GA Code § 44-14-67 (2021)
2021 Georgia Code|Title 44 - Property|Chapter 14 - Mortgages, Conveyances to Secure Debt, and Liens|Article 3 - Conveyances to Secure Debt and Bills of Sale|Part 1 - In General|§ 44-14-67. Cancellation of Deed as Reconveyance of Title

  In all cases where property is conveyed to secure a debt, the surrender and cancellation of the deed, in the same manner as mortgages are canceled, on payment of the debt to any person legally authorized to receive the same, shall operate to reconvey the title of the property to the grantor or the grantor's heirs, executors, administrators, or assigns.   In the case of a deed to secure debt which applies to real property, in order to authorize the clerk of superior court to show the original instrument as canceled of record, there shall be presented for recording:   A cancellation upon the original security deed itself;   A conveyance from the record holder of the security deed, which conveyance is in the form of a quitclaim deed or other form of deed suitable for recording and which refers to the original security deed; or   A cancellation as provided in subsection (c) of this Code section.  Any clerk of superior court who cancels of record any deed to secure debt in the manner authorized in this subsection shall be immune from any civil liability, either in such clerk's official capacity or personally, for so canceling of record such security deed.       (c) Cancellation of a security deed, the original of which has been lost, stolen, or otherwise mislaid, may be made based upon a document executed by the owner of the security interest and who so swears in such document, which document shall be recorded and shall be in substantially the following form:   ________________ County, Georgia The indebtedness referred to in that certain deed to secure debt from _____________ to _____________, dated _____________, and of record in Deed Book __________, Page __________, in the office of the clerk of the Superior Court of ________________ County, Georgia, having been paid in full and the undersigned being the present owner of such secured interest by virtue of being the original grantee or the heir, assign, transferee, or devisee of the original grantee, the clerk of such superior court is authorized and directed to cancel that deed of record as provided in Code Section 44-14-4 of the O.C.G.A. for other mortgage cancellations. In witness whereof, the undersigned has set his or her hand and seal, this __________ day of ________________________, ________. ______________________________ (SEAL) Signature Signed, sealed, and delivered on the date above shown __________________ Unofficial Witness __________________ Notary Public (SEAL) My commission expires: ____________________________________   (Ga. L. 1889, p. 118, § 1; Civil Code 1895, § 2774; Civil Code 1910, § 3309; Code 1933, § 67-1306; Ga. L. 1986, p. 754, § 2; Ga. L. 1989, p. 498, § 2; Ga. L. 1994, p. 1943, § 12; Ga. L. 1999, p. 81, § 44.)   Law reviews.   - For annual survey of law of real property, see 38 Mercer L. Rev. 319 (1986).   JUDICIAL DECISIONS    A security deed, although conveying the legal title, does so for the purpose of security only, and upon the satisfaction of the obligation which it is given to secure, is automatically extinguished in effect and can be canceled of record without any reconveyance by the grantee, in accordance with the provisions of O.C.G.A. § 44-14-67. Hennessy v. Woodruff, 210 Ga. 742, 82 S.E.2d 859 (1954); Sapp v. ABC Credit & Inv. Co., 243 Ga. 151, 253 S.E.2d 82 (1979).    No reconveyance is necessary to revest title, where land has been conveyed to secure a debt, a cancellation of the deed, as in the case of mortgages, being sufficient for that purpose under O.C.G.A. § 44-14-67. Chapman v. Ayer, 95 Ga. 581, 23 S.E. 131 (1895); Citizens' Bank v. Taylor, 155 Ga. 416, 117 S.E. 247 (1923).   Legal title automatically reverted.    - Trial court did not err in holding that children acquired a collective two-thirds interest in property because pursuant to O.C.G.A. § 44-14-67(a), when the original security deeds were paid off and cancelled legal title automatically reverted to the father and the children, his assigns; the father had no authority thereafter to convey a greater interest than he held, and thus, only the father's own one-third interest could be encumbered by the loan that was made to the father without any involvement by the children. Chase Manhattan Mortg. Corp. v. Shelton, 290 Ga. 544, 722 S.E.2d 743 (2012).    