Given our geographic proximity, it is not uncommon for Florida banks to do business in Georgia or with clients owning property in Georgia. This geographic proximity, however, does not lend itself to equivalence of foreclosure procedures. This is because, unlike Florida, Georgia recognizes non-judicial foreclosures. Indeed, power of sale foreclosures, as they are called, are the most prevalent form of foreclosure in Georgia. It is useful for Florida banks that have made, or contemplate making, loans secured by real estate in Georgia to be aware of the different procedure available to them on default in that jurisdiction.

The security instrument used in Georgia is called a “Deed to Secure Debt.” For the bank to have the right to pursue foreclosure non-judicially, the Deed to Secure Debt must grant the bank a “power of sale.” If it does, the bank’s remedy comprises the following steps:

First, the bank should ensure that the Security Deed is filed of record in the county in which the real property is located before the foreclosure sale. If the bank acquired its security interest by assignment, it should also ensure that the assignment is filed of record before the foreclosure sale.

Second, the bank must comply with all notice requirements provided in the Deed to Secure Debt.

Third, where the security is residential real estate, the bank must mail the debtor notice of the default and pending foreclosure sale. The mailed notice must:  (1) be accompanied by a copy of the advertisement (discussed below); (2) include the name, address, and telephone number of the entity with power to negotiate and modify the terms of the mortgage (Deed to Secure Debt); (3) be sent via registered or certified mail or overnight delivery; and (4) be sent at least 30 days prior to the foreclosure sale.

Fourth, an advertisement of the sale must be published each week for four weeks in the designated newspaper of the county or counties in which the property is located. Courts have found that it is sufficient to publish once a week for four calendar weeks immediately prior to the week in which the sale is to be held; however, there is no requirement that the sale be held within 28 or 30 days of the first publication. The advertisement should:  (1) state that the debtor is in default; (2) include the legal description of the property; (3) name the grantor, current owner, and parties in possession to the extent reasonably ascertainable; (4) identify any prior encumbrances; and (5) state the date, time, and place of the sale. Advertisements generally also state the dates of publication. Notably, newspapers in different counties may publish on different days of the week and also have differing internal deadlines for receipt of advertisements for publication. If the Deed to Secure Debt provides for additional advertisement requirements, the bank should ensure those requirements are satisfied.

Fifth, the sale should be held on the first Tuesday of the month between 10:00 a.m. and 4:00 p.m. at the courthouse of the county or counties in which the property is located. If the first Tuesday of the month falls on New Year’s Day or Independence Day, the sale should be held on the immediately following Wednesday. If the bank anticipates seeking a deficiency judgment, bidding should begin at the fair market value of the property. Generally, there is no competitive bidding, and the bank purchases the property. If the Deed to Secure Debt sets forth additional procedures for conducting the foreclosure sale, the bank should ensure that those procedures are followed.

Sixth, the bank must record a “Deed Under Power of Sale” within 90 days of the foreclosure sale. The deed should be executed by the bank as attorney-in-fact for the debtor.

Lastly, if the bank wishes to obtain a deficiency judgment, it must apply for a court order confirming and approving the foreclosure sale within 30 days after the sale. The procedure for obtaining a deficiency judgment will be discussed in more detail in a subsequent post.

The primary and obvious benefit of a power of sale foreclosure is that, from start to finish, the procedure takes only four to six weeks. Additionally, Georgia does not afford a right of redemption. Therefore, a bank doing business in Georgia can acquire the property of a defaulting debtor more quickly than in any other jurisdiction.