We are not aware of any restrictions on the maximum lien amount that may be listed in a mortgage, nor of any restrictions that would limit the maximum lien amount to twice the loan amount.

Illinois courts generally have upheld “cross-collateralization” clauses in security agreements to secure future debts, provided the clauses are “clear and unambiguous” so that lenders are given constructive notice as to the existence of other liens that might be secured by the same collateral. In addition, it is worth noting that, while the Uniform Commercial Code does not apply to mortgages, it expressly permits security agreements to secure future advances.

Consequently, we believe it is permissible to state a maximum lien amount in a mortgage that exceeds twice the loan amount, provided the parties agree to the terms.

For resources related to our guidance, please see:

• Universal Guar. Life Ins. Co. v. Coughlin, 481 F.3d 458, 463 (7th Cir. 2007) (“A dragnet clause ‘saves the parties the trouble of executing a new security agreement every time there is a further extension of credit. It also backstops the lender against the possibility of an inadvertent failure by the borrower to execute the new agreement.’ Dragnet clauses are not favored in Illinois, but they are enforceable if they are clear and unambiguous.”) (Cross-collateral provisions often are referred to as a “dragnet clause” or “anaconda clause.”)

• Peoples Nat. Bank, N.A. v. Banterra Bank, 719 F.3d 608, 612 (7th Cir. 2013) (“[T]he dispositive question presented by these facts [is] . . . whether actual notice of a cross-collateralization clause in a mortgage imparts inquiry notice as to the existence of other obligations that may be covered by the security instrument. On these facts, we hold that it does.”)

• Illinois Uniform Commercial Code, 810 ILCS 5/9-204(c) (“A security agreement may provide that collateral secures . . . future advances or other value, whether or not the advances or value are given pursuant to commitment.”)