June 26, 2015
by Melody R. Jones
and Scott Lofranco
McCalla Raymer, LLC
USFN Member (Georgia)
The Georgia General Assembly concluded its annual 40-day legislative session under the Gold Dome in Atlanta on April 2. The 2015 legislative session included the passage of several major pieces of legislation affecting our industry.
House Bill 322 (HB 322) was signed into law on May 6, 2015 by the governor, effective July 1, 2015. There are two provisions of HB 322 relevant to our industry and practice. First, HB 322 amends O.C.G.A. § 44-14-160. The previous version of O.C.G.A. § 44-14-160 stated that a deed under power shall be recorded within 90 days of the foreclosure sale date. As amended, the statute now requires that deeds under power be “filed” within 90 days of the foreclosure sale date, which takes into account county recording delays that are out of the clients’ control. HB 322 also creates a $500 penalty (in addition to the filing fee) to be paid to the Clerk of Court for failing to file a deed under power within 120 days of a foreclosure sale. This penalty will be due at the time of filing along with the regular recording fees. The legislative purpose for introducing a $500 penalty is to encourage mortgage servicers to execute foreclosure deeds in a timely fashion so that counties and municipalities will have notice of the transfer of ownership. In order to ensure compliance and avoid any penalty, mortgage servicers should exercise diligence in moving deeds through their document execution departments and returning them to the law firms to record. Law firms should also follow up regularly with their clients on outstanding deeds.
HB 322 also amends O.C.G.A. §§ 44-5-30, 44-14-33, 44-14-34, 44-14-61, 44-14-62, and 44-14-63 relating to the witnessing requirements for deeds, mortgages, and deeds to secure debt. Proper execution of these instruments will now require the signatures of the maker, an unofficial witness, and an attesting officer (notary public). Further, O.C.G.A. § 44-14-63 has been amended to state that unrecorded deeds to secure debt remain valid against the persons executing them. The passage of HB 322 will help reduce the likelihood of secured debt being stripped of secured status due to gray areas in the law relating to execution or recording requirements. It appears that the unintentional effect of HB 322 on deed and assignment execution (as well as security deeds/mortgages) is that notary acknowledgements alone will no longer meet recording requirements in Georgia. As stated above, for all security deeds/mortgages, assignments, and deeds, the requirement now is that the maker/signor must sign in the presence of one attesting witness AND one attesting officer as defined by O.C.G.A. § 44-2-15. An “officer” is defined as a notary public, judge, magistrate, or deputy clerk/clerk of the superior court. What attestation means, in layman’s terms, is that the witness and notary are in the presence of the signor of the document, and personally view the signor’s signing of the document. An acknowledgment typically certifies that the signor acknowledged to the notary that she/he signed the document, and it is her/his signature. To ensure compliance, mortgage servicers should review their document templates immediately and work with their local law firms to revise them if needed.
Another major piece of legislation to pass this year, affecting residential real estate closings in Georgia, was House Bill 153 (HB 153). Sponsored by Representative Weldon with the support of the Real Property Law Section of the Georgia Bar Association, the bill was introduced in response to a 2014 Formal Advisory Opinion issued by the Supreme Court of Georgia regarding witness-only closings. The new law, effective July 1, 2015, allows any consumer involved in a one-to-four family residential real estate transaction (or a consumer debtor or trustee of a consumer debtor in a bankruptcy case involving a one-to-four family residential property) to file a civil action for damages stemming from a violation of the Georgia Supreme Court’s rules relating to the unlicensed practice of the law.
As for legislation that did not pass in 2015: SB 117 (which would have given condominium owners associations a super-priority lien for 6 months’ worth of unpaid assessments prior to a foreclosure sale, even as to the holder of a first-priority security deed) failed to make it out of the Senate Judiciary Committee. HB 115, which provided a borrower facing foreclosure with a statutory right to cure, passed out of the House Judiciary Committee but did not make it out of the House Rules Committee.
As a final note, the Georgia General Assembly operates on a biennial legislative term. Any bills that do not pass both chambers by Day 40, or cross over to the other chamber by Day 30 in the first year, will typically remain in the most recent committee to which they are assigned and be available for consideration the following year. If a bill does not pass in the second term, it is dead and will have to be reintroduced. This means that in addition to the new bills introduced in 2016, many of the bills from 2015 will still be in play next year.
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