We can help you streamline deal flow nationwide | Fidelity National Title - Find an office

small_FNT-NCS-Desktop-Banner-Ad[28].png

thumbnail_FNT-NCS-Desktop-Banner-Ad[28].png

fidelity-desktop-banner

thumbnail_FNT-NCS-Mobile-Banner-Ad[89].png

fidelity-mobile-banner

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

North Dakota

SECURITY INSTRUMENT USED

Notary acknowledgment or proven by a subscribing witness. A mortgage of real property can be created, renewed, or extended only by writing, executed with the formalities required in the case of a grant of real property. N.D.C.C. &sect;&nbsp;35-03-01; &sect;&nbsp;47-10-05. A mortgage (or assignment of mortgage) must contain the address of the mortgagee (or assignee). N.D.C.C. &sect;&nbsp;35-03-04. The maturity date of obligation should be stated in mortgage to avoid premature, unintended expiration by operation of law. N.D.C.C. &sect;&nbsp;35-03-14.

RECORDING REQUIREMENTS

STATUTES TO BE WAIVED

Any provision contained in any note, bond, mortgage, security agreement, or other evidence of debt for the payment of attorneys' fee in case of default in payment or in proceeding had to collect such note, bond, or evidence of debt, or to foreclose such mortgage or security agreement, is against public policy and void. N.D.C.C. &sect;&nbsp;28-26-04.

UNUSUAL TREATMENT OF STANDARD PROVISIONS

Permitted. Union Nat'l Bank v. Milburn & Stoddard Co., 7&nbsp;N.D. 201 (1897). A lien document relating to a real estate transaction and containing a written provision securing the repayment of future advances, whether or not the lien creditor is obligated to make such future advances, has priority over all subsequent encumbrances to the extent of all sums advanced, with interest thereon, with the same effect as if the entire sum had been advanced at the creation of the lien. N.D.C.C. &sect;&nbsp;35-01-05.2.

SECURING FUTURE ADVANCES

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL

TRUSTEE UNDER DEED OF TRUST: N/A.

TRUSTEE UNDER DEED OF TRUST N/A.

By action only, in district court. N.D.C.C. &sect;&nbsp;32-19-01. At least 30 days and not more than 90 days before commencing the foreclosure action, a written notice of the impending foreclosure must be served. N.D.C.C. &sect;&nbsp;32-19-20; see also N.D.C.C &sect;&sect;&nbsp;32-19-21 to -27 (prescribing requirements, contents and methods of service of the notice). The mortgage is re-instated if the events of default are cured within 30 days of the notice. N.D.C.C. &sect;&nbsp;32-19-28. If action is commenced, the complaint must state sufficient allegations to identify the mortgage being foreclosed, to establish the applicable redemption period, and to determine whether a deficiency judgment will be sought and against which parties. N.D.C.C. &sect;&nbsp;32-19-04. No reported decisions from North Dakota courts have arisen from recent foreclosure litigation altering the procedures for foreclosure. Generally, actions other than foreclosure are not available for obligations secured by a mortgage. However, for obligations given on or after August&nbsp;1, 1993, and secured by a mortgage against residential real property consisting of 4 or fewer residential units, other than a first mortgage, a mortgagee may bring an action on the obligation if the mortgagee waives the right to foreclose the mortgage. N.D.C.C. &sect;&nbsp;32-19-07. The court renders judgment for the amount found to be due and the allowable costs of the action, and orders a sale of the premises to pay the amount adjudged to be due. N.D.C.C. &sect;&nbsp;32-19-06. North Dakota heavily protects a mortgagor's equity of redemption, and the mortgagor is generally entitled to the possession, rents, use, and benefit of the real property during the period of redemption.

