OF PROCEDURE

The owner's redemption period can be up to 12 months, but is usually reduced to 3 months, if less than 1/3 of the amount of the original indebtedness has been paid. Lien creditors may also redeem, and thereafter the owner may redeem from the creditor. The redeeming owner or creditor must pay the amount bid at sale, plus interest. K.S.A. 60-2414

REDEMPTION PERIOD AND PRICE

The right to redeem may be waived, except by natural persons as to 1- to 2-family dwellings and agricultural land. During the foreclosure action, or after the sale, the owner's redemption right may be extinguished if the property is abandoned or not occupied in good faith. K.S.A. 60-2414(a).

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

The amount of the confirmed sale is a credit against the judgment amount and so establishes the judgment deficiency. The judgment becomes dormant after 5 years if it is not kept alive by executions, and the judgment may be revived within two years after the date on which the judgment became dormant if the holder thereof files a motion for reviver and files a request for the immediate issuance of an execution thereon if such motion is granted. K.S.A. 60-2403 and K.S.A. 60-2404.

DEFICIENCIES

Leases are foreclosed when the lessee is made a party to foreclosure action. Otherwise, a lease is not affected.

EFFECT OF FORECLOSURE UPON LEASES

The holder of a subordinate mortgage who is joined in the foreclosure of a senior mortgage must have its interest adjudicated in the foreclosure or lose its right to any excess sale proceeds and its right to creditor redemption; if it defaults or otherwise fails to protect its lien, it will be left in the status of an unsecured creditor. Junior mortgage holders must be served with notice of a sheriff's sale under the service requirements of the Code of Civil Procedure; simple publication of a notice of sale is not sufficient.

JUNIOR MORTGAGES

First mortgage rates for loans made primarily for personal, family, or household purposes cannot exceed 15% per annum. K.S.A. 16-207(a). Second mortgage rates are governed by the Kansas Uniform Consumer Credit Code: 18% with limitations on prepaid finance charges. But parties to a first mortgage loan secured by an interest in a manufactured home may elect the UCCC 18% rate limit. K.S.A. 16a-2-401(4).

USURY CEILING

Adjustable rate loans secured by real estate or a contract for deed and business or agricultural loans are exempt. K.S.A. 16-207(e) and K.S.A. 16-207(g).

USURY EXEMPTIONS

Kansas adopted the official UCC version treatment of fixtures. There are 2 ways to perfect a lien on goods that are or are to become fixtures. A UCC financing statement can be filed with the Secretary of State, as with other goods, if it is not filed as a fixture filing. K.S.A. 84-9-501(a)(2). More commonly, to obtain fixture filing status, the financing statement is filed as a fixture filing with the Register of Deeds in the county where the real estate is located. K.S.A. 84-9-501(a)(1)(B). Filings for as-extracted collateral and timber to be cut are also local. K.S.A.&nbsp;84-9-501(a)(1)(A). Filings for all other collateral are with the Secretary of State. K.S.A. 84-9-501(a)(2).

LOCATIONS FOR FILING

The mortgage can be filed as a fixture filing with payment of an additional fee of $15. K.S.A. 84-9-502(c).

SECURITY INSTRUMENT AS FIXTURE FILING

UNUSUAL PROVISIONS OR REQUIREMENTS

No statutes, but waivers of impairment of collateral, extension of time, and all defenses based on the law of suretyship are common.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY

No separate action is necessary to establish a deficiency judgment. Judgment is entered in the foreclosure action for the amount of the indebtedness owed by the obligors/guarantors. The guarantor must be named as a party to the foreclosure action or any right to later pursue the guarantor is waived. After sheriff's sale and confirmation of the sale by the court, the judgment amount is reduced by the amount bid at sheriff's sale. The obligors/guarantors are liable for the deficiency owed following confirmation of the sheriff's sale, without any subsequent action required to establish a deficiency judgment.

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING DEFICIENCY JUDGMENTS

Revised Article&nbsp;9 was adopted in Kansas effective July&nbsp;1, 2001, as amended.

UNIFORM COMMERCIAL CODE

5 years from date of default on written instruments. K.S.A. 60-511.

STATUTE OF LIMITATION PERIOD

A mortgage will become “void” 42 years after recording unless an affidavit identifying the mortgage is filed or a foreclosure action is commenced. K.S.A. 58-2333i.

DURATION OF MORTGAGE

Record a separate instrument called discharge, release, or satisfaction of mortgage. It must state the names of the mortgagor and mortgagee, the legal description and the recording data. K.S.A. 58-2306. A closing agent may execute a release. There is a $500 penalty, plus attorneys' fees, if a mortgagee fails to timely release a mortgage after demand. The mortgagee must notify the Register of Deeds of the owner's full name and last known address so the county has a new address for tax statements. K.S.A. 58-2309a.

REQUIREMENTS FOR RELEASE OF LIEN

Spouse generally must join in the execution of the mortgage to extinguish homestead rights and spousal marital rights.

HOMESTEAD ISSUES

Kansas is not a community property state.

COMMUNITY PROPERTY

None. K.S.A. 79-3102, 79-3106 and 79-3105 (all repealed effective 1/1/2019).

MORTGAGE TAX

DOCUMENTARY STAMP TAX

TRANSFER TAX

A choice of law designation will be effective to determine the rights of parties to the agreement where there is a reasonable relationship of the transaction to the state whose law is chosen, except for provisions that violate Kansas public policy, and except that matters relating to transfers or creation of a security interest in real property, the nature of an interest in real property that is transferred or created by the transaction, the method for foreclosure of a lien on real property, the nature of an interest in real property that results from foreclosure, or the manner and effect of recording or failing to record evidence of the transaction will be governed by Kansas law.

