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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

Mississippi

A deed of trust is the customary security instrument used to create a lien on real property in Mississippi. The terms “deed of trust” and “mortgage” are used in this review interchangeably; however, both should technically be construed as a deed of trust.

SECURITY INSTRUMENT USED

A paper document must contain an original signature or signatures, and in the case of an electronic document, it must contain an electronic signature or signatures. A notary acknowledgment in compliance with the Mississippi statutory form is required for constructive notice purposes. Witnesses are not necessary. Under Mississippi statutes, an acknowledgment is acceptable for the purpose of providing constructive notice if the acknowledged instrument is accepted by the recording office of the county in which the instrument is recorded. Indexing instructions identifying the property by quarter sections, section, township and range or governmental or subdivision lots must be included on first page of the instrument. Instruments affecting previously recorded instruments (such as a substitution of trustee or cancellation of a deed of trust) do not require an indexing instruction by reference to the real estate description but should contain a marginal notation of the book and page reference of the previously recorded instrument. In addition, the following requirements should be satisfied: <ul>
 <li>The name and physical business mailing address and business or employment telephone number of the individual who prepared the document should be included on the first page. Every grantor, grantee, borrower, beneficiary, trustee or other party to the instrument, together with the address and phone number, should also be included on the first page;</li>
 <li>Documents should be printed on only 1 side of the page;</li>
 <li>Documents must be printed in no smaller than 10-point font size or include an attached exact typewritten or printed copy that is at least 10-point font size;</li>
 <li>Documents must be sufficiently legible to produce a clear reproduction;</li>
 <li>Documents must be on white paper of not less than 20-pound weight;</li>
 <li>All signatures on a paper document to be recorded shall be in blue or black ink with the corresponding name to be typed, printed, or stamped beneath the original signature;</li>
 <li>The first page of the document shall have a 3” top margin; all other pages shall have a minimum of &frac34;” and shall contain the name of the document.</li>
</ul> If the statutory requirements are not met, an additional recording fee in the amount of $10 will be charged for the recording of the document. While these additional requirements are statutorily required, their absence does not affect the validity or enforceability of the recorded document or instrument if the clerk accepts the document for recording.

RECORDING REQUIREMENTS

The grantor (mortgagor) should waive the provisions of &sect;&nbsp;89-1-55 of the Code, and &sect;&nbsp;111 of the Mississippi Constitution insofar as either provision restricts the right of the trustee to offer property for sale in parcels, as a whole or in any order that the trustee may elect. Without the waiver, all lands comprising a single tract must first be offered in subdivisions not exceeding 160 acres.

STATUTES TO BE WAIVED

There are no unusual treatments in Mississippi for standard provisions.

UNUSUAL TREATMENT OF STANDARD PROVISIONS (prepayment penalties, escrows, etc.)

A deed of trust may secure future advances. Future advance clauses are treated as any other contract provision and will be enforced in accordance with the terms of the document. The standard language is substantially as follows: In addition to the indebtedness specifically mentioned above and any and all extensions, modifications, or renewals of the same or any part thereof, this deed of trust also secures such future and additional advances as may be made to the grantor, or any of them, and any and all other debts, obligations, or liabilities, direct or contingent, of the grantor, or any of them, to the beneficiary, whether now existing or hereafter arising at any time before actual cancellation of record of this instrument, whether the same be evidenced by note, open account, overdraft, endorsement, guaranty, or otherwise. In order to “dragnet” an indebtedness in existence on the date of the deed of trust, the indebtedness should be specifically described.

SECURING FUTURE ADVANCES

The lien of the deed of trust may secure advances to protect the collateral, including payment of taxes and insurance. Standard language is substantially as follows: This deed of trust secures any advance or payment made by the beneficiary to protect the collateral, including payment of taxes, rent, insurance, and any prior lien. Additionally, this deed of trust secures any advances, including attorneys' fees, made by the beneficiary to protect title to the collateral, to remove any cloud, to correct any mistake or error in this document, or otherwise to protect its lien position and rights in the collateral. The payment of any amount or taking of action by the beneficiary shall not operate as a cure of the default as between the grantor and the beneficiary. Although the issue is not without some doubt, an optional advance made after the filing date of the deed of trust likely has priority over intervening liens. Special priority rules apply to construction advances and federal tax liens. There is no statutory provision giving a junior lienholder a right to notice of any kind, but senior lienholders frequently notify holders of junior liens prior to foreclosure as a matter of custom and practice. Payment of the money secured by a deed of trust automatically extinguishes the lien, but automatic extinguishment does not apply to a deed of trust that states on its face that it secures a line of credit. “Line of credit” is defined as any loan, extension of credit, or financing arrangement where the lender has agreed to make additional or future advances.

