proposed revisions to title standards for 2016

Hillary Fentress
Chicago Title Insurance Company
Commonwealth Land Title Insurance Company

CHAPTER 4 Proposed Revisions

4.5 Requirements for Recording a Deed in Georgia

AS OF JULY 1, 2015:

For a deed to be recorded, Georgia law requires that it be signed by the maker (grantor), attested by an officer as provided in O.C.G.A. 44-2-15, and attested by one other witness. O.C.G.A. Section 44-5-30. A deed is attested when an officer as provided in O.C.G.A. 44-2-15 and one or more natural persons see the maker sign the deed and they "attest" to the fact by signing the deed as officer and witness.

As of the July 1, 2015 revision to O.C.G.A. 44-5-30, an acknowledged deed will not be entitled to be recorded. "Acknowledging" a deed is not the same as "attesting" a deed. To be recorded, a deed must be "attested" by an officer as provided in O.C.G.A. 44-2-15, and attested by one other witness ". If there is only one (1) "attesting" witness, the deed is not entitled to be recorded, even if the deed is subsequently "acknowledged" and even if the one "attesting" witness is an authorized officer. O.C.G.A. Section 44-2-14.
The above requirements are the same for all deeds, regardless of their nature. Therefore, when attestation is not proper, it must be reported as a title defect.

PRIOR TO JULY 1, 2015:

For a deed to be recorded, Georgia law requires that it be signed by the maker (grantor) and attested by at least two (2) witnesses. O.C.G.A. Section 44-5-30. A deed is attested when two or more natural persons see the maker sign the deed and they "attest" to the fact by signing the deed as witnesses.

Also, the deed must be attested or acknowledged by an officer authorized by Georgia statutes. O.C.G.A. Section 44-2-14, 44-2-15. The official witness can be one of the two (2) required attesting witnesses. If the deed is not attested by an official witness, it may be acknowledged after execution and the acknowledgment certified on the deed by the official witness entitling the deed to be recorded. O.C.G.A. Section 44-2-16.

Acknowledgment involves the grantor's declaration before a notary public or other officer that, in fact, he is the maker named in the deed, that he signed the deed, and that the signature on the deed is in fact his signature; these facts provide the substance of the officer's certification of acknowledgment. White v. Margarahan, 87 Ga. 217, 13 S.E. 509 (1891) (overruled on other ground by Leeds Building Product, Inc. v. Sears Mortgage Corp. 267 Ga. 300, 477 S.E. 2d 565 (1996) which allows a deed that was properly attested or acknowledged on its face, but contained a latent defect, to provide constructive notice. Although customary in some jurisdictions, the Georgia Code does not require the maker's signature on the acknowledgment. O.C.G.A. Section 44-2-15.

An acknowledgment does not eliminate the requirement for at least two (2) attesting witnesses. "Acknowledging" a deed is not the same as "attesting" a deed. To be recorded, a deed must be "attested" by two (2) witnesses; if one of the "attesting witnesses is an authorized officer, there is no need for an "acknowledgment". If there are two (2) unofficial "attesting" witnesses, the deed is still not entitled to be recorded until "acknowledged" by an authorized officer. If there is only one (1) "attesting" witness, the deed is not entitled to be recorded, even if the deed is subsequently "acknowledged" and even if the one "attesting" witness is an authorized officer. O.C.G.A. Section 44-2-14.

The above requirements are the same for all deeds, regardless of their nature. Therefore, when attestation or acknowledgment is not proper, it must be reported as a title defect.

4.6 Constructive Notice of Security Deeds

AS OF JULY 1, 2015:

To admit deeds to secure debts or mortgages to record, they must be attested by an officer as provided in Code Section 44-2-15 and attested by one other witness. O.C.G.A. Section 44-14-61 and O.C.G.A. Section 44-14-33. A deed to secure debt or mortgage is attested when an officer as provided in O.C.G.A. 44-2-15 and one or more natural persons see the maker sign the deed to secure debt or mortgage and they "attest" to the fact by signing the deed to secure debt or mortgage as officer and witness.

When a security deed is defectively attested, it may be corrected by a new corrective deed or a modification agreement. See Revised State Bar of Georgia Title Standards §14.4. O.C.G.A. Section 14-2-18 provides that if a mortgage or security deed is not properly attested, the security deed may be recorded upon the affidavit of a subscribing witness, and the officer must testify to the execution of the deed and its attestation according to law. Also, O.C.G.A. Section 44-2-19 outlines procedures for recording a deed by affidavit when the subscribing witness or witnesses are dead, insane or have moved outside the state or otherwise incapacitated to make an affidavit.

Comment: Assignments and Releases

O.C.G.A. §44-14-64 sets out that all transfers of deeds to secure debt….”shall be witnessed as required for deeds”.
When a quit claim deed is executed to release property from a Security Deed it should be attested in the same manner required for deeds, see Chapter 4.5. When a cancellation is executed to cancel the security deed of record, OCGA 44-14-67 provides a form and requires that any cancellation shall be substantially similar to the form provided, see Chapter 14.7. The form provides for a witness and notary, therefore good title practice requires that the cancellation should be executed in the same manner as deeds.