BRIEF DESCRIPTION OF PROCEDURE

The redemption period is generally 60 days from the date of sale. For agricultural land, the redemption period is 365 days from filing of the summons and complaint, but no earlier than 60 days from the sheriff's sale. The owner of the property has a paramount right to redeem upon paying the amount bid at the sheriff's sale plus interest on that amount at the same rate as the obligation secured by the mortgage. Persons holding subordinate liens on the property may redeem in the order of priority as determined by the order of attachment to the property. This redemption has the effect of a redemption as of the date of deposit, subject to the subsequent payment of any additional amount, if any, determined to be due as of that date. N.D.C.C. &sect;&nbsp;32-19-18. The court may eliminate the statutory redemption period if the court determines the property is abandoned. N.D.C.C. &sect;&nbsp;32-19-19; N.D.C.C. &sect; 32-19-18.

REDEMPTION PERIOD AND PRICE

. Any agreement by the mortgagor in the mortgage purporting to waive in advance the mortgagor's right of redemption is unenforceable, as North Dakota heavily protects the mortgagor's equity of redemption. North Dakota does not allow for reduction of the statutory redemption period; provided, however, that the court may eliminate the statutory redemption period if the court determines the property is abandoned. N.D.C.C. &sect; 32-19-19; N.D.C.C. &sect;&nbsp;32-19-18.

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

No deficiency judgment is allowed for mortgages of residential property with 4 or fewer units of up to 40 contiguous acres containing a residence occupied by the owner as a homestead. N.D.C.C. &sect;&nbsp;32-19-03. Deficiencies on agricultural land of more than 40 acres may be had but only on the difference between the amount of the debt and the fair market value of the land at the time of commencement of the action. Id. There are procedural/evidentiary difficulties in doing so. See N.D.C.C. &sect;&nbsp;32-19-06.2. The plaintiff may obtain a deficiency judgment in all other cases for the difference between the appraised value, as determined by a licensed appraiser appointed by the court at the request of the plaintiff, and the amount determined due. N.D.C.C. &sect;&nbsp;32-19-03. Again, however, procedural/evidentiary difficulties are applicable. See N.D.C.C. &sect;&nbsp;32-19-06.1.

DEFICIENCIES

All orders, judgments, or decrees entered in any action are binding upon each person proceeded against as a defendant, and each person claiming by, through, or under a defendant after commencement of the action. N.D.C.C. &sect;&nbsp;32-19-39. Accordingly, if the mortgagee wants to extinguish a lessee's rights in the mortgaged property, the lessee must be named and proceeded against as a defendant in the foreclosure action. If any lease exists prior to the recording of the mortgage, the mortgagee should obtain a subordination agreement from the lessee to establish the mortgage lien's priority over the lessee's interest. USURY See, generally, N.D.C.C. &sect;&nbsp;47-14-05; &sect; 47-14-09.

EFFECT OF FORECLOSURE ON LEASES

5&frac12;% per annum higher than the current cost of money as reflected by the average rate of interest payable on United States treasury bills maturing in 6 months in effect for North Dakota for the 6 months immediately preceding the month in which the transaction occurs, as computed and declared on the last day of each month by the state banking commissioner, but not less than 7%, and in the computation of interest the same may not be compounded; provided, however, a minimum interest charge of $15 may be made. Notwithstanding such interest rate limits, state-chartered banks and the Bank of North Dakota may charge interest at a rate equal to the maximum allowable rate that lawfully may be charged for a particular type of loan by national banking associations or state or federally chartered savings and loan associations operating out of facilities located in this state. N.D.C.C. &sect; 47-14-09.&nbsp; Finance charges and late fee limitations apply to “money brokers” required to be licensed pursuant to N.D.C.C. Chapter 13-04.1, including a prohibition against finance charges in excess of an annual rate of 36%. N.D.C.C. &sect; 13-04.1-09.3. Certain entities are exempt from the licensing requirements for money brokers, including banks, credit unions, savings and loan associations and insurance companies. N.D.C.C. &sect; 13-04.1-02.1.

