A line of credit mortgage is a mortgage created for not more than a specified maximum amount on real property belonging to a debtor or a third party and provided thereby to secure a creditor's unspecified claim within a specific scope against the debtor.
Claims secured by line of credit mortgages shall be limited to claims deriving from specific legal relationships or to rights deriving from negotiable instruments.
For rights deriving from negotiable instruments, with the exception of those obtained on the basis of a specific legal relationship with a debtor as referred to in the preceding paragraph, if the mortgagee accepts any further transfers of negotiable instruments once the debtor has ceased payment and begun liquidation proceedings, or once there has been any composition agreement, application for bankruptcy, or application for company reorganization pursuant to the Bankruptcy Act, the rights under such negotiable instruments are not a claim secured by the line of credit mortgage. This restriction shall not apply, however, if the mortgagee has accepted transfer of a negotiable instrument without knowledge of those circumstances.