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

The trustee under a deed of trust customarily is an individual, although a partnership, corporation, limited liability company, professional association, or any other legal entity may serve as trustee, subject to qualification and doing-business analysis.

CORPORATE OR INDIVIDUAL

There is no residency requirement for a trustee. Any person may be appointed and may perform the duties of the trustee in a deed of trust. Such person will not be disqualified because of such person's relationship to any other party to the deed of trust, but the trustee should not be the beneficiary's spouse, and the trustee and the beneficiary may not be the same person or entity. The trustee may not notarize the deed of trust. A substitution of trustee must be recorded prior to commencement of foreclosure proceedings if the original trustee has been replaced.

RESIDENCY REQUIRED

Foreclosure can be accomplished judicially or non-judicially, although non-judicial foreclosure is generally preferred. Judicial foreclosure is initiated with the lender filing a complaint in Chancery Court, naming all parties with an interest in the property to be foreclosed. Summons are issued and served on the parties. When the Court determines that foreclosure is in order, the Court enters an Order setting forth the procedures and appointing a Commissioner to conduct the foreclosure. The Commissioner publishes a Notice of Sale for at least 3 consecutive weeks preceding the sale in a newspaper of general circulation in the county in which the land is located. Publication is generally made once a week for 4 weeks. A Notice of Sale is also posted at the courthouse of the county in which the land is located. The sale is conducted in accordance with the procedures established by the Court. Following the sale, the Commissioner files a motion to confirm the sale and the Court will enter an Order doing so and directing that a Commissioner's Deed be issued to the successful bidder. A non-judicial foreclosure utilizes the power of sale provisions in the Deed of Trust. A Notice of Sale is published for at least 3 consecutive weeks preceding the sale in a newspaper of general circulation in the county in which the land is located. Publication is generally made once a week for 4 weeks. A Notice of Sale is also posted at the courthouse of the county in which the land is located. The sale is held between 11:00 a.m. and 4:00 p.m. at the courthouse of the county in which the land is located. Following the sale, the trustee conducting the sale issues a Trustee's Deed to the successful bidder.

BRIEF DESCRIPTION OF PROCEDURE

. Usually 4 weeks after commencement of publication.

TYPICAL LENGTH OF PROCEDURE

The bid is generally cash or cash equivalent unless otherwise provided in the deed of trust and notice of sale. The lender may credit the bid amount against the indebtedness, if authorized by the deed of trust. The standard for upholding a price as sufficient, absent fraud or collusion, is an amount that will not shock the court's conscience. Recent cases also allude to “commercial reasonableness” as a standard for obtaining a deficiency judgment.

FORECLOSURE BID REQUIREMENTS

There is no redemption period after a valid foreclosure sale, but a debtor has the statutory right to reinstate an acceleration of a series of notes or installment payments secured by a deed of trust prior to the completion of a foreclosure sale by paying the amount past due, including all accrued costs, attorneys' fees, and trustees' fees on the amount actually past due, rather than the amount accelerated, and such taxes or insurance premiums due and not paid, with interest thereon, if such should have been paid by any interested party to the deed of trust.

REDEMPTION PERIOD AND PRICE

Since there is no redemption period, waiver is not applicable.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

A deficiency may be obtained after a foreclosure sale as long as (1)&nbsp;suit is commenced within 1 year after the date of the sale, and (2)&nbsp;the sale was made in a “commercially reasonable” manner. If the debt secured is not an “installment note,” the 1-year period may be extended for 3 years, but the safer assumption is that the 1-year statute applies. The basis for a deficiency is the difference between the debt outstanding on the date of the foreclosure sale and the greater of either the property's fair market value on the date of the sale or the amount bid at the sale. An appraisal is recommended prior to foreclosure if a deficiency is anticipated. There is no single form of action rule in Mississippi. The lender may accept a Deed in Lieu of Foreclosure, but by doing so, the Lender's right to a deficiency is extinguished.

DEFICIENCIES

Without a written agreement between the lessee and the mortgagee, the status of leases is not certain. A valid foreclosure sale extinguishes any subordinate liens or rights in the property. Mississippi is a hybrid race-notice state. If the mortgagee has actual notice of the existence of tenants prior to filing the deed of trust, the tenants' rights may be prior to the mortgagee's rights. Leases entered into after the filing date of the mortgage would be subordinate and would be extinguished absent an agreement to the contrary. There is no statute specifically addressing assignments of rents and leases. A deed of trust may also include an assignment of rents and leases.

EFFECT OF FORECLOSURE UPON LEASES

There have been no changes to the foreclosure process resulting from recent foreclosure litigation.

