Important Georgia Excess Tax Sale Funds Case: Home Equity Credit Series 2021 v. Patrick Labat

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Facts

In a well-reasoned and clearly articulated opinion dated April 17, 2025, the Georgia Court of Appeals clarified the rights of parties claiming excess funds following a tax sale. In Home Equity Credit Series 2021 v. Patrick Labat, a tax sale held on February 1, 2022, generated $438,598.95 in excess funds. The property was later redeemed on behalf of the owner, Nelson, by mortgage servicer NewRez (acting through its agent, CoreLogic) for $528,000.

The Fulton County Sheriff subsequently filed an interpleader action to determine the rightful recipients of the excess funds. Claims were filed by: NewRez, seeking $276,763.71 to satisfy a mortgage payoff as servicer for Freddie Mac; Georgia Housing and Finance Authority (GHFA), claiming $6,833.22 based on a subordinate security deed; and Home Equity Credit, claiming entitlement to all remaining funds based on an assignment of rights from Nelson.

At a hearing,  trial court awarded: $276,763.71 to NewRez, $6,833.22 to GHFA, $151,014.46 to another lienholder, $3,987.56 to the Sheriff for costs. Home Equity Credit received nothing and appealed.

Key Legal Issue

The central legal question on appeal was whether holders of security deeds are entitled to excess tax sale funds under OCGA § 48-4-5, or whether their claims are limited to interests in real property only, and therefore excluded.

Home Equity Credit contended that NewRez and GHFA were ineligible to receive any excess funds as their interests were limited to real estate, not personal property. They relied primarily on two cases: DLT List, LLC v. MM7VEN, 301 Ga. 131 (2017), which held that excess tax sale funds are personal property and cannot be claimed by parties whose interests attach only to the real estate; and Jackson v. Wellington & Assoc., 389 F. Supp. 3d 1199 (N.D. Ga. 2019), where a federal court went further, suggesting that security deed holders are not entitled to such funds.

Court of Appeals Ruling

The Court distinguished Jackson as non-binding federal precedent and emphasized the plain language of OCGA § 48-4-5(a)-(b), which requires notice to “record owner[s] of each security deed” and directs the superior court to distribute excess funds “to the owner or owners as their interests appear.”

Additionally, citing OCGA § 44-14-60, the Court noted that holders of security deeds retain actual legal title and are considered “owners” under Georgia law. The Court therefore found that the Georgia Legislature clearly intended for such parties to receive excess funds in line with their lien priorities.

Conclusion

The Georgia Court of Appeals affirmed the trial court’s distribution of excess funds and held that security deed holders are eligible recipients under OCGA § 48-4-5. The Court declined to follow contrary federal authority and reaffirmed the rights of lienholders to claim excess funds based on their recorded interests.

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If you have questions, do not hesitate to call us at 404-382-9994.

Georgia Case Regarding Lis Pendens and Slander of Title

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Understanding Lis Pendens in Georgia Real Estate Law

A lis pendens is a legal notice recorded in the county where a property is located, alerting the public that a lawsuit has been filed involving that property. It serves to notify prospective buyers or lenders that the property is the subject of litigation and that the outcome may affect any interest they acquire. In Georgia, the controlling statute is OCGA § 44-14-610.

Crucially, a lis pendens cannot be based solely on a claim for monetary damages. Its function is to warn that the lawsuit seeks specific relief affecting the property itself. As explained in Evans v. Fulton Nat’l Mtg. Corp., 168 Ga. App. 600, 309 S.E.2d 884 (1983), the litigation must involve a direct interest in the property for a lis pendens to be valid.

Example

If a fraudulent deed is recorded, and the rightful owner files suit to challenge it, the owner can also record a lis pendens. This ensures any would-be buyer is on notice of the dispute. Should a buyer proceed with the purchase despite the notice, they are bound by the lawsuit’s outcome and could lose the property if the plaintiff prevails.

Case Study: Spinola v. Akaranta

In this recent decision, Spinola sued her neighbor, Akaranta, claiming that a water leak from Akaranta’s condominium caused damage to her own unit. Spinola sought monetary damages and also requested an injunction to prevent Akaranta from selling her unit. She recorded a lis pendens against Akaranta’s property to notify potential buyers of the ongoing litigation.