It is the duty of the grantee, upon payment of the amount due under the terms of deed to secure debt, to surrender and deliver it to the grantor with a proper entry showing payment, and the grantor may thereafter have it "satisfied" of record. A petition seeking to have the above rule complied with by the grantee is based upon a statutory right. Hennessy v. Woodruff, 210 Ga. 742, 82 S.E.2d 859 (1954).   Alternate methods.    - If an instrument by which title is conveyed to the creditor is of such a character as to pass into the creditor an absolute title, it can be revested only by a reconveyance to the grantor, or by compliance with the provisions of O.C.G.A. § 44-14-67. Burckhalter v. Planters' Loan & Sav. Bank, 100 Ga. 428, 28 S.E. 236 (1897). See also Ashley v. Cook, 109 Ga. 653, 35 S.E. 89 (1900).   Nature of interest revested.    - Under O.C.G.A. § 44-14-67 the payment of a debt secured by deed to land revests in the grantor in such deed such interest and title therein as can be levied upon under an execution issuing upon a judgment junior in date to such deed, without a reconveyance of the land to the grantor, and, in case of cancellation, without the record of the cancellation of the security deed. Citizens' Mercantile Co. v. Easom, 158 Ga. 604, 123 S.E. 883 (1924).   Deed with reconveyance clause not mortgage.    - Under O.C.G.A. § 44-14-67 an instrument, in all respects in the form of a deed passing title, and executed for the purpose of securing the payment of a described debt is not, because containing the clause: "Reconveyance of said property to be made upon fulfillment of all the conditions of this instrument," properly to be treated as a mere mortgage. Pitts v. Maier, 115 Ga. 281, 41 S.E. 570 (1902).    A written instrument which by its terms passes title from the vendor to the vendee as security for a debt and which contains no defeasance clause is a deed or bill of sale to secure a debt and is not a mortgage. The title conveyed thereunder does not automatically revert to the vendor upon the payment of the debt, but continues thereafter in the vendee, and is not divested until the performance of some act, as a reconveyance from the vendee to the vendor, or the cancellation and surrender of the instrument by the vendee as required by O.C.G.A. § 44-14-67. Grady v. T.I. Harris, Inc., 41 Ga. App. 111, 151 S.E. 829 (1930).   Distinction between cancellation and record of cancellation.    - O.C.G.A. § 44-14-67 deals with the cancellation of the security deed as a separate and distinct thing from the record of such cancellation; and the record of such cancellation as a separate and distinct thing from the cancellation itself. The language of that section, "cancellation of such deed in the same manner that mortgages are now canceled," may mean that such cancellation shall consist of an acknowledgment of the payment of the debt and an order from the grantee authorizing or directing the cancellation of the instrument. The proper construction may be, that, when such order is entered upon the security deed, it is the cancellation thereof contemplated by the section. Citizens' Mercantile Co. v. Easom, 158 Ga. 604, 123 S.E. 883 (1924).   Voluntary cancellation without consideration.    - Under O.C.G.A. § 44-14-67, the cancellation of a security deed and its delivery to the grantor, who had it canceled of record, was held binding and effective, though the cancellation was voluntary and without consideration. In re Hitchcock, 283 F. 447 (N.D. Ga. 1922).   Effect of failure to record cancellation.    - If record of cancellation is not effected according to O.C.G.A. § 44-14-67, the security deed appearing of record to be valid, a purchaser without notice acquires title. Ellis v. Ellis, 161 Ga. 360, 130 S.E. 681 (1925).   Sufficiency of deed cancellation.    - Chapter 7 trustee was allowed under 11 U.S.C. § 544 and O.C.G.A. § 44-14-63(a) to avoid a security deed which debtors gave to a bank before the debtors declared Chapter 7 bankruptcy because the bank filed the deed in the wrong county. There was no merit to the bank's claim that the trustee had inquiry notice of the bank's security interest because the debtors used the proceeds of a loan the debtors obtained from the bank to pay a debt to another bank and the other filed documents to cancel the bank's loan that were defective under O.C.G.A. § 44-14-67(c); in addition, the doctrine of equitable subordination did not prevent the trustee from avoiding the bank's secured interest. Rogers v. M&I Bank FSB (In re Morgan), 449 Bankr. 821 (Bankr. N.D. Ga. 2010).   Erroneous cancellation of security deed.    - Trial court did not err in reinstating the security deed after the bank erroneously cancelled the security deed as the recorded cancellation did not reconvey title since the debt was not fully satisfied and, thus, the bank retained the bank's right to non-judicial foreclosure. Patel v. J.P. Morgan Chase Bank, N.A., 327 Ga. App. 321, 757 S.E.2d 460 (2014).   Transfer of bond to reconvey.    - Where an owner of land made a conveyance of it to secure a loan, taking bond for reconveyance upon payment, and transferred the bond to another, in the absence of fraud, one who subsequently obtained judgment against the assignor of the bond, and who was not shown to have been a creditor when the transfer was made, did not have the right to subject the land after the payment of the secured debt by the transferee of the bond, the cancellation of the security deed under O.C.G.A. § 44-14-67, and the subsequent making of a quitclaim deed by the secured creditor to the transferee. Burney Tailoring Co. v. Cuzzort, 132 Ga. 852, 65 S.E. 140 (1909).    Payee of a note authorizing retention of any of maker's collateral then or thereafter acquired and application to the same or other debts, which took a transfer of a note and security deed executed by maker to a bank, was entitled to a special lien on the land described in the security deed only for the amount of the balance due by the debtor to the bank, and upon payment of such balance the debtor was entitled to have the security deed canceled and surrendered to the debtor. Mitchell v. Mandeville Mills, 180 Ga. 791, 180 S.E. 828 (1935).   No reconveyance where secured debt not paid in full.    - Because the debt to the bank was not paid, the title of the property could not have been reconveyed to the successor of the grantor of the bank's security interest pursuant to O.C.G.A. § 44-14-67(a). Therefore, the bank's security interest was never reconveyed and the bank held a senior position based on the bank's 1997 mortgage to the grantor. Mak v. Argent Mortg. Co., LLC, F. Supp. 2d (N.D. Ga. Sept. 15, 2009).    In a case in which (1) a creditor's security interest was inadvertently released before the mortgage on the debtor's residence was paid in full; (2) the debtor sought declaratory relief as to secured status, to avoid preferential transfer, and for monetary damages for wrongful foreclosure; and (3) the creditor moved for summary judgment, the creditor's inadvertent filing of a rescission of cancellation of the creditor's security interest in the debtor's residence did not result in a transfer of an interest of the debtor in the property. Under O.C.G.A. § 44-14-67(a), filing a notice of cancellation did not terminate the creditor's lien; the satisfaction of the debt did so. In re Poff, Bankr. (Bankr. M.D. Ga. Dec. 16, 2010).   Fraudulent deed was facially regular and operated to release security interest.    - A 2003 warranty deed that operated to release a prior lender's security interest in the property was not a forgery but was signed by someone fraudulently assuming the authority of an officer of the prior lender and was regular on the deed's face. Therefore, a subsequent lender that foreclosed on the property and purchased the property at the foreclosure sale was a bona fide purchaser for value entitled to take the property free of the prior lender's security interest. Deutsche Bank Nat'l Trust Co. v. JP Morgan Chase Bank, N.A., 307 Ga. App. 307, 704 S.E.2d 823 (2010).   Failure to provide a separate statement swearing to fate of original document.    - According to In re Morgan, 449 Bankr. 