CHANGES TO FORECLOSURE PROCESS

For loans other than loans made by a licensee under the Mississippi Small Loan Regulatory Law, there is no finance charge or usury limitation on loans for which the principal balance is in excess of $2,000. Generally, for loans less than $2,000, the contract rate is the greater of 10% per annum or 5% above the discount rate on 90-day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve District where the lender is located. In Mississippi, the law regulates the “finance charge” rather than usury. The components of finance charge include any charge paid or payable directly or indirectly by a debtor for receiving a loan or incident to or as a condition of the extension of credit. Mississippi has not opted out of the preemptory provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980. The allowable late charge on general extensions of credit is the greater of $5 or 4% of the amount of any delinquency if contracted for in writing. No late charge may be imposed unless the delinquency is more than 15 days past due. The prepayment penalty limitation for a single-family dwelling or a single-family condominium unit or real estate used primarily for agricultural or livestock purposes is as follows: 5% of the unpaid principal balance during the first year; 4% of the unpaid principal balance during the second year; 3% of the unpaid principal balance during the third year; 2% of the unpaid principal balance during the fourth year; 1% of the unpaid principal balance during the fifth year; and no penalty thereafter. The limitation does not apply where a greater penalty is required by any federal law or regulation. Credit card advances and purchases, motor vehicle financing, sales of factory manufactured movable homes, and credit extended pursuant to a revolving charge agreement are different from the rates and late charges stated above and are not discussed for the limited purposes of this publication. Special rates also apply to licensees under the Small Loan Regulatory Law.

USURY CEILING

There is no finance charge limitation under a loan or commitment to lend a principal amount in excess of $2,000, but this exemption does not apply to a licensee under the Mississippi Small Loan Regulatory Law, nor does it currently apply to the financing of motor vehicles or mobile homes, revolving credit agreements for credit extended pursuant to revolving charge agreements, check cashing services, “title” loans, or credit cards.

USURY EXEMPTIONS

Mississippi adopted Revised Article 9 effective January 1, 2002, with few amendments. If the local law of Mississippi governs perfection of a security interest or agricultural lien, the office designated for filing is the office of the Chancery Clerk of the county in which the collateral is located if the collateral is (a)&nbsp;as-extracted collateral or timber to be cut; or (b)&nbsp;the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures and the financing statement is filed as a fixture filing. The office in which to file a financing statement to perfect a security interest in collateral of a transmitting utility is the Office of the Secretary of State. The transmitting utility financing statement may also constitute a fixture filing if it so indicates. In all other cases, if Mississippi is the appropriate jurisdiction in which to file a financing statement, the statement is filed in the Office of the Secretary of State. Mississippi has implemented a central filing system relating to farm products that conforms with the requirements of &sect; 1324 of the Food Security Act of 1985 for an “effective financing statement.” A secured party may not enforce a security interest in farm products against a buyer, commission merchant, or selling agent who purchases or sells farm products in the ordinary course of business from or for a person engaged in farming operations unless the secured party has complied with the regulations issued by the Secretary of State or unless the buyer, commission merchant, or selling agent has received written notice that complies with the Food Security Act's requirements. A filing with the Secretary of State under the Food Security Act requires a description of the real estate as well as additional information regarding the collateral. Although a security interest in farm products must be perfected pursuant to the UCC in farm products, generally requiring a filing in the jurisdiction of the debtor's residence, the logical state for filing the notice to buyers pursuant to a central filing system adopted in compliance with the Food Security Act is the state in which the farm product is located, although the issue will not be clear without some amendment to the Food Security Act or the Mississippi law electing notice by filing. It is important to note that perfecting a security interest in farm products and providing effective notice to buyers of farm products may require 2 different filings. Mississippi issues certificates of title for motor vehicles, certain sailboats, and motor boats. Perfection of a security interest is by notation of the lien on the certificate of title. Mississippi adopted the 2010 Amendments to Article 9 effective July 1, 2013. Among other changes, Mississippi's version of the 2010 Amendments requires that an individual's name on a financing statement, including fixture filings, must be the same as on the individual's driver's license. Financing statements submitted to the Mississippi Secretary of State's office must be filed electronically or printed out after entry into the online filing system and mailed to the Secretary of State.

LOCATIONS FOR FILING

The recording of a deed of trust is effective as a fixture filing if (1)&nbsp;the record indicates that fixtures are covered; (2)&nbsp;the fixtures are related to the real property described in the instrument; (3)&nbsp;the deed of trust satisfies the requirements of a financing statement filed as a fixture filing (other than a statement that it is to be filed in the real property records); and (4)&nbsp;the deed of trust is duly recorded. The deed of trust remains effective as a fixture filing until the deed of trust is released or satisfied of record or its effectiveness otherwise terminates as to the real property.

