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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