USURY CEILING

EXCEPTIONS: <ul>
 <li>Bona fide pawnbroking transaction in an amount not exceeding $10,000 that is made by a bona fide pawnbroking business transacted under a pawnbroker's license;</li>
 <li>Loan made to a foreign or domestic corporation, foreign or domestic limited liability company, cooperative corporation or association, or trust;</li>
 <li>Loan made to a partnership, limited partnership, or association that files a state or federal partnership income tax return;</li>
 <li>Loan or forbearance of money, goods, or things in action the principal amount of which amounts to more than $35,000; and</li>
 <li>Loan made by a lending institution that is regulated or funded by an agency of a state or of the federal government. N.D.C.C. &sect;&nbsp;47-14-09.</li>
</ul>

USURY

Financing statements securing goods, other than fixtures, as collateral must be filed online using the North Dakota Central Indexing System, which is administered by the Secretary of State. N.D.C.C. &sect;&nbsp;41-09-72(3). Paper filings and search requests are no longer accepted by state or county filing offices. Financing statements securing fixtures as collateral must be recorded with the County Recorder in the county where the fixtures are located. N.D.C.C. &sect;&nbsp;41-09-72(1). Financing statements securing both goods and fixtures as collateral must be recorded with the County Recorder in the county where the fixtures are located and must also be filed online using the North Dakota Central Indexing System.

LOCATIONS FOR FILING

Permitted, to be recorded with County Recorder in the county where the fixtures are located. N.D.C.C. &sect;&nbsp;41-09-73.

MORTGAGE AS FIXTURE FILING

A guarantor's obligation may not be larger in amount, nor in any respects more burdensome, than that of the principal. N.D.C.C. &sect;&nbsp;22-01-12. Continuing guaranties (those relating to the principal's future liability under successive transactions where the liability continues from time to time or renews after satisfaction) can be revoked at any time with respect to future transactions unless there is continuing consideration the guarantor does not renounce. N.D.C.C. &sect;&nbsp;22-01-14. A guarantor may be exonerated if a creditor, without the guarantor's consent, alters the original obligation of the principal in any respect, or if the creditor's remedies or rights against the principal are impaired or suspended in any manner, N.D.C.C. &sect;&nbsp;22-01-15, unless that right is explicitly waived. Wallwork Lease and Rental Co., Inc. v. Decker, 336&nbsp;N.W.2d 356 (N.D. 1983); Sterling Development Group Three, LLC v. Carlson, 859 N.W.2d 414 (N.D. 2015). A creditor's acceptance of anything in partial satisfaction of an obligation reduces a guarantor's obligation in the same measure as that of the principal. N.D.C.C. &sect;&nbsp;22-01-18. Upon payment of the balance due a mortgage lender, the guarantor is then entitled to an assignment of all of the interests in the property of the principal held by the creditor. Bank of Kirkwood Plaza v. Mueller, 294 N.W.2d 640 (N.D. 1980).

IMPORTANT PROVISIONS OR REQUIREMENTS

The right to exoneration. See above.

Because of the deficiency limitations noted above, the appropriate actions (and order of same) and parties to name in such actions must be carefully considered prior to the enforcement of any remedies.

SPECIAL PROBLEMS IN ENFORCEMENT

In general, limitations on recovery against a mortgagor debtor under anti-deficiency judgment statutes in North Dakota do not prevent a lender from proceeding first to recover the full balance owing from a non-mortgagor guarantor. Bank of Kirkwood, at 645. Guarantors of a commercial real estate loan are not afforded the anti-deficiency judgment protections of N.D.C.C. &sect;&nbsp;32-19-06.1. Alerus Financial, N.A. v. Marcil Group Inc., 806 N.W.2d 160 (N.D. 2011). As mentioned below, however, the order of actions and the parties thereto is critical. For example, a mortgagee's acquisition of property at a foreclosure sale by credit bidding the amount of the debt extinguishes the obligation of the guarantors of such debt. First Federal Savings & Loan Ass'n of Bismarck v. Scherle, 356 N.W.2d 894 (N.D. 1984); First Inter. Bank & Trust v. Peterson, 776 N.W.2d 543 (N.D. 2009).