SECURITY INSTRUMENT USED AS A FIXTURE FILING

There are no unusual provisions or requirements in Mississippi related to guaranties. Mississippi adopted revised Article 3 of the Uniform Commercial Code effective January 1, 1993.

UNUSUAL PROVISIONS OR REQUIREMENTS

Rights of subrogation generally are waived until the creditor receives payment in full. Section 87--5--1 of the Code provides that any surety or accommodation indorser may, at any time after the debt becomes due, give notice to the creditor to commence legal proceedings against the principal debtor if the debtor resides in this state. If the creditor fails to commence proceedings by the next term of court, the surety is discharged. This Section is therefore generally waived.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY

JUDGMENTS: On Seeking/Obtaining Deficiency Judgments: See above.

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING DEFICIENCY

An error in the mode of a foreclosure sale that makes the sale void is not cured by any statute of limitations except the 10-year statute of adverse possession. The 10-year statute of adverse possession may be extended for up to 10 years after a minor reaches maturity, and if the party against whom the statute is running is a non compos mentis, the statute is extended to 31 years. When a mortgagee, after default, obtains actual possession or receipt of the profits or rents from land included within the mortgage, the mortgagor may not bring a suit to redeem the mortgage except within 10 years after the time at which the mortgagee first obtained such possession or receipt. An action on a deed of trust, including foreclosure, may not be brought except within the time allowed for commencement of an action at law upon the writing that specifies the sum of money secured by the deed of trust. In all cases where the remedy at law to recover the debt is barred, the remedy in equity on the mortgage also is barred. The statute of limitations applicable to enforcement of both negotiable notes and nonnegotiable notes is 6 years after the due date or, if accelerated, within 6 years after the accelerated due date. For instruments other than negotiable and nonnegotiable notes, the statutes of limitations vary. An action upon an installment note or a series of notes of 3 or more for a deficiency must be commenced within 1 year from the date of the foreclosure of the property pledged as security. When a cause of action has accrued outside Mississippi and by the laws of the foreign jurisdiction an action cannot be maintained by reason of lapse of time, then no action shall be maintained in Mississippi; provided, where such a cause of action has accrued in favor of a resident of this state, this state's law on the period of limitations shall apply. Where the remedy to enforce any deed of trust appears on the face of the record to be barred by the applicable statute of limitations (which, as to a series of notes or a note payable in installments, shall begin to run from and after the maturity date of the last note or last installment), the lien of a deed of trust shall cease and have no effect as to creditors and subsequent purchasers for value without notice unless within 6 months after expiration of the applicable statute the debt has effectively been renewed and a renewal notation is made on the margin of the record or a new or amended instrument is recorded. If the final maturity date cannot be ascertained from the face of the recorded deed of trust, the maturity date is deemed to be 1 year from the instrument's date. Therefore, if a deed of trust does not contain a maturity date, the applicable statute of limitations begins to run 1 year from the date of the deed of trust with regard to third parties without notice. Statutes of limitation generally do not affect liens in favor of a governmental entity unless special statutes have been enacted. Mississippi has numerous special periods of limitation in addition to those referenced above.

STATUTE OF LIMITATION PERIOD

Any mortgagee is required to cancel the deed of trust of record after payment of all sums owed within 1 month after written request. After the 1-month period expires, the debtor can recover a penalty in the amount of $200 by suit. If, after request, the mortgagee continues to refuse to cancel the deed of trust, the mortgagee forfeits and is obligated to pay to the aggrieved party any sum not exceeding the mortgage money, to be recovered by an action in court. Except with regard to certain revolving credit documents, a deed of trust is canceled automatically upon payment of the money secured by the deed of trust and the lien is extinguished by operation of law. If a deed of trust states on its face that it secures a line of credit, the automatic cancellation does not apply, and instead the lien of the deed of trust is extinguished upon termination or maturity of the line of credit and payment of all sums owing in connection with the line of credit or upon payment of all sums owing in connection with the line of credit and the written request by the debtor to cancel the line of credit and the deed of trust. The term “line of credit” means any loan, extension of credit or financing arrangement where the lender has agreed to make additional or future advances to the debtor. A deed of trust may be canceled by a separate instrument or by a marginal notation on the original recorded document, attested by the Chancery Clerk. Separate instruments are customarily used, signed by the mortgagee, authorizing and directing the chancery clerk to note the cancellation on the cover page of the original recorded deed of trust. The trustee may authorize cancellation but there is no statutory authority for a trustee to execute a partial release.