PRIOR TO JULY 1, 2015:

To admit deeds to secure debts to record, they must be attested or proved in the same manner prescribed by law for mortgages. O.C.G.A. Section 44-14-61. To admit a mortgage to record, it must be attested by or acknowledged before an officer as prescribed for the attestation or the acknowledgment of deeds of bargain and sale. In the case of real property, a mortgage must also be attested or acknowledged by one additional witness. O.C.G.A. Section 44-14-33.

When a security deed is defectively attested or acknowledged, it may be corrected by a new corrective deed or a modification agreement. See Revised State Bar of Georgia Title Standards §14.4. O.C.G.A. Section 14-2-18 provides that if a mortgage, or security deed, is neither attested by nor acknowledged before one of the officers set out in O.C.G.A. Section 44-2-15, the security deed may be recorded upon the affidavit of a subscribing witness, and the officer must testify to the execution of the deed and its attestation according to law. Also, O.C.G.A. Section 44-2-19 outlines procedures for recording a deed by affidavit when the subscribing witness or witnesses are dead, insane or have moved outside the state or otherwise incapacitated to make an affidavit.

4.7 Actual and Constructive Notice

AS OF JULY 1, 2015

A deed that is not properly attested or acknowledge is ineligible for recording, and may be rejected by the clerk of the court, or, even if recorded, will not serve as constructive notice. Coniff v. Hunnicutt, 157 Ga. 823, 122 S.E. 694 (1924). However, that actual notice from record, if seen in the record by the purchaser or his attorney, will be effective even if the deed is ineligible for recording, and thus will trigger inquiry notice. Gardner v. Granniss, 57 Ga. 539 (1876). This conforms with Georgia's race/notice standard which provides that a purchaser who has actual notice of a prior instrument does not have priority over a subsequent purchaser even if that prior instrument is unrecorded or defectively recorded. O.C.G.A. Section 44-2-3.
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PRIOR TO JULY 1, 2015

A deed that is not properly attested or acknowledged is ineligible for recording, and may be rejected by the clerk of the court, or, even if recorded, will not serve as constructive notice. Coniff v. Hunnicutt, 157 Ga. 823, 122 S.E. 694 (1924). However, that actual notice from record, if seen in the record by the purchaser or his attorney, will be effective even if the deed is ineligible for recording, and thus will trigger inquiry notice. Gardner v. Granniss, 57 Ga. 539 (1876). This conforms with Georgia's race/notice standard which provides that a purchaser who has actual notice of a prior instrument does not have priority over a subsequent purchaser even if that prior instrument is unrecorded or defectively recorded. O.C.G.A. Section 44-2-3.

Comment: Effect of Gordon Cases:

Taken together, U.S. Bank National Association v. Gordon, 709 S.E. 2d 258 Ga (2011) and Wells Fargo Bank v. Gordon, 292 Ga. 474 (2013) establish that for a security deed to be "duly filed, recorded and indexed," in satisfaction of O.C.G.A. Section 44-14-33 and the 1995 Amendment, the security deed must not be facially defective and thus cannot be missing any required signatures or attestations and acknowledgments. The Supreme Court in the Gordon cases explicitly voiced concern that the relaxation of execution formalities, for equitable reasons, would increase the risk of fraud and would undermine the efficacy and purpose of such requirements for the recording system. Note that under §544(a) of the Bankruptcy Code, the Trustee enjoys a heightened hypothetical bona fide purchaser status, regardless of actual notice, that has not yet been applied outside of the bankruptcy context by the Georgia Supreme Court.

8.5 Power of Attorney

If the execution of any document in the chain of title is made by an attorney-in-fact, it is better practice that the title examiner be able to verify that: the power of attorney is dated, properly executed, witnessed and recorded; empowers the attorney to execute the document; refers to the real property as specifically as possible; and at the time the attorney executed the document, the power of attorney had not been terminated of record by the principal, nor was there any evidence of record that the principal was deceased or mentally incompetent at that time, if the power of attorney provides that it terminates in the event of mental incompetency. A power of attorney is not terminated and it remains durable if the principal becomes mentally incompetent, unless the power of attorney provides to the contrary. If the examiner is dissatisfied with any or these facts surrounding the power of attorney, then the examiner should raise his/her objections to the client to permit the closing attorney to resolve the matter.

Comment: See the Comment above to Standard 8.4.

Comment: Attestation

In order for a power of attorney to be entitled to recording, it should be attested in the same manner as deeds. See Dodge v. American Freehold Land Mortg. Co. of London, 109 Ga. 394, 34 S.E. 672 (1899). As of July 1, 2015, to be entitled to be recorded, the power should be attested by an officer as provided in O.C.G.A. 44-2-15, and attested by one other witness. O.C.G.A. Section 44-5-30. See Section 4.5, infra

DRAFT Title Standards 9.2 Authority of Officer to Execute Instruments

9.2 Authority of Officer to Execute Instruments

When a corporate instrument is either (i) executed by a corporate officer, that person’s signature is attested by the secretary or assistant secretary (or other officer authorized to authenticate corporate records), and the corporate seal or a facsimile thereof is affixed, or (ii) executed by the president or vice president and that person’s signature is attested by the secretary or assistant secretary (or other officer authorized to authenticate corporate records), a title examiner may assume that the officer executing the document in fact holds the position indicated, that such person is authorized to execute the document, and that the officer’s signature is genuine.
Comment: Source — O.C.G.A. Section 14-2-151. See also O.C.G.A. Section 14-5-7, Clause (ii) above became effective July 1, 1992.