Akaranta counterclaimed, asserting that the lis pendens was improperly filed and had defamed her title, causing a sale to fall through and preventing her from purchasing another property. Initially, the trial court declined to cancel the lis pendens, based on weak property-related claims by Spinola (such as the assertion of a constructive trust). Although the court later reversed that decision and ruled the lis pendens improper, the initial ruling gave Spinola leverage, despite her ultimately admitting that her claims only involved damage to her own unit.

At trial, the jury found that Spinola had wrongfully filed the lis pendens, harming Akaranta by interfering with the sale of her property. The jury awarded damages and attorney’s fees to Akaranta.

However, the Georgia Court of Appeals reversed the verdict. The Court held that, under OCGA § 51-5-8, statements made in connection with judicial proceedings—including those in recorded documents like a lis pendens—are privileged if they are pertinent to the relief sought, even if ultimately found to be false or unsupported. Because Spinola’s lis pendens was filed as part of a legal proceeding and related (at least nominally) to property claims, it was protected by this statutory privilege. As a result, it could not form the basis for a slander of title or defamation claim.

Legal Takeaway

To prove slander of title under OCGA § 51-9-11, a plaintiff must show the publication of false, malicious statements that caused special damages. But when the statement is protected by privilege—as with a lis pendens filed in a pending lawsuit—it cannot support a defamation claim, regardless of the filer’s intent or the document’s eventual rejection by the court.

In Spinola, the effect was that although the jury determined the lis pendens was improperly recorded and caused real harm, the damages were overturned due to the legal protections afforded to court-related filings. The case underscores the importance of correctly filing a lis pendens and understanding the legal privileges attached to litigation-related documents.

Questions?

If you need legal guidance about lis pendens or any related real estate dispute, don’t hesitate to contact our office at (404) 382-9994.

Property Fraud in Fulton County, Georgia

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We have written about property fraud prevention before. As you may know, anyone can go down to the courthouse and record a deed that could significantly impact your property. Sometimes, you may have to file a quiet title action to cancel or get rid of the fraudulent deed. A quiet title is a lawsuit that can cost several thousand dollars. Fulton County has initiated a new tool to help those who own real estate in Fulton County. It is called COSMC – R.E.A.A.C.T. I know, a mouthful. At least part of that stands for Real Estate Activity Alert and Contact Tool.

You can go to the Fulton County Clerk’s website to register and create an account. Once an account is created, you can identify your properties in Fulton County. In theory, if there is activity regarding your property, you will receive an alert by text or email.

While registering your property will not necessarily stop someone from filing a fraudulent deed, at least you will have notice. Many folks do not find out about fraudulent deeds until they try to refinance or sell their property. Believe us, it is no fun having your house under contract but, just before the scheduled closing, finding out from a buyer that there is a problem with your title.

We encourage you to take advantage of this free service offered by the Fulton County Superior Court Clerk’s Office.

Excess Tax Sale Funds in Georgia: A Quick Review

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In Georgia, properties can be auctioned if the owner fails to pay property taxes. When a property is sold at a tax sale for more than the amount owed in taxes, the remaining funds are considered excess funds. These funds are typically held by the county tax commissioner’s office or the sheriff. The Georgia statute that addresses excess tax sale funds is OCGA § 48-4-5.

How long do you have?

Excess funds will be maintained for five years from the date of sale under OCGA § 48-4-5(c) before being turned over to the Georgia Department of Revenue, Unclaimed Property Division.

Who is Entitled to Excess Funds?

Generally, those who may be entitled to claim excess funds include:

  • The property owner at the time of the tax sale: If the property owner can prove ownership and has not relinquished their rights, they may be entitled to the excess funds.
  • Lien holders: Mortgage companies or other lien holders with a recorded interest in the property at the time of the tax sale may also be entitled to claim the funds.
  • Other interested parties: In some cases, other parties with a legitimate interest in the property may be able to claim excess funds.

Excess tax sale funds are paid first to lienholders with a recorded interest on the day of the tax sale (in the order the interests were recorded) and then to the property owner at the time of the tax sale.

Claim Process

Claiming excess tax sale funds can be a bureaucratic and frustrating process. It involves providing documentation to prove ownership or interest in the property and filing a claim with the county tax commissioner’s office. The specific requirements and procedures vary by county.

Claiming excess tax sale funds can be challenging for several reasons:

  • Documentation requirements: Proving ownership or interest in a property can be difficult, especially if the property has changed hands multiple times or records are incomplete.
  • Bureaucratic hurdles: Like many government agencies or large corporations, filing a claim can be time-consuming and frustrating, with unnecessary bureaucratic obstacles.