REQUIREMENTS FOR RELEASE OF LIEN

A deed of trust or other encumbrance upon a homestead is not valid or binding unless signed by the owner and the owner's spouse, unless the nontitled spouse, in lieu of joining in the deed of trust or other encumbrance, files an affidavit of nonhomestead to be recorded providing that (i) the nontitled spouse, together with the titled spouse, voluntarily abandoned the old homestead and currently occupy a new homestead or, (ii) the nontitled spouse separated from the titled spouse with no intent to return to the titled spouse or to reside with the titled spouse on the titled spouse's homestead, and that the nontitled spouse currently maintains and occupies a separate residence. Waivers of homestead rights are not enforceable. A spouse may grant any competent adult other than his or her spouse a power of attorney to execute an encumbrance or conveyance of homestead property. The power of attorney should be in recordable form and recorded prior to or simultaneously with the deed or deed of trust.

HOMESTEAD ISSUES

Mississippi is not a community property state.

COMMUNITY PROPERTY

There is no mortgage tax payable in Mississippi.

MORTGAGE TAX

There is no documentary stamp tax payable in Mississippi, except for the sale, lease or reservation of the oil, gas or other minerals. In such event, the mineral documentary tax shall be paid to the chancery clerk of the county in which the land affected by the sale, lease or reservation is located.

DOCUMENTARY STAMP TAX

There are no “transfer taxes” due other than the normal or customary taxes in the nature of income taxes payable to the applicable state and federal government. In a sale of real property not considered an exchange or trade that results in gross proceeds in excess of $100,000, paid by the buyer to a non-resident seller or sellers, the seller or sellers are required to withhold from the proceeds of the sale and pay to the Department of Revenue, a percentage of the proceeds determined in accordance the provisions of &sect;&nbsp;27-7-308 of the Code. A nonresident corporate seller qualified to do business is not considered a non-resident, though a foreign limited liability company or limited partnership are considered foreign sellers, regardless of qualification to do business. On foreclosure sale: See above. On deed in lieu of foreclosure: See above.

TRANSFER TAX

Mississippi has enacted the general choice of law provisions in the Uniform Commercial Code providing that when a transaction bears a reasonable relation to this state and also to another state, the parties may agree that the law of either state may govern their rights and duties. Former case law imposed an obligation of good faith on the choice of law provisions, requiring that the choice be made in good faith and not solely to avoid the laws of any jurisdiction. For actions not subject to the Uniform Commercial Code, Mississippi courts generally follow the Restatement (second) of Conflicts. Mississippi does not recognize the right to choose the laws of another jurisdiction with regard to disclaimers of implied warranties of merchantability or fitness, limitations of remedies for breaches of implied warranties of merchantability or fitness, or the necessity for privity of contract to maintain a civil action for breach of implied warranties of merchantability or fitness. Revised Article 9, as adopted in Mississippi, governs which state's law applies to perfection and the effect of perfection and non-perfection of security interests.

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

A receiver is available, but there is a requirement that an action be pending in order for a receiver to be appointed. A receiver cannot be appointed before the primary action is filed since receivership is an auxiliary remedy. At least 5 days' notice is required prior to appointment, absent unusual circumstances. Several conditions precedent to appointment are, individually or in any combination, insolvency, fraud, neglect, waste, imminent danger of loss, and the clear right of the plaintiff to possession of the property.

RECEIVERSHIP

There are no special rules regarding loan application, loan fees, or commitment fees for a lender not subject to the Mississippi Small Loan Regulatory Law or the Mississippi Mortgage Consumer Protection Law. Loan fees and commitment fees would be included within the general definition of “finance charge” for purposes of determining the applicable rate of finance charge.

