Sec. 648.1. Mortgages for indefinite amounts

Tax Law, § 256

(a) A mortgage for an indefinite amount is one where it is not possible to determine from the terms of the mortgage itself the maximum amount of principal debt or obligation which is, or under any contingency may be, secured at the date of execution thereof or at any time thereafter.

(b)

(1) If a mortgage secures the repayment of a specific sum of money and also contains provisions that set forth that the mortgage may secure additional amounts, which represent expenses incurred by the mortgagee on behalf of the mortgagor in the event of the mortgagor's failure to perform a covenant or obligation under the terms of the mortgage relating to maintaining the real property, preserving its value and protecting the mortgagee's lien, the expenses in the event of a foreclosure, and interest and late payment charges, which shall be referred to for purposes of this Part as incidental amounts, such a mortgage is not a mortgage for an indefinite amount, provided that such failure to perform a covenant or obligation under the terms of the mortgage resulting in such expenses being incurred by the mortgagee, constitutes a condition of default under the terms of the mortgage.

(2) Examples of incidental amounts as described in paragraph (1) of this subdivision, which may become secured by a mortgage for the purpose of maintaining and preserving the value of the real property or protecting the mortgagee's lien are as follows:

(i) the amounts paid by the mortgagee for real property taxes, charges or assessments which are imposed by law upon the mortgaged premises upon failure of the mortgagor to do so, where such failure constitutes a default under the mortgage;

(ii) the amounts paid by the mortgagee for insurance premiums covering the mortgaged premises upon failure by the mortgagor to do so, where such failure constitutes a default under the mortgage; and

(iii) any amount, cost or charge to which the mortgagee becomes subrogated upon payment, provided such payment is made as a result of the mortgagor's failure to pay the same and such failure constitutes an event of default under the mortgage.

(3) Where a mortgagee has advanced sums of money on behalf of the mortgagor in payment of incidental amounts as described in paragraph (1) of this subdivision, or the mortgagee has deferred the payment of such incidental amounts due from the mortgagor, and the mortgage is modified or otherwise amended to provide that such advances or deferrals are to be secured by the mortgage as modified or amended, thus increasing the amount secured by the mortgage, the recording of an instrument evidencing such increase in the amount secured shall be taxable in accordance with section 645.2(a) of this Title.