821 (Bankr.N.D.Ga. 2010), the failure to provide a separate statement swearing to the fate of the original document does not, by itself, put a hypothetical bona fide purchaser on inquiry notice because "given the plain language of the statute, the presentation of an instrument of cancellation conforming to this form with an attested, witnessed signature in and of itself evidences a sworn statement that the original security deed to be cancelled is unavailable." Though the Morgan decision did not address ownership, the reasoning plainly extends to it; the statute (in the context of O.C.G.A. § 44-14-67(c)), provides a form, so that the form clearly complies with the requirements of the statute. Gordon v. Wells Fargo Bank, N.A. (In re Ingram), Bankr. (Bankr. N.D. Ga. Apr. 5, 2013).   Summary judgment proper once security deed paid in full.    - In an action to remove a cloud from title, the trial court properly granted summary judgment to a bank and cancelled a recorded deed in favor of a holder, as: (1) the holder could no longer claim any legal title to the subject property once the underlying debt thereto was paid; (2) no evidence of valid renewal or extension of the note existed; and (3) the holder lacked standing to challenge any foreclosure on the debt. Northwest Carpets, Inc. v. First Nat'l Bank, 280 Ga. 535, 630 S.E.2d 407 (2006).    Cited in Cumming v. McDade, 118 Ga. 612, 45 S.E. 479 (1903); Webb v. Harris, 124 Ga. 723, 53 S.E. 247 (1906); Turner v. Woodward, 133 Ga. 467, 66 S.E. 160 (1909); Massell v. Fourth Nat'l Bank, 38 Ga. App. 631, 144 S.E. 806 (1928); Blumenfeld v. Citizens' Bank & Trust Co., 168 Ga. 327, 147 S.E. 581 (1929); Penn Mut. Life Ins. Co. v. Larsen, 178 Ga. 255, 173 S.E. 125 (1934); Waldroup v. State, 198 Ga. 144, 30 S.E.2d 896 (1944); Farmers Fertilizer Co. v. J.R. Watkins Co., 199 Ga. 49, 33 S.E.2d 294 (1945); Burgess v. Simmons, 207 Ga. 291, 61 S.E.2d 410 (1950); Bank of LaFayette v. Giles, 208 Ga. 674, 69 S.E.2d 78 (1952); Wilson v. Whitmire, 212 Ga. 287, 92 S.E.2d 20 (1956); Strickland v. Miles, 131 Ga. App. 300, 205 S.E.2d 880 (1974); Davis v. Johnson, 241 Ga. 436, 246 S.E.2d 297 (1978); Coleman Road Assocs. v. Culpepper, 214 Ga. App. 475, 448 S.E.2d 83 (1994); Stearns Bank, N.A. v. Mullins, 333 Ga. App. 369, 776 S.E.2d 485 (2015); Brown v. Tucker, 337 Ga. App. 704, 788 S.E.2d 810 (2016).   OPINIONS OF THE ATTORNEY GENERAL   Recordation requirements.   - When a paid mortgage or security deed is filed with an order of cancellation upon it, clerks of superior court may record the canceled instrument or only the part which bears the order; the part recorded should be sufficient to identify the transaction; clerks should index cancellations of security instruments with the name of the borrower (mortgagor) in the "grantee" index, make all notations required by statute in the indices and on the recordings, and charge a fee of $3.50, unless the cancellation is by new deed, in which case the fee for recording a deed should also be charged. 1989 Op. Att'y Gen. U89-19.    Cancellation of security deeds and writs of execution from record.  1972 Op. Att'y Gen. No. U72-79.    A clerk must obtain a written authorization executed by or on behalf of grantee in order to cancel a security instrument  and, in case of real property, may require additional formalities such as attestations to assure against forgery. 1981 Op. Att'y Gen. No. U81-50.   Sufficiency of deed cancellation.    - Under Ga. L. 1986, p. 754, amending O.C.G.A. §§ 44-14-3 and44-14-67 dealing with deeds to secure debt and their cancellation, the release of corporate security interests in real property or security interests under the UCC, signed by an officer or delegated agent, as provided in O.C.G.A. § 14-5-7(b), will continue to constitute conclusive evidence of corporate authorization for the release, and when the clerk is presented with such a release apparently so signed, in the absence of overt signs of impropriety, it should be accepted for recording. 1986 Op. Att'y Gen. No. 86-17.   RESEARCH REFERENCES   Am. Jur. 2d.   - 55 Am. Jur. 2d, Mortgages, §§ 359 et seq., 430.   C.J.S.   - 59 C.J.S., Mortgages, § 451 et seq.   ALR.    - Excessive security for debt as affecting question of fraud upon creditors, 138 A.L.R. 1051.   Requiring security as condition of canceling of record mortgage or lien, or of recording payment, 2 A.L.R.2d 1064.