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

The Mississippi Small Loan Regulatory Law contains a broad prohibition against any person or entity lending money without first obtaining a license from the Mississippi Department of Banking and Consumer Finance. Exemptions from the Law include: (i)&nbsp;any entity doing business under any of the laws of the state relating to banks, savings banks, trust companies, building and loan associations, insurance companies, credit unions, or pawnbrokers; (ii)&nbsp;loans made to employees or farm tenants by their employer; (iii)&nbsp;loans or advances to be used in farming or agricultural operations; (iv)&nbsp;loans insured or guaranteed by the United States or any of its agencies; (v)&nbsp;persons or entities making loans secured only by real estate; (vi)&nbsp;dealers and sellers or purchasers of conditional sales or retained title contracts on real or personal property; (vii)&nbsp;loans from a member of an affiliated group to another member of the group, secured by tangible personal property; and (viii)&nbsp;loans made by an occasional lender not regularly engaged in the business of lending money. Regulations issued by the Mississippi Department of Banking and Consumer Finance state that a “loan” under the Small Loan Regulatory Law means a loan that is made to individuals primarily for personal, family or household purposes. Assuming a lender qualifies under one of the Small Loan Lender exemptions, the general business law statute “doing business” exceptions include creating or acquiring indebtedness, mortgages, and security interests and collecting debts or enforcing mortgages. Additionally, the Mississippi “foreign investor” statute, &sect;&nbsp;81-5-41 of the Code, exempts banks and trust companies with no place of business in this state from qualification for certain activities related to making or investing in loans secured by real estate. Out-of-state banking and trust associations also are allowed to act as executors or administrators of estates and as trustees under voluntary trust agreements, subject to reciprocity requirements, provided the entity appoints the Mississippi Secretary of State as agent for service of process pursuant to &sect;&nbsp;81-5-43. Mississippi also has adopted the International Banking Act and the Multistate Trust Institutions Act as well as legislation related to foreign business trusts. The Mississippi Mortgage Consumer Protection Law requires registration for operation as a mortgage lender or mortgage broker. The Law regulates loans to a natural person secured by a lien upon any interest in a lot intended for residential purposes, or upon 1-4-family residential property. Exemptions are listed at &sect;&nbsp;81-18-5. The Consumer Loan Broker Act also regulates the activities of brokers in arranging consumer loans. Section 27-21-3 imposes a statewide privilege tax on any person or entity other than state or national banks lending on the security of tangible personal property located in Mississippi or purchasing any form of indebtedness secured by a lien on tangible personal property other than certain agricultural products. Entities in the general mercantile business who obtain collateral to secure customer purchasers and members of certain “affiliated groups” are also exempt. “Doing business” is broadly defined in the statute, and the penalty for failure to comply includes fines as well as denial of access to state courts. Section 27-7-23(d) contains the general provisions for taxation of foreign lenders.

LENDER QUALIFICATION AND/OR LICENSURE

Under Mississippi law, the statute of limitations for a deed of trust begins to run on the date stated as the maturity date in the recorded deed of trust. See earlier discussion in Statute of Limitation Period regarding the lack of a maturity date in a deed of trust. If a deed of trust is to be modified to extend the maturity date of the loan, then a document modifying the deed of trust should be recorded in the land records indicating the extended maturity date so that the statute of limitations would not begin until the new maturity date. Other than being in recordable form, there are no special requirements applicable to a modification agreement.

MODIFICATION OF MORTGAGE LOANS

Mississippi has adopted a version of the Uniform Environmental Covenants Act known as the Mississippi Uniform Environmental Covenants Act (the “MUECA”) (&sect;&sect;&nbsp;89-23-1 et seq., Mississippi Code of 1972, as amended). The MUECA applies to voluntary environmental covenants defined as “a servitude arising under an environmental response project” planned or performed for environmental remediation of real property under a federal or state program, including: <ul>
 <li>Subchapter III or IX of the federal Resource Conservation and Recovery Act of 1976, 42 USC &sect;&sect; 6921 through 6939e and 6991 through 6991i;</li>
 <li>Section 7002 or 7003 of the federal Resource Conservation and Recovery Act of 1976, 42 USC &sect;&sect; 6972 and 6973;</li>
 <li>The federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 USC &sect;&sect; 9601 through 9647, as amended;</li>
 <li>The Mississippi Air and Water Pollution Control Law, &sect; 49-17-1 et seq.;</li>
 <li>The Mississippi Solid Wastes Disposal Law of 1974, &sect; 17-17-1 et seq.;</li>
 <li>The Mississippi Underground Storage Tank Act of 1988, &sect; 49-17-401 et seq.;</li>
 <li>Such other laws or regulations as the commission shall enumerate.</li>
</ul> (B) Incident to closure of a solid or hazardous waste management unit, if the closure is conducted with approval of an agency; or (C) Under a state voluntary clean-up program authorized in the Mississippi Brownfields Voluntary Cleanup and Redevelopment Act, &sect; 49-35-1 et seq. <ul>
 <li>The environmental covenant has priority from the date of filing with the appropriate Chancery Clerk unless the holder of a prior right or lien elects to subordinate its interest.</li>
 <li>Although there remains a hodgepodge of civil fines and penalties in various sections of Mississippi's environmental laws and regulations, the MUECA purports to create a standard methodology for implementation of environmental orders, fines and penalties.</li>
</ul> Of particular interest to lenders, &sect; 49-17-42 of the Mississippi Code provides that “[a]ny lender or holder who maintains indicia of ownership primarily to protect an interest in a property, facility, or other person, and who does not participate in the management of the property, facility, or other person, shall not be considered an owner or operator of that property, facility, or other person, nor liable under any pollution control or other environmental protection law, or any rule or regulation or written order of the commission in pursuance thereof.” This provision seems to provide lenders protection from Mississippi environmental laws, but all lenders should be aware of the numerous environmental laws and regulations that are applicable to owners and operators.