ENFORCEABILITY OF AGREEMENT OF BORROWER AND LENDER AS TO CHOICE OF LAW PROVISIONS

A receiver will usually be appointed where it is provided for in the mortgage or in an assignment of rents, or where there is waste. K.S.A. 58-2343.

RECEIVER AVAILABLE

Reasonable expenses incurred in making, closing, or disbursing a first mortgage loan are not considered interest. Fees other than reasonable expenses are not prohibited but must be considered as interest in usury calculations. K.S.A. 16-207.

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

Kansas does not have special rules relating to modifications of promissory notes and mortgages, but neither a creditor nor a debtor may maintain an action on a credit agreement unless the agreement complies with K.S.A. 16-117 and K.S.A. 16-118 (material terms and conditions are in writing and the agreement is signed by the debtor and the creditor).

MODIFICATION

Kansas law does provide state authority for the creation or filing of state liens against real property in connection with environmental obligations or liabilities. Kansas law at K.S.A. 79-2614 also provides for the place of filing of federal liens such as an EPA Superfund lien, stating in pertinent part: (a)&nbsp; Notices of liens, certificates and other notices affecting federal tax liens or other federal liens must be filed in accordance with the provisions of this act. [and] (b)&nbsp; Notices of liens upon real property for obligations payable to the United States and certificates and notices affecting the liens shall be filed in the office of the register of deeds of the county in which the real property subject to the liens is situated.

ENVIRONMENTAL LIEN LAW

Kansas does not currently have a local bar opinion report that articulates standard accepted opinion practices for the jurisdiction.

LEGAL OPINIONS

Second mortgages and certain high loan-to-value first mortgages are subject to the Kansas Uniform Consumer Credit Code. The UCCC limits prepaid finance charges to 8% of the amount financed, including no more than 5% of the amount financed to the lender or any lender-related party. K.S.A. 16a-2-401(6)(a).

UCCC LOANS

A manufactured home is personal property, the ownership of which is evidenced by a certificate of title, much like a motor vehicle. K.S.A. 58-4204. A security interest is perfected by notation of the lender's name on the certificate of title. A purchase money financing lender may obtain a first-priority security interest by filing a notice of security interest with the Kansas Division of Motor Vehicles, even before the certificate of title is issued. The owner of a manufactured home may change the nature of it from personal property to real property if the home is “permanently affixed to real property, by placement upon a permanent foundation of a type not removable intact” from the real property. There is a statutory procedure for eliminating the certificate of title by filing an application and surrendering the certificate of title; the secured creditor is protected by the statutory requirement of a release of the security interest. Upon approval by the Division of Motor Vehicles, the approved application is recorded with the local Register of Deeds. After recording, the certificate of title is eliminated and the manufactured home “shall be considered for all purposes an improvement to real property.” The lien of a mortgage recorded before or after elimination of the certificate of title attaches to the manufactured home. A “modular home” is specifically excluded from the definition of manufactured housing (K.S.A. 58-4203).

MANUFACTURED HOUSING

<ol start="1101">
 <li> INCEPTION OF L&M LIEN (Priority of Lien Mortgage): The priority date of an L&M lien is the date of commencement of furnishing of labor, material, equipment or supplies used at the site. All lien claimants enjoy the priority of the “earliest unsatisfied lien.” K.S.A. 60-1101. Accordingly, L&M liens filed after the mortgage is recorded will have priority over the mortgage if work began before the mortgage was recorded.</li>
</ol> On new construction, the Lender customarily obtains a “no start survey” or “no start affidavit” from a surveyor, certifying that no work has started on the project for which a mechanic's lien could be filed. Title companies have insured mortgage priority over possible mechanic's liens. However, because case law has extended lien priority to design professionals and other off-site suppliers even if the work was not evident from inspection at the site, title coverage is more difficult to obtain. A high level of diligence by a lender is due. <ol>
 <li> PRIORITY AS TO REMOVABLE FIXTURES: The holder of a purchase money security interest in a removable fixture may obtain judgment to remove the fixture ahead of the preexisting mortgage, but is not entitled to proceeds from a foreclosure sale of the real estate.</li>
</ol>

LABOR AND MATERIAL LIEN CLAIMS (“L&M LIEN”)—PRIORITY ISSUES

The preferred form generally required by lenders is the American Land Title Association (ALTA) Loan Policy (Form 6-17-06).

FORM USUALLY REQUIRED BY LENDER

(Note: Kansas law requires an endorsement to be first filed with the Kansas Insurance Commissioner.) The following are commonly recommended:

ENDORSEMENTS AVAILABLE

Access

ALTA Form 3.0 describes current zoning and permitted uses. Form 3.1 does the same, but also insures specific structure.

Zoning

Variable Interest Rate

(ALTA Form 8.1) (Loans on residential only.).

Environmental Protection Lien

Restrictions, Encroachments, Minerals

Does not require acceleration of debt or resort to other collateral before recovery of a claim on the policy.

Contingent Loss/First Loss

Doing Business

Future Advances

Improvements are located within property description. Encroachments shown.

Location Endorsements (Contiguity/Survey)

Protects priority of mortgage against later filed mechanic's liens. (Coverage is given by removal of the mechanic's lien exception rather than an endorsement.)

Kansas

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for Kansas

Kansas

Mortgage Law Summary

Continue reading theMortgage Law Summary for Kansas

Continue reading the
Mortgage Law Summary for Kansas