How are mortgage liens treated in Georgia?

Georgia is known as a title theory state where the property title remains in the hands of the lender until payment in full occurs for the underlying loan. The document that secures the title in Georgia is called a deed to secure debt but may also be referred to as a security deed. The instrument that represents the borrower’s personal promise to pay the loan is known as a promissory note.


How are Georgia mortgages foreclosed?

The primary method of foreclosure in Georgia involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action unless a deficiency is sought. When the deed to secure debt is initially signed it will usually contain a provision called a power of sale clause, which upon default allows sale of the property in order to satisfy the underlying loan. Georgia does not use the typical deed of trust where the trustee acts as a representative of the lender and/or is the holder of the deed of trust. Foreclosure sales will typically occur in the form of an auction at the courthouse. Because this is a non-judicial remedy, there are very stringent notice requirements and the legal documents are required to contain the power of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:

  1. Prior to initiating a foreclosure, the lender must send a demand letter requesting the payment of all past due amounts, which gives the borrower ten (10) days to pay these amounts otherwise foreclosure proceedings will begin. If payment is made at this stage no attorney's fees are assessed.
  2. The lender must then publish the notice of the scheduled foreclosure sale in the county newspaper in which the property is located for four (4) consecutive weeks before the sale. The borrower must also receive by certified mail notice at least fifteen (15) days before the date of the proposed sale.
  3. Foreclosure sales must take place on the first Tuesday of each month (between 10AM and 4PM) at the courthouse. The trustee will auction the property to the highest bidder at the courthouse steps.

In Georgia, the lenders can also go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. If the deed of trust does not contain the power of sale language, or a standard mortgage is used, the lender usually must seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in county court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.


What are the legal instruments that establish a Georgia mortgage?

The documents are known as the deed to secure debt, promissory note, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, a mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the promissory note.


How long does it take to foreclose a property in Georgia?

Depending on the timing of the various required notices, it usually takes approximately 60-90 days to effectuate an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and adjournments of sales, or files for bankruptcy.


Is there a right of redemption in Georgia?

Once a deed under power of sale is issued to a successful bidder at the foreclosure sale, Georgia has no statutory right of redemption, which would allow a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs.


Are deficiency judgments permitted in Georgia?

Yes, a deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures. The lender must seek a deficiency judgment within thirty (30) days after the foreclosure sale. The foreclosure sale must be confirmed.


What statutes govern Georgia foreclosures?

The laws that govern Georgia foreclosures are found in of Georgia Code (O.C.G.A) O.C.G.A §44-14-162 et. seq. Actions to assert wrongful foreclosure for improper notice are referenced under O.C.G.A §9-11-65, and various notice requirements for Sheriff’s foreclosure sales are referenced under O.C.G.A. §9-13-140(a).