LIENS GRANTED PRIORITY FROM TIME OF FILING

Municipalities and counties are granted statutory “property cleaning” liens that ordinarily are not associated with environmental clean-up, but the general standard of a property's condition being detrimental to public health, safety, or welfare is sufficiently broad to include environmental issues. The assessments for property cleaning liens may be enforced in the same manner as the lien for delinquent ad valorem taxes and, therefore, arguably are prior to existing liens.&nbsp; One particular problem is that, prior to 2023, these liens were not required to be and were not filed in the land records. The Mississippi Legislature in 2023 amended the statute governing liens filed by counties to require that these liens be filed in the land records, but no similar change has been made for liens filed by municipalities.

LIENS GRANTED SUPER-PRIORITY

Mississippi does not have a local bar opinion report that articulates standard accepted opinion practices for the state.

LEGAL OPINIONS

LABOR AND MATERIAL LIEN CLAIMS - PRIORITY ISSUES: Mississippi has adopted certain code sections entitled Special Liens on Real Estate or Other Property, (&sect;&sect;&nbsp;85-7-401 et seq., Mississippi Code of 1972, as amended), which address persons having lien rights for the furnishing of labor, services or materials. The following have lien rights: (i)&nbsp;contractors, subcontractors and materialmen furnishing services or material to a contractor or subcontractor who is in privity of contract with the owner; (ii)&nbsp;registered architects or engineers furnishing services with respect to the real estate; and (iii)&nbsp;registered land surveyors furnishings services with respect to the real estate.

LABOR AND MATERIAL LIEN CLAIMS - PRIORITY ISSUES

In order to claim the benefits of Mississippi's Special Liens on Real Estate or Other Property lien law, the party seeking to claim a lien must follow the provisions of &sect;&nbsp;85-7-405, including: <ol>
 <li>Substantial compliance by the party claiming the lien with the party's contract, subcontract or purchase order;</li>
 <li>Filing a claim of lien for record in the office of the clerk of the Chancery Court of the county in which the property is located, within 90 days after the claimant's last work was performed, or after the labor or services were provided. The lien shall include a statement regarding its expiration pursuant to &sect;&nbsp;85-7-421(1) and a notice advising the owner of its right to contest the lien must be served upon the owner and contractor within two (2) business days after the claim of lien is filed of record by registered or certified mail or by overnight delivery service. Absence of the statement or the notice shall invalidate the lien. The basic format for both the statement and the notice are provided within the statute at &sect;&nbsp;85-7-405(b).</li>
</ol> <ul>
 <li>A payment action for the recovery of the amount of the lien claimant's claim must be commenced in county, circuit or chancery court within 180 days from the date of filing of the claim of lien, unless the owner files a Notice of Contest in which case the claimant must file suit within 10 days of the date of the Notice of Contest. When the payment suit is commenced, the claimant must file a lis pendens notice, with a copy sent to the owner and contractor.</li>
</ul> <ol>
 <li>The liens filed under Mississippi's Special Liens on Real Estate code provisions (construction liens) are inferior to liens for taxes, as well as all liens, deeds of trust, mortgages and encumbrances filed before the date and time of the filing of the notice of claim, regardless of whether the work secured by the lien was performed before or after the filing of the lien, deed of trust, mortgage or other encumbrance. This priority extends to amendments, restatements and/or assignments of the lien, deed of trust, mortgage or other encumbrance. Foreclosure of the prior deeds of trust or other liens shall terminate and extinguish the subordinate lien, but the subordinate lienholder shall have the rights to any excess proceeds received by the foreclosing lienholder.</li>
 <li>A deed of trust, mortgage, assignment of leases and rents, fixture filing or other security agreement affecting real property is defined within the statute as a construction mortgage to the extent it secures a loan or loans for the purpose of financing the repair or construction of improvements on the real property. The loan may include the acquisition cost of the real property. A construction lien is subordinate to the construction mortgage if the construction mortgage is filed in the land records before a notice of a claim of lien is filed and the lender, secured party, mortgagee, beneficiary or holder of the construction mortgage has obtained either: (a)&nbsp;an affidavit or sworn statement for the owner to the effect that no work has been performed on, or materials delivered to, the real property; or, (b)&nbsp;an affidavit or sworn statement from the contractor (or owner if there is no contractor) regarding payment for work, materials or services provided. The construction mortgage has this priority for all loan advances secured thereby, regardless of whether the advances are made before or after the filing of a notice of a construction lien; this priority will extend to all amendments, restatements and refinancings of the construction mortgage</li>
</ol>