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING DEFICIENCY JUDGMENTS

Any action or proceeding for the foreclosure of a mortgage upon real estate must be commenced within 10 years after the claim for relief has accrued. N.D.C.C. &sect;&nbsp;28-01-15.

STATUTE OF LIMITATIONS PERIOD

A satisfaction must be recorded within 60 days after the mortgage or other lien upon real property is satisfied or within 30 days of receipt of a written demand of the owner of the property, whichever is shorter. N.D.C.C. &sect;&nbsp;35-01-27. Any mortgagee or owner of a mortgage or lien who fails to execute or deliver a discharge or to enter a satisfaction as provided under this section is liable to the property owner for all damages sustained as a result of the refusal and exemplary damages of $100. Id.

REQUIREMENTS FOR RELEASE OF LIEN

A conveyance or encumbrance of the homestead is void unless the instrument is executed and acknowledged by both spouses. Dixon v. Kaufman, 79 N.D. 633 (1953). N.D.C.C. &sect;&nbsp;47-18-05. Thus, even where non-homestead real property is owned in an individual capacity, it is customary to require the spouses of all fee owners to execute the mortgage. A mortgage on a homestead of more than 40 acres that is not a purchase money mortgage must contain the following statement printed in conspicuous manner: “I understand that homestead property is in many cases protected from the claims of creditors and exempt from judicial sale and that, by signing this contract, I voluntarily give up my right to this protection for this property with respect to claims based upon this contract.” This statement must be immediately followed by the date and the person's signature to indicate that the person is specifically and knowingly waiving the exemption, which must be a separate signature from that person's signature on the entire mortgage contract. N.D.C.C. &sect;&nbsp;47-18-05.1.

HOMESTEAD ISSUES

North Dakota is not a community property state.

COMMUNITY PROPERTY

MORTGAGE TAX

DOCUMENTARY STAMP TAX

TRANSFER TAX

North Dakota courts generally recognize contractual agreements as to choice of law between commercial parties, subject to equitable and public policy considerations. Snortland v. Larson, 364 N.W.2d 67 (N.D. 1985); Candee v. Candee, 2017 ND 259 (N.D. 2017). North Dakota laws will apply to the creation, attachment, perfection, and enforcement of a mortgage, notwithstanding any choice of law provision to the contrary.

ENFORCEABILITY OF AGREEMENTS AS TO CHOICE OF LAW

While North Dakota courts have been loath to deny a mortgagor its equities of redemption, a receiver is theoretically available when it appears the mortgaged property is in danger of being lost, removed, or materially injured, or the conditions of the mortgage have not been performed and the property is probably insufficient to discharge the mortgage debt. N.D.C.C. &sect; 32-10-01. Subject to the same judicial reluctance, a mortgagee can also seek appointment of a trustee when the mortgage secures commercial property. N.D.C.C. &sect;&nbsp;32-19.2 et seq.

RECEIVERSHIP/TRUSTEE

A money broker license is required for money brokers, as defined by statute. N.D.C.C. &sect;&nbsp;13-04.1-02 and &sect;&nbsp;13-04-.1-01.1. Certain entities are exempt from such money broker license requirement, including banks, credit unions, savings and loan associations, and insurance companies, among others. N.D.C.C. &sect;&nbsp;13-04.1-02.1.

LENDER LICENSURE

No unusual provisions or requirements for modification of an existing mortgage.

MODIFICATION

Not expressly prohibited, but probably subject to general prohibitions against enforcement of forfeitures and penalties. See N.D.C.C. &sect;&nbsp;32-01-12. It is prudent to include liquidated damages language into such sections.

PRE-PAYMENT PENALTIES

A charge for a late payment penalty may be imposed only if the amount of the late charge or the method of calculation of the late charge has been agreed to by the parties in the loan documents that are signed by the borrower. N.D.C.C. &sect;&nbsp;47-14-05.

