Georgia Legislature Revises Deadline for Recording of Foreclosure Deeds and Signature Requirements for Security Deeds
Written by Associate Attorney Patrick Taggart
Two statutes that control the mortgage servicing industry in Georgia were recently revised by the state legislature and signed into law by Governor Nathan Deal. Georgia House Bill 322 changes the current rules by setting the requirements for the proper attestation of security instruments as well as a specific time in which a foreclosure deed must be recorded without incurring a penalty. This bill will become law effective July 1, 2015.
The execution of a mortgage or security deed in Georgia must be signed by the maker and two witnesses in order to be recordable (O.C.GA. §44-2-15). The execution of the instrument must be witnessed or acknowledged by an official witness. In common practice, the official witness is typically a notary public. The two witnesses for the majority of security deeds are made up of the official witness, and an unofficial witness; both of whom personally witness the execution by the maker of the instrument. Another acceptable form of execution under O.C.G.A. § 44-2-16 is where the signature of the maker is completed in the presence of two unofficial witnesses and then “acknowledged” before the notary public. In this situation, the notary (or authorized officer) does not personally witness the maker executing the document but receives an acknowledgement from the maker and certifies the same on the face of the deed.
An issue has arisen due to bankruptcy trustees attempting to void certain security deeds when the deed is acknowledged by the notary and there was only one unofficial witness. As of July 1, security deeds will require the unofficial witness and notary to both be present when the maker executes the security deed in order to be considered properly executed. This new requirement will be beneficial to mortgage servicers in Georgia in that it sets forth a uniform standard for the execution of the security deed. However, closing attorneys will need to be vigilant moving forward to ensure security deeds executed outside of their office are signed, sealed and delivered in the presence of both the unofficial witness and notary and to not record deeds attested to by acknowledgement.
House Bill 322 also amends O.C.G.A. §44-14-160. This statute previously required that a foreclosure deed be filed within 90 days of the foreclosure sale. Over the years the law has created some confusion in the industry as there is no penalty stated for violating this statute. Attorneys for borrowers have attempted to use this code section to their benefit by claiming a foreclosure deed which was filed more than 90 days after a sale is void. The revised code section creates a $500 penalty for any foreclosure deed filed more than 120 days after the sale. The penalty will be assessed on the holder of the foreclosure deed at the time of filing. The establishment of a monetary penalty for late filing is beneficial to servicers by preventing the assertion in litigation that the delay renders the deed void. Since these statutes are strictly construed, the explicit penalty emplaced by the legislature will preclude differing interpretations by parties attempting to attack the enforceability of the instrument. On the other hand, this penalty creates more of an urgency to record deeds in a timely manner to avoid the penalty. Long past are the times when delays were acceptable as closing firms will need to promptly record deeds or else risk the ire of clients as well as potentially incurring liability on behalf of the firm for the penalty.