In what might be viewed as the last nail in the coffin for Georgia’s confirmation statute, the Georgia Supreme Court’s recent opinion in PNC Bank, National Association v. Smith affirms that a lender may contract around the statutory requirement of confirming the results of a prior foreclosure sale before pursuing a deficiency action – at least with respect to the pursuit of guarantors. In responding to two certified questions from the federal district court in a deficiency action where the lender foreclosed first, but did not confirm the results of the prior foreclosure sale, the Supreme Court held that (1) a lender’s compliance with the requirements of the Georgia confirmation statute is a condition precedent to the lender’s ability to pursue a guarantor for a deficiency after a foreclosure sale has been conducted; and (2) a guarantor can waive the condition precedent requirement of the foreclosure confirmation statute by virtue of waiver clauses in its loan documents.

The Supreme Court first reviewed the record, which showed PNC Bank, National Association ("PNC") made a loan to Hoschton Town Center, LLC, which was guaranteed by several individuals and secured by property in Jackson County, Georgia. The borrower was not a party to the action. In the security deed encumbering the Jackson County property, the borrower granted PNC the right to exercise its power of sale in the event of a default and also the ability to pursue other collateral, including "contracts of guaranty." The borrower also agreed to a choice of remedy clause granting PNC "the right to exhaust its remedies ‘either concurrently or independently, and in such order as [PNC] may determine.’" In separate guaranty agreements, each guarantor pledged to remain unconditionally liable on the indebtedness, irrespective of the borrower’s liability (or discharge of same). Moreover, the guarantors also waived "‘any and all rights or defenses … based on any "one action" or "antideficiency" law or any law which prevents [PNC] from bringing any action, including claim for deficiency against [the guarantors], before or after [PNC]’s completion of any foreclosure action….’" Perhaps more importantly, the guarantors "also acknowledged PNC’s right of foreclosure and agreed to remain liable for the indebtedness" even if PNC did not confirm the foreclosure sale.