GA Code § 44-14-3 (2021)
2021 Georgia Code|Title 44 - Property|Chapter 14 - Mortgages, Conveyances to Secure Debt, and Liens|Article 1 - In General|§ 44-14-3. Furnishing of Cancellation by Grantee or Holder Upon Payment; Liability for Failure to Comply; Cancellation of Instrument After Failure to Comply; Liability of Agents

  As used in this Code section, the term:   "Account" means the loan, note, or other such agreement executed by the parties.   "Finance charge" means interest and other charges agreed to by the parties.   "Grantee" means heirs, devisees, executors, administrators, successors, transferees or assigns, and any servicing agent or any person or entity to whom indebtedness is paid on behalf of or by any grantor.   "Grantor" means heirs, devisees, executors, administrators, successors, transferees, or assigns.   "Instrument" means a deed to secure debt, a security instrument, a purchase money mortgage, a financing statement, a personalty mortgage, a loan contract, or other instrument executed in connection with any loan.   "Revolving loan account" means an arrangement between a lender and a debtor for the creation of debt pursuant to an agreement secured by an instrument and under which:   The lender may permit the debtor to create debt from time to time;   The unpaid balances of principal of such debt and the loan finance and other appropriate charges are debited to an account;   A loan finance charge is computed on the outstanding balances of the debtor's account from time to time;   The debtor agrees to repay the debt and accrued finance charges in accordance with the written agreement with the lender; and   The limitation on the maximum amount which the debtor is entitled to become indebted under said arrangement between the lender and debtor is stated on the face of the instrument, and said amount shall be deemed to be notice of the maximum amount secured by the instrument.         Whenever the indebtedness secured by any instrument is paid in full, the grantee or holder of the instrument, within 60 days of the date of the full payment, shall cause to be mailed to the grantor, at the grantor's last known address as shown on the records of the grantee or holder of the instrument, written notice of the grantee's or holder of the instrument's transmittal of notice of satisfaction or cancellation as required by this subsection and notice of the grantor's right to demand payment of $500.00 in liquidated damages from the grantee or holder of the instrument if such obligation is not timely met.   Whenever the indebtedness secured by any instrument is paid in full, the grantee or holder of the instrument, within 60 days of the date of the full payment, shall cause to be furnished to the clerk of the superior court of the county or counties in which the instrument is recorded a legally sufficient satisfaction or cancellation to authorize and direct the clerk or clerks to cancel the instrument of record. The grantee or holder of the instrument shall further direct the clerk of the court to transmit to the grantor the original cancellation or satisfaction document at the grantor's last known address as shown on the records of the grantee or holder of the instrument. In the case of a revolving loan account, the debt shall be considered to be "paid in full" only when the entire indebtedness including accrued finance charges has been paid and the lender or debtor has notified the other party to the agreement in writing that he or she wishes to terminate the agreement pursuant to its terms.   Notwithstanding paragraph (2) of this subsection, if an attorney at law remits the pay-off balance of an instrument to a grantee or holder of the instrument on behalf of a grantor, the grantee or holder of the instrument may direct the clerk of the court to transmit to such attorney the original cancellation or satisfaction document.   A grantee or holder of the instrument shall be authorized to add to the pay-off amount the costs of recording a cancellation or satisfaction of an instrument.       Upon the failure of the grantee or holder of the instrument to transmit a legally sufficient satisfaction or cancellation as required by subsection (b) of this Code section, the grantee or holder of the instrument shall be liable to the grantor for the sum of $500.00 as liquidated damages and such additional sums for any loss caused to the grantor, plus reasonable attorney's fees if the grantor makes a written demand for liquidated damages to the grantee or holder of the instrument before transmittal, but not less than 61 days after the instrument is paid in full, and prior to filing a civil action.   The grantee or holder of the instrument shall not be liable to the grantor if he or she demonstrates reasonable inability to comply with subsection (b) of this Code section; and the grantee or holder shall not be liable to the grantor unless and until a written demand for the liquidated damages as provided in subsection (b) of this Code section is made. No settlement agent or attorney may take an assignment of the right to the $500.00 in liquidated damages.   