INCEPTION OF LIEN

Other than the following limited exceptions provided under Mississippi Code &sect; 75-9-334, a perfected security interest in fixtures is subordinate to a conflicting interest held by a lien holder on real property. <ul>
 <li>A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of real property if the debtor has an interest of record in or is in possession of the real property, the security interest is a purchase-money security interest, the interest of the encumbrancer or owner arises before the goods become fixtures, and the security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter.</li>
 <li>A perfected security interest in fixtures has priority over a conflicting interest of an encumbrancer or owner of the real property if (i)&nbsp;the debtor has an interest of record in or is in possession of the real property and the security interest is perfected by a fixture filing before the interest of the encumbrancer or owner is of record and the security interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner; or (ii)&nbsp;before the goods become fixtures, the security interest is perfected by any method permitted by &sect; 75-9-1 et al. of the Mississippi Code and the fixtures are readily removable including factory or office machines, equipment that is not primarily used or leased for use in the operation of the real property, or replacements of domestic appliances that are consumer goods; or (iii)&nbsp;the conflicting interest is a lien on the real property obtained by legal or equitable proceedings after the security interest was perfected by any method permitted by &sect; 75-9-1 et al. of the Mississippi Code; or (iv)&nbsp;the security interest is created in a manufactured home in a manufactured-home transaction and perfected pursuant to a statute described in &sect;&nbsp;Section 75-9-311(a) of the Mississippi Code.</li>
 <li>A security interest in fixtures, whether or not perfected, has priority over a conflicting interest of an encumbrancer or owner of the real property if (i)&nbsp;the encumbrancer or owner has, in an authenticated record, consented to the security interest or disclaimed an interest in the goods as fixtures; or (ii)&nbsp;the debtor has a right to remove the goods as against the encumbrancer or owner.</li>
</ul>

PRIORITY AS TO REMOVABLE FIXTURES

MOBILE HOMES: PERFECTION OF SECURITY INTEREST/LIEN: A security interest in a manufactured home or mobile home is perfected by noting the lien on the certificate of title issued by the Department of Revenue. Mobile homes may be classified as real property by local tax assessors if the wheels and axles have been removed. A certificate stating that the mobile home has been classified as real property is required to be filed in the land records. Regardless of the classification of a mobile home, the method for perfecting a security interest on a certificated mobile home is by noting the lien on the certificate. A “lien” on the land would also require filing a deed of trust. For mobile homes acquired prior to July 1, 1999, for which a certificate has not been issued, perfection of a security interest is by deed of trust describing the mobile home and the land if the home has been classified as real property for ad valorem tax purposes or by a fixture filing (and a protective UCC personal property filing) if the home remains personal property. Liens retained by a seller on an uncertificated mobile home in a sale prior to July 1, 1999, may also be automatically perfected if the transaction is categorized as a consumer transaction. There are procedures for obtaining a certificate on a previously uncertificated mobile home as well as rules governing mobile homes already subject to a lien when brought into this state.

MOBILE HOMES PERFECTION OF SECURITY INTEREST/LIEN

Section 85-7-505 of the Code provides that a broker shall have a lien upon commercial real estate in the amount that the broker is due under a written agreement for broker services signed by the owner or signed by the owner's duly authorized agent, if: (a) The broker has performed under the provisions of the agreement; (b) The written agreement for broker services clearly sets forth the broker's duties to the owner; and (c) The written agreement for broker services sets forth the conditions upon which the compensation shall be earned and the amount of compensation. All deeds of trust recorded before the recording of the broker's lien shall have priority over the broker's lien.

COMMERCIAL REAL ESTATE BROKER LIEN ACT

Lenders usually require the ALTA 2021 forms for a Lender's Title Insurance Policy insuring the lender up to the full loan amount.

FORM USUALLY REQUIRED BY LENDER

ENDORSEMENTS AVAILABLE

The short form loan policy is in common use in Mississippi. Endorsements often required are as follows: Environmental (ALTA 8.1), which provides coverage over any recorded lien or statutory liens except specifically listed liens; Restrictions, Easements and Minerals (ALTA 9) providing affirmative coverage on no reverter or loss of lien in event of covenant violation, no encroachment and surface damage coverage on minerals and easements; ALTA 100XC, similar to ALTA 9 but without surface damage coverages; and Adjustable Rate Mortgage (ALTA 6) insuring against loss resulting from rate changes.

RESIDENTIAL LOAN POLICIES

Above plus Zoning (ALTA 3.1 or if not available, ALTA 3); Non-Imputation Endorsement (lender or investor will not be charged with actual knowledge simply because of relationship as partner, joint venturer or otherwise-used in nontraditional financing structures); Access; Contiguity; Separate Tax Parcel; and First Loss (lender not required to pursue other collateral, such as personal property, before asserting claim), and others modeled after the California Land Title endorsements designed to suit the imaginative lender and its counsel. &nbsp;

Mississippi

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for Mississippi

Mississippi

Mortgage Law Summary

Continue reading theMortgage Law Summary for Mississippi

Continue reading the
Mortgage Law Summary for Mississippi