If you are entitled to excess tax sale funds, here are some tips:

  • Act promptly: Research the time limits for filing claims in your county and act quickly.
  • Gather documentation: Collect relevant documents, such as deeds, mortgages, and property tax records.
  • Consult an attorney: An attorney can help you navigate the legal process and protect your rights.

Would you like to know more about a specific aspect of excess tax sale funds in Georgia, such as the time limits for filing claims or the documentation required? Please call us at 404-382-9994; we’ll happily answer any questions.  

Quiet Your Title Worries: Overview of Marketable Title in Georgia

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Owning property in Georgia is a dream for many, but title issues can turn that dream into a nightmare. If you’re facing a cloud on your title – a potential claim that could prevent you from selling or refinancing your property – a quiet title action can be the solution.

Marketable Title

Marketable title is a legal term that refers to a property title free from any claims or disputes that could reasonably be expected to affect its value or ownership. In essence, it’s a title that a prudent buyer would be willing to accept.

What is a Quiet Title Action?

A quiet title action is a lawsuit allowing you to clear up doubts about the property’s rightful owner. By filing a quiet title lawsuit, you’re asking the court to declare you the owner and “quiet” any challenges to your title.

Types of Quiet Title

There are two types in Georgia: (1) conventional and (2) against all the world. Conventional is used when you must cancel a particular deed that is clouding your title. Against all the world is used when unknown persons may own your property. An example of a conventional type is if someone filed a fraudulent deed against your property, while an example of an against the world type is if you find out the person who sold you your property did not have full title; if you can’t find that person, you must file a quiet title against all the world.

Why Would I Need a Quiet Title Action in Georgia?

You might need a quiet title action in Georgia for several reasons. Here are a few common ones:

  • Heir Property: If you inherited property and there are questions about the validity of the will or the rights of other heirs, a quiet title action can help solidify your ownership.
  • Boundary Disputes: Unsure exactly where your property line ends? A quiet title action can help establish the legal boundaries of your land.
  • Tax Sales: A quiet title action is normally needed to clear the title following a tax sale.
  • Errors in Public Records: Mistakes on deeds or other public records can create clouds on title. A quiet title action can correct these errors.
  • Fraudulent Deeds: If someone fraudulently (or unintentionally) records a deed that shows up in your chain of title (the deeds that show you own the property, a quiet title is needed.
  • Uncancelled Loans: If you use your property as collateral to get a loan (i.e., a mortgage), the lender places a security deed on your property. Once you pay off the loan, the lender is supposed to cancel the security deed. Sometimes, for various reasons, the lender fails to cancel the security deed. For example, if a lender goes out of business, there may be no one to cancel the security deed.
  • Gaps in Ownership: When you sell your property, an attorney may call you to say that there is a gap in your ownership. For example if A sells to B and B sells to C, but you got your property from D, you have a title problem problem becuase you need a deed from C.

The Benefits of a Quiet Title Action in Georgia

A successful quiet title action provides several benefits:

  • Peace of Mind: Knowing your title is clear lets you relax and enjoy your property.
  • Increases Property Value: Properties with marketable title are more valuable than those with title issues.
  • Marketability: Without a clear title, you will likely be unable to sell your property.
  • Loan Approval: A clear title is essential for loan approval if you want to refinance your property.

The Quiet Title Process in Georgia

  1. Consult with a Real Estate Attorney: An experienced attorney can advise you on whether a quiet title action is right for you and guide you through the process.
  2. File a Lawsuit: The attorney will file a petition with the Superior Court in the county where the property is located.
  3. Serve Notice: The court will require that all potential claimants be served with the lawsuit.
  4. Special Master Appointment: In a quiet title against all the world, and sometimes in a conventional quiet title, the court will appoint a special master to investigate the claims and make recommendations.
  5. Court Hearing: The court or the special master will hold a hearing to determine property ownership.
  6. Judgment: The court will issue an order declaring the rightful owner. This order will then be filed on the county’s real estate records. Recording the court order gives you clear title.

Get Help With Your Quiet Title Action in Georgia

If you’re facing a cloud on your title in Georgia, don’t hesitate to seek help. We can advise you on your best course of action and ensure a smooth and successful quiet title process. Call us at 404-382-9994.