Evidences of Indebtedness Secured by a Mortgage or Deed of Trust
Statute: § 551.202(11), Wis. Stats.
Used for: Transaction in a note or other evidence of indebtedness secured by a mortgage or deed of trust or by an agreement for the sale of real estate or chattels.
Note: The entire mortgage, deed of trust or agreement, together with all of the evidences of indebtedness secured thereby, must be offered and sold as a unit (not fractionalized.) Thus for instance, a $100,000 first mortgage on a property cannot be used to secure two separate $50,000 notes to different persons and qualify for use of the exemption.
Filing requirement: Self-Executing. No filing or Consent to Service of Process is necessary in order to claim this exemption.
Frequently asked questions:
Q: Is this exemption self-executing?
A: Yes. No filing or Consent to Service of Process is necessary in order to claim this exemption.
Q: Can advertising (such as a newspaper ad) be used?
A: No. The exemption does not permit any general solicitation or general advertisement.
Important interpretive letters:
7/14/89 letter re: Creative Mortgages & Credit Services, Inc. The language "as a unit" means that each separate and distinct mortgage (whether it is a first, second, third, etc.) cannot cover more than one separate mortgage note. Thus, for example, a first mortgage on a $100,000 piece of real estate cannot serve as collateral for 5 separate $20,000 notes and still qualify for this exemption. Stated another way, in order to use this exemption, a single mortgage cannot be "fractionalized" to cover multiple evidences of debt/notes, etc.
History: Predecessor statute 551.23(5), Wis. Stats., adopted January 1, 1970. Identical to Uniform Securities Act of 1956 § 402(b)(5). Repealed and recreated effective January 1, 2009.