Changes Coming to Filing Requirements for Security Deeds in Georgia
A new Georgia law changes the information required on security deeds and will help Superior Court clerks clear backlogs in the state's larger counties while making the filing process more efficient. Starting in July 2023, attorneys who draft security deeds will be required to list essential information on the first page of the document.
Security deeds usually are drafted by the attorney for the lender and reviewed by the borrower's attorney and the title company. The title company is the gatekeeper and usually files the security deed because it is the insurer of the priority of the lien. All parties have an interest in timely recording of a security deed and should be cognizant of the new requirements.
The new law also requires all Superior Court clerks to offer electronic filing for the recording of security deeds, along with a public computer terminal that allows courthouse access to the Georgia Superior Court Clerk's Cooperative Authority's electronic filing portal.
The new law, House Bill (HB) 974, addresses inefficiencies in the way that data is scattered throughout security deeds and, in some cases, not listed anywhere. Security deeds for commercial transactions commonly