The Examiner should bear in mind that the evidentiary presumption afforded by O.C.G.A. Sections 14-2-151 and 14-5-7 do not establish recording requirements. Recording is governed by O.C.G.A. Section 44-2-14, which requires, with respect to execution, a signature, two witnesses, and an attestation or acknowledgment.attested by an officer as provided in O.C.G.A. 44-2-15, and attested by one other witness. Neither the presence of a corporate seal, nor the signature of an officer specified in O.C.G.A. Section 14-5-7, is required for recording.

DRAFT Title Standards 17.1 Foreclosure in General

17.1 Foreclosure in General

Foreclosures in Georgia may be conducted in equity; pursuant to statutory procedures; by execution, levy and sheriff’s sale; and by non-judicial power of sale. The non-judicil power of sale is the most common method of foreclosure in Georgia. The most common security instrument in Georgia is the deed to secure debt also referred to as a security deed.

When a foreclosure appears in the chain of title, an examination of the security instrument which was foreclosed is necessary. The security instrument and succession of transfers to the current holder authorized to conduct the sale should be recorded. A foreclosure sale conducted after the statute of limitations has run on the security instrument is void. Failure to pay intangible recording tax applicable to the security instrument constitutes a bar to foreclosure. Such bar to foreclosure may be removed by payment of the tax plus penalty and interest. Since non-judicial power of sale is a contractual remedy, the terms and procedures for conducting the foreclosure sale must be set forth in the security instrument to be foreclosed. The instrument must also contain a valid power of attorney empowering the grantee to conduct the foreclosure sale and execute the deed under power of sale as the attorney in fact for the grantor.

While there is no statutory procedure for conducting non-judicial foreclosure sales, it is required that a non-judicial foreclosure sale be advertised and conducted in the same manner as sheriffs’ sales. If all or a part of the property to be foreclosed was to be used as a dwelling place of the debtor at the time the security instrument is entered into, Written notice of the sale must be given to the debtor by registered or certified mail sent no later than 30 days prior to the foreclosure sale date.

Comment: For a comparison of security deeds with other security instruments, see Pindar and Pindar, Ga. Real Est. Law, Section 21-4 (4th ed.).

Security deeds and transfers recorded after July 1, 1989, should include the mailing address of the grantee or transferee. However, failure to include the mailing address is not a defense to foreclosure (O.C.G.A. Sections 44-14-63 and 64). A foreclosure sale by a holder of a security instrument pursuant to an unrecorded transfer is valid. [Burgess v. Simmons, 207 Ga. 291, 61 S.E.2d 410 (1950)]. However, failure to record the transfer would require future examiners to inquire as to the authority of the party executing the deed under power of sale. [Pindar and Pindar, Ga. Real Est. Law, Section 21-46 (4th ed.)].O.C.G.A. §44-14-162(b) requires that the assignment into the foreclosing lender must be recorded prior to the time of the foreclosure sale.

O.C.G.A. Section 44-14-80 establishes a 7-year reverter following maturity of the debt or recording or delivery if no maturity is stated and a 20-year reverter from the date of the conveyance if no maturity is stated and the conveyance contains an affirmative statement that the parties intend to establish a perpetual or indefinite security interest in the property conveyed to secure a debt or debts. (See Standard 14.6). Prior to the 1994 amendment, this Code Section established a 20-year reverter following maturity of the debt or recording or delivery if no maturity was stated. The amended Code Section should not be relied upon as to security deeds executed prior to the effective date, April 19, 1994, of the 1994 amendment. O.C.G.A. Section 44-14-81 bars a foreclosure after the reversion period. The expiration of the statute of limitations on a note secured by a security deed does not bar foreclosure (O.C.G.A. Section 44-14-43).

O.C.G.A. Section 48-6-61 imposes a tax of $1.50 for each $500.00 or fraction thereof of the face amount of a long-term note secured by real estate as defined at O.C.G.A. Section 48-6-60 (2). O.C.G.A. Section 48-6-77(a) bars foreclosure unless applicable intangible recording tax is paid. This same Code Section imposes a penalty of 50% of the amount of the tax plus interest if such tax is not paid within 90 days of the date of the instrument.

For standards regarding powers of attorney, see Standard 8.5.
See O.C.G.A. Section 23-2-114 for power of sale in deed to secure debt and O.C.G.A. Section 44-14-162 for conducting as a sheriff’s sale.
See O.C.G.A. Sections 44-14-162.1 through 162.4 for notice requirements to debtor and deed recitals.