Tag: security deed

Quiet Title: Cancelling an Expired Security Deed

Expiration of Security Deeds in Georgia

We have previously discussed that security deeds (i.e., a mortgage) can automatically expire in Georgia. If a security deed expires, the lender cannot foreclose, and the security deed no longer acts as a lien against the property, and the security deed can be canceled. Generally, under OCGA § 44-14-80, a security deed expires (1) seven years after the maturity date of the security deed, or (2) if there is a statement in the security deed that says the maturity date is perpetual or infinite, 20 years from the date of the conveyance.

Recent Quiet Title Action

The above statute was tested in a recent quiet title action. See Freeport Title & Guaranty, Inc. v. Braswell, A23A0442 (2023). In Freeport, a property owner, A, conveyed real estate to B in 2004. The owner financed the sale, meaning that B borrowed money from A to purchase the property and gave a security deed to A.

B defaulted on the loan, but A did not foreclose on the security deed until 2020. A claimed that the security deed was valid because the security deed has “perpetual/infinite” language and, therefore, the above 20-year rule applied. Conversely, B argued that the security deed (and the 2020 foreclosure) were invalid because the seven-year rule applied.

The Court of Appeals ruled for A, finding that the security deed contained sufficient language to activate the 20-year rule. The Court rejected B’s argument that the language in the security deed was insufficient to show intent for a perpetual duration.

Read the Security Deed

The lesson here is that you must closely read the security deed to determine the expiration date of a security deed. Please call us at 404-382-9994 if you have questions regarding whether a security deed on your property is enforceable and whether you are entitled to file a quiet title to remove the security deed.

In Georgia, can a security interest in real estate expire?

Yes. A security interest in real estate expires (in other words, become unenforceable) seven years after expiration of the maturity of the debt. Or, if the language in the security deed contains an affirmative statement with the intent of establishing a perpetual security interest, then the expiration date is the later of (a) seven years from the maturity of the debt or (b) 20 years from the date of the conveyance. See O.C.G.A. § 44-14-80(a).

If a security deed expires based the above paragraph, the property reverts back to the borrower. This means the lender loses its security interest in the property and cannot foreclose.

An additional consideration is what happens if the loan is extended. O.C.G.A. § 44-14-80(b) answers this: as long as the loan is extended before the seven or 20 years—and, importantly, the extension is recorded on the public record—then the security interest is also extended by seven or 20 years (depending on the language in the security deed).

The import of recording an extension was the subject of a recent Georgia appellate decision. Bell v. Freeport Title & Guaranty, A20A0133 (May 1, 2020). In Bell, the loan and security went into default in 2007. However, the borrower signed two extensions. These extensions were never recorded on the public record. The lender foreclosed on the loan in 2015. The Georgia of Court of Appeals ruled that because the two extensions were not recorded, the lender’s security interest expired in 2014. Thus, the reversion of the property back to the borrower in 2014 voided the 2015 foreclosure.

Although mentioned in a footnote, Bell makes an important point, which is the grantee (here, the lender) has the duty to record its deed. Reidling v. Holcomb, 225 Ga. App. 229, 230-231 (1997). By failing to record the extensions, the lender had no one to blame but itself.

Please call Gomez & Golomb at 404-382-9994 if you have any questions about title to your property.