Except as provided in paragraph (1) of subsection (b) and paragraph (2) of subsection (c) of this Code section, no other provision of this Code section shall be construed so as to affect the obligation of the grantee or holder of the instrument to pay the liquidated damages provided for in this subsection.   At least 15 business days prior to filing a civil action to recover liquidated damages, the grantor shall provide notice in writing to the grantee or holder of the instrument at the address where the grantee or holder of the instrument directs payments to be mailed with respect to the indebtedness secured by the instrument or, if such address is not available, at the address of the grantee or holder of the instrument's registered agent for service of process in Georgia stating that the grantee or holder of the instrument:   Has failed to comply with the obligation required by this Code section;   Owes the grantor liquidated damages in the amount of $500.00; and   May be sued by the grantor for the failure to comply with the provisions of this Code section.     If the grantee or holder of the instrument fails to provide written notice to the grantor regarding the grantee's or holder of the instrument's obligation for transmittal as provided in paragraph (1) of subsection (b) of this Code section, the grantor may file a civil action at any time more than 60 days after the grantee's or holder of the instrument's receipt of full payment.   Confirmation of a wire transfer to the grantee or holder of record paying off such loan.   A bank receipt showing payment to the grantee or holder of record of such loan.  Any person who files an affidavit in accordance with this subsection which affidavit is fraudulent shall be guilty of a felony and shall be punished by imprisonment for not less than one year nor more than three years or by a fine of not less than $1,000.00 nor more than $5,000.00, or both.        In all cases, any servicing agent or any person or entity to whom the indebtedness is paid on behalf of any grantee shall be responsible for notifying the holder thereof upon payment in full and for securing the satisfaction or cancellation as provided in this Code section; and, upon failure to do so, the servicing agent or payee shall be subject to the same liability as provided in this Code section.    (c.1)In the event that a grantee or holder of record has failed to transmit properly a legally sufficient satisfaction or cancellation to authorize and direct the clerk or clerks to cancel the instrument of record within 60 days after a written notice mailed to such grantee or holder of record by registered or certified mail or statutory overnight delivery, return receipt requested, the clerk or clerks are authorized and directed to cancel the instrument upon recording an affidavit by an attorney who has caused the secured indebtedness to be paid in full or by an officer of a regulated or chartered financial institution whose deposits are federally insured if that financial institution has paid the secured indebtedness in full. The notice to be mailed to the grantee or holder of record shall identify the indebtedness and include a recital or explanation of this subsection. The affidavit shall include a recital of actions taken to comply with this subsection. Such affidavit shall include as attachments the following items:   A written verification which was given at the time of payment by the grantee or holder of record of the amount necessary to pay off such loan; and   (A) Copies of the front and back of a canceled check to the grantee or holder of record paying off such loan.   (Ga. L. 1975, p. 1134, §§ 1, 2; Ga. L. 1983, p. 677, § 1; Ga. L. 1984, p. 22, § 44; Ga. L. 1986, p. 754, § 1; Ga. L. 1987, p. 3, § 44; Ga. L. 1991, p. 413, §§ 1, 2; Ga. L. 1998, p. 545, § 1; Ga. L. 1999, p. 862, §§ 2, 3; Ga. L. 2000, p. 136, § 44; Ga. L. 2000, p. 1589, § 3; Ga. L. 2008, p. 352, § 1/HB 1093.)    The 2000 amendments.  The first 2000 amendment, effective March 16, 2000, part of an Act to revise, modernize, and correct the Code, in subsection (c.1), substituted a period for a semicolon at the end of subparagraph (c.1)(2)(A) and substituted a period for "; or" at the end of subparagraph (c.1)(2)(B). The second 2000 amendment, effective July 1, 2000, substituted "certified mail or statutory overnight delivery" for "certified mail" in the first sentence of the introductory language in subsection (c.1).    The 2008 amendment,  effective May 12, 2008, inserted "of the instrument" throughout subsections (b) and (c); in subsection (b), added paragraph (b)(1), redesignated former paragraphs (b)(1) through (b)(3) as present paragraphs (b)(2) through (b)(4), respectively, in paragraph (b)(2), inserted "or she" near the end of the last sentence, and, in paragraph (b)(3), substituted "paragraph (2)" for "paragraph (1)"; and rewrote subsection (c). See the Editor's note for applicability.   Editor's notes.   - Ga. L. 1991, p. 413, § 3, not codified by the General Assembly, provides: "This Act shall become effective on July 1, 1991, and shall be applicable to any written demand for the transmittal of a cancellation or satisfaction made pursuant to the provisions of Code Section 44-14-3 of the Official Code of Georgia Annotated occurring on or after July 1, 1991."   Ga. L. 2000, p. 1589, § 16, not codified by the General Assembly, provided that the Act is applicable with respect to notices delivered on or after July 1, 2000.   Ga. L. 2008, p. 352, § 2, not codified by the General Assembly, provides, in part, that a demand for liquidated damages made before May 12, 2008 shall be governed by the provisions of former Code Section 44-14-3.   Law reviews.   - For annual survey of law of real property, see 38 Mercer L. Rev. 319 (1986). For annual survey of real property law, see 57 Mercer L. Rev. 331 (2005). For survey article on trial practice and procedure, see 60 Mercer L. Rev. 397 (2008). For note, "The Great Escape: How One Plaintiff's Sidestep of a Mandatory Arbitration Clause Was Applied to a Class in Bickerstaff v. SunTrust Bank," see 68 Mercer L. Rev. 539 (2017).   JUDICIAL DECISIONS   Statutory obligation to cancel satisfied notes.    - Trial court correctly ordered that security deed be satisfied and canceled of record as the uncontroverted evidence was that the different former property owner paid the different former property owner's debt to the security deed holder but the security deed holder never canceled the security deed; however, once the security deed was satisfied, the security deed holder had a statutory obligation to cancel that instrument. Lebbos v. Davis, 256 Ga. App. 1, 567 S.E.2d 345 (2002).    The trial court, having found a debt to have been forgiven upon a decedent's death, did not err in ordering the decedent's administrator to cancel a deed to secure debt. The litigation did not give notice to the public that the deed had been cancelled; under O.C.G.A. §§ 44-14-3(b) and44-14-60, a grantee of a security deed had the duty to cancel the deed of record when the obligation was satisfied. Mize v. Woodall, 291 Ga. App. 349, 662 S.E.2d 178 (2008).    Lender improperly removed a borrower's action under 28 U.S.C. §§ 1446(b) and 1453(a) because the lender failed to meet its burden to establish that the number of borrowers who paid off their loans and whose security deeds were not timely cancelled under former O.C.G.A. § 44-14-3(b) met the requirements of the Class Action Fairness Act of 2005, making remand necessary under 28 U.S.C. § 1447(c). Stroh v. Colonial Bank, N.A., F. Supp. 2d (M.D. Ga. Nov. 4, 2008).    In a dispute between two siblings and their brother's widow, arising out of the brother's purchase and mortgage of a home for a third sibling, the title of which was in the names of the two siblings and the brother, the trial court erred in ruling that the siblings were not entitled to cancellation or satisfaction of the loan documents after the widow paid the amounts due on the mortgage because the estate had a duty to pay the amount due as the brother was the only obligor on the mortgage. Roberts v. Smith, 341 Ga. App. 823, 801 S.E.2d 915 (2017).   Application of definition of grantee.    - After Chapter 7 debtor executed a note to a lender and also executed a security deed to a grantee, as lender's nominee, to secure the debt, the grantee was not a grantee, within the meaning of O.C.G.A. § 44-14-3(a), because the definition of "grantee" in § 44-14-3(a) did not apply to any other Code section. Drake v. Citizens Bank (In re Corley), 447 Bankr. 375 (Bankr. S.D. Ga. 2011).   Standing was in new purchaser of property.    - Former property owner lacked standing to bring an action for statutory damages and attorney fees under O.C.G.A. § 44-14-3(c) against a lender that failed to cancel the lender's security deed on the property after receiving a payoff of the loan as the owner no longer had an interest in the property at the time that the complaint was filed and, accordingly, the owner was not the real party in interest under O.C.G.A. § 9-11-17(a); the new purchaser of the property became "the grantor" that had the capacity to prosecute the claim pursuant to § 44-14-3(a)(4). Associated Credit Union v. Pinto, 297 Ga. App. 605, 677 S.E.2d 789 (2009).   Duty to inform grantee of manner by which debt satisfied.    - Although no particular form of words is necessary when phrasing a demand under O.C.G.A. § 44-14-3(c), when grantor relies upon payment of the debt in a manner other than that prescribed by the terms of the debt instrument, it is incumbent upon that grantor to inform the grantee of the exact manner by which the grantor claims the debt has been satisfied. Mitchell v. Oliver, 254 Ga. 112, 327 S.E.2d 216 (1985).   Notice.    - When a debtor paid a promissory note and demanded that the creditor record the note's satisfaction, the creditor's failure to do so fell squarely under O.C.G.A. § 44-14-3(c), and the notice requirements found in O.C.G.A. § 44-14-3(c.1) had no application, as (1) the two sections concerned different matters, (2) each had a distinct notice requirement, and (3) O.C.G.A. § 44-14-3(c) specifically provided that no other provision of O.C.G.A. § 44-14-3 was to be construed to limit a creditor's obligation to pay a debtor liquidated damages for violating O.C.G.A. § 44-14-3(c). Franklin Credit Mgmt. Corp. v. Friedenberg, 275 Ga. App. 236, 620 S.E.2d 463 (2005).   "Honest doubt" concerning payment of debt.    - Trial court properly granted creditor's motion for summary judgment upon debtor's claim for statutory penalties under O.C.G.A. § 44-14-3(c), where creditor submitted facts demonstrating that it did not cancel the security deed within the 45-day time period because of an "honest doubt" concerning payment of the debt, and debtor presented no specific facts raising a genuine issue in this regard. Edenfield v. Trust Co. Mtg., 185 Ga. App. 678, 365 S.E.2d 520 (1988).   Borrower waived and released its claim for violation.    - Although a lender had failed to timely release two subdivision lots from its deed to secure debt as required by O.C.G.A. § 44-14-3, the lender was not liable to the borrower because, after the lots sold, the borrower signed loan modification agreements releasing and waiving any claims it might have against the lender. Heritage Creek Dev. Corp. v. Colonial Bank, 268 Ga. App. 369, 601 S.E.2d 842 (2004).   Demand for liquidated damages.    - Because the borrower never specifically demanded liquidated damages, the borrower was not entitled to statutory damages for the lender's failure to timely cancel a security deed. Shree Annpurna, Inc. v. Udhwani, 255 Ga. App. 799, 567 S.E.2d 42 (2002).    In an action for damages, O.C.G.A. § 9-11-8(a)(2)(B), part of the Civil Practice Act (CPA), requires a written demand in the complaint for the damages requested; thus, if a court were to interpret O.C.G.A. § 44-14-3(c) as permitting a demand for liquidated damages to be made in the complaint, the section would have no real meaning because the CPA already imposes such a requirement. Accordingly, if O.C.G.A. § 44-14-3(c) is to serve any real purpose, it must be construed as a requirement that a grantor make a written demand on the grantee for the liquidated damages as a condition precedent to creating the liability that serves as the basis for a lawsuit. SunTrust Bank v. Hightower, 291 Ga. App. 62, 660 S.E.2d 745 (2008).    A complaint by a borrower against a lender for liquidated damages under O.C.G.A. § 44-14-3(c) should have been dismissed because the borrower failed to make a written demand for such damages before filing suit. If the statute was to serve any real purpose, the statute had to be construed as imposing such a requirement. SunTrust Bank v. Hightower, 291 Ga. App. 62, 660 S.E.2d 745 (2008).    Penalties were appropriate  where no justification existed for a bank's refusal to cancel a security deed on property. Regions Bank v. Wachovia Bank ( In re Goldberg), 248 Bankr. 201 (Bankr. S.D. Ga. 2000).   Attorney fees.    - When a debtor paid a promissory note and demanded that the creditor record the note's satisfaction, but the creditor sued the debtor on the note four years later, the debtor was entitled to attorney fees, including fees incurred in defending against the creditor's action, which was directly related to the creditor's failure to comply with O.C.G.A. § 44-14-3(c). Franklin Credit Mgmt. Corp. v. Friedenberg, 275 Ga. App. 236, 620 S.E.2d 463 (2005).    Because the debtor and the investment company's defense of the creditor's action to quiet title was directly related to the creditor's refusal to comply with the creditor's obligation under O.C.G.A. § 44-14-3 to have the security deed cancelled, the trial court did not err when the court awarded the debtor attorney fees under the statute. CB Lending, LLC v. Strategic Property Consulting Group, LLC, 353 Ga. App. 114, 834 S.E.2d 618 (2019).   Penalties were appropriate.    - When a debtor paid a promissory note and gave the creditor a written demand to record the note's satisfaction, but, instead, the creditor sued the debtor on the note four years later, the creditor's actions and omissions fell squarely within O.C.G.A. § 44-14-3(c), and it was liable to the debtor for statutory damages under that section. Franklin Credit Mgmt. Corp. v. Friedenberg, 275 Ga. App. 236, 620 S.E.2d 463 (2005).    Cited in Green v. Cohutta Banking Co., 156 Ga. App. 292, 274 S.E.2d 688 (1980); Lee v. Beneficial Fin. Co., 159 Ga. App. 205, 282 S.E.2d 770 (1981); Dixon v. Cook Banking Co., 191 Ga. App. 861, 383 S.E.2d 337 (1989); Stearns Bank, N.A. v. Mullins, 333 Ga. App. 369, 776 S.E.2d 485 (2015), cert. denied sub nom. Hawkins v. Stearns Bank, N.A., No. S15C1827, 2015 Ga. LEXIS 855 (Ga. 2015), cert. denied, No. S15C1821, 2015 Ga. LEXIS 868 (Ga. 2015).   OPINIONS OF THE ATTORNEY GENERAL   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, § 475 et seq. 69 Am. Jur. 2d, Secured Transactions, § 426 et seq.   C.J.S.   - 59 C.J.S., Mortgages, §§ 479, 483, 484.   ALR.   - Requiring security as condition of canceling of record mortgage or lien, or of recording payment, 2 A.L.R.2d 1064.   Damages recoverable for real-estate mortgagee's refusal to discharge mortgage or give partial release therefrom, 8 A.L.R.4th 853.