Source: https://www.buckleybeal.com/blog/2014/july/wrongful-foreclosure-confirmation-and-debtors-re2/
Timestamp: 2019-05-20 20:28:59
Document Index: 457003298

Matched Legal Cases: ['§ 21', '§ 44', '§ 44', '§ 9', '§ 8', '§ 21', '§ 9', '§ 11', '§ 8', '§ 9', '§ 21', '§ 23', '§ 8', '§ 32', '§ 21']

In this second series on commercial property foreclosure, this article will examine a lender's duties to a debtor when preparing to sell and selling a debtor's foreclosed property. These duties are providing notice of the sale to the debtor, properly advertising the sale, and conducting the sale in good faith.
Notice and Advertising the Sale
Georgia law provides "notice to [debtor] is a prerequisite to the exercise of the power of sale for both residential and commercial property."[1] The law requires that
[n]otice of the initiation of proceedings to exercise a power of sale . . . shall be given to the debtor by the secured creditor no later than 30 days before the date of the proposed foreclosure. Such notice shall be in writing, shall include the name, address, and telephone number of the individual or entity who shall have full authority to negotiate, amend, and modify all terms of the mortgage with the debtor, and shall be sent by registered or certified mail or statutory overnight delivery, return receipt requested, to the property address or to such other address as the debtor may designate by written notice to the secured creditor. The notice required . . . shall be given by mailing or delivering to the debtor a copy of the notice of sale to be submitted to the publisher.[2]
If a creditor fails to properly provide notice of sale to the debtor, "the debtor may either seek to set aside the foreclosure or sue for damages for the tort of wrongful foreclosure."[3] Once notice to the debtor is completed, the creditor must advertise the sale.
There are several requirements for proper advertisement of the foreclosure sale, which must be done in the same "time and place and in the usual manner of the sheriff's sales in the county in which such real estate . . . is located."[4] These include advertising "weekly for four weeks in the legal organ for the county notice of all sales of land and other property,"[5] listing the name of every individual in possession of the property,[6] including the name of the grantor in the advertisement,[7] listing the owner of the property if different from the grantor, including the name, address, and telephone number of the entity who has the authority to negotiate, amend, or modify all terms of the mortgage with the debtor, including the time and place of the sale in the advertisement,[8] and referencing the right to sell the property.[9] However, Georgia courts have stated that an advertisement "need not set forth the amount of the debt."[10]
Conducting the Sale in Good Faith
Georgia law requires that "[p]owers of sale in deeds of trust, mortgages, and other instruments shall be strictly construed and shall be fairly exercised."[18] As such, a creditor has a "duty of good faith" to protect the debtor during the sale and to ensure that "nothing is done which will have the effect of chilling the bidding at the sale."[19] Georgia law holds that a "breach of this duty to conduct the sale 'fairly' gives rise to a claim for damages" to the debtor.[20] However, as will be discussed below, this fairness does not require that the true market value of the property be obtained at the foreclosure sale, but only that any breaches of duty regarding the sale do not result in an inadequate price. Included below is a short list of the requirements of the sale:
"Unless otherwise provided, sales of property must be made by the sheriffs or coroners only at the courthouse on the first Tuesday in each month, between the hours of 10:00 A.M. and 4:00 P.M., and at public outcry."[21]
"The property must be sold for cash, and one who extends credit is accountable to the grantor as if he had received cash."[22]
"Unless permitted by the security deed, the land cannot be offered or sold in separate parcels, but must be sold as a whole, except to the extent that part of the secured property has already been released from the deed."[23]
The creditor must not conduct the sale in a way calculated to chill the bidding or depress the prices offered.[24]
[1] 3 Ga. Real Estate Law & Procedure § 21:81 (7th ed.).
[2] O.C.G.A. § 44-14-162.2
[3] Roylston v. Bank of Am., N.A., 290 Ga. App. 556, 559, 660 S.E.2d 412, 417 (2008).
[4] O.C.G.A. § 44-14-162.
[5] O.C.G.A. § 9-13-140.
[9] Ga. Real Estate Finance and Foreclosure Law § 8:4 ("It is not required that the foreclosure advertisement identifies specifically the nature of default. All that is required at a minimum is that there be a default. A recitation of one event of default in the advertisement will not be deemed to be to the exclusion of other events of default, and a foreclosure will not be set aside if the published reason for default is erroneous so long as an adequate basis for default and foreclosure does exist. If, however, the underlying instruments do require notice of the basis of default and the advertisement is the only form of such notice to the debtor, then identification of an improper basis of default may be deemed a waiver of alternative grounds for default and the foreclosure may be set aside.").
[10] 3 Ga. Real Estate Law & Procedure § 21:81 (7th ed.).
[11] O.C.G.A. § 9-13-140.
[12] In re S. Bowling, Inc., 05-86834-WLH, 2010 WL 4881798 (Bankr. N.D. Ga. Oct. 8, 2010) (citing Collier v. Vason, 12 Ga. 440 (1853)).
O.C.G.A. § 11-9-108. See also Ga. Real Estate Finance and Foreclosure Law § 8:4.
[15] Racette v. Bank of Am., N.A., 318 Ga. App. 171, 175, 733 S.E.2d 457, 462 (2012); see also LSREF2 Baron, LLC v. Alexander SRP Apartments, LLC, 1:12-CV-2545-AT, 2013 WL 8335728 (N.D. Ga. Feb. 13, 2013) ("[A] bid-chilling claim premised on inadequacies in the foreclosure notice can succeed even when the foreclosure notice complies with the requirements of O.C.G.A. § 9–13–140(a).").
[16] 3 Ga. Real Estate Law & Procedure § 21:81 (7th ed.).
[17] In re S. Bowling, Inc., 05-86834-WLH, 2010 WL 4881798 (Bankr. N.D. Ga. Oct. 8, 2010).
[18] O.C.G.A. § 23-2-114.
[19] Ga. Real Estate Finance and Foreclosure Law § 8:5.
[20] Kennedy, 155 Ga. App. at 329.
[21] 3A Ga. Jur. Property § 32:35. ("However, should the first Tuesday of the month fall on New Year's Day or Independence Day, such sales must take place on the immediately following Wednesday.").
[22] 3 Ga. Real Estate Law & Procedure § 21:86 (7th ed.) ("However, the fact that he may give the bidder time to comply with his bid will not necessarily invalidate the sale, and it has been held that as long as he credits the full amount of the bid on the secured indebtedness, the sale is valid, even where he accepts a new security deed for part of the purchase price.").