LATE PAYMENT PENALTIES

All contracts must bear the same rate of interest after maturity as they bear before maturity unless the parties agree otherwise in writing, and any legal rate of interest stipulated by a contract remains chargeable after a breach thereof until the contract is superseded by a verdict or other new obligation. N.D.C.C. &sect;&sect;&nbsp;47-14-05 and 47-14-07.

DEFAULT INTEREST

North Dakota has adopted the Uniform Assignment of Rents Act. N.D.C.C. Chapter 47-35. A document (however denominated) that is enforceable and that creates or provides for a security interest in real property also creates an assignment of rents (i.e., a security interest in all accrued and unaccrued rents) arising from the real property described in the document, unless the document itself provides otherwise. N.D.C.C. &sect;&nbsp;47-35-01(1). The security interest in rents is created regardless whether the document is denominated an absolute assignment, an absolute assignment conditioned upon default, an assignment as additional security, or otherwise. N.D.C.C. &sect;&nbsp;47-35-01(2). The security interest in rents is separate and distinct from any security interest held by the assignee in the real property. Id.

SECURITY INTEREST IN RENTS

The North Dakota Department of Environmental Quality may recover corrective action costs incurred&nbsp;for environmental remediation.&nbsp;N.D.C.C. &sect; 23.1-10-12. All corrective action costs expended from the fund pursuant to the statute constitute a lien on all property owned by the responsible party when a notice of lien is filed with the recorder in the county where the property is located. N.D.C.C. &sect; 23.1-10-13. The lien has priority over all other claims or liens on the property, except those perfected before the Department's filing of the notice of lien. Id. Upon receipt of information that a petroleum release has occurred which may present an imminent or substantial endangerment of health or the environment, the Department may take emergency action necessary to protect health or the environment. N.D.C.C. &sect; 23.1-12-08. North Dakota has&nbsp;also&nbsp;adopted the Uniform Environmental Covenants Act. N.D.C.C. Chapter 47-37.

ENVIRONMENTAL LIENS

LEGAL OPINION STANDARDS

LABOR AND MATERIALMEN'S LIEN CLAIMS — PRIORITY ISSUES

Any person that improves real estate under a contract with the owner of the real estate or under contract with any agent, trustee, contractor, or subcontractor of the owner, has a lien upon the improvement and upon the land on which the improvement is situated or to which the improvement may be removed for the price or value of the contribution. N.D.C.C. &sect;&nbsp;35-27-02.

INCEPTION OF LIEN

As against the legal and equitable owner, construction liens attach and take effect from the time the first item of material or labor is furnished at the premises for the beginning of the improvement. N.D.C.C. &sect;&nbsp;35-27-03(1). A construction lien may not attach against a personal that acquires an interest in real estate, in good faith, without actual or constructive notice of the claimant's rights, before the actual and visible beginning of the improvement on the subject property. N.D.C.C. &sect; 35-27-03(2).&nbsp; Generally, such construction liens are preferred to any unrecorded mortgage or other encumbrance, unless the lienholder had actual notice of the unrecorded interest. N.D.C.C. &sect;&nbsp;35-27-03(3).

PRIORITY, GENERALLY

As against a mortgage given in good faith for the purpose of providing funds for the payment of materials or labor for the improvement, a lien may not be preferred even though a mortgage is recorded after the time the first item of material or labor is furnished upon the premises, or after the actual visible beginning of the improvement unless the person furnishing such labor, skill, or material for such improvement, before the recording of such mortgage, files for record a construction lien. N.D.C.C. &sect; 35-27-04.

PRIORITY, CONSTRUCTION MORTGAGE

FORM USUALLY REQUIRED BY LENDER

Typical ALTA endorsements are readily available. &nbsp;

North Dakota

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for North Dakota

North Dakota

Mortgage Law Summary

Continue reading theMortgage Law Summary for North Dakota

Continue reading the
Mortgage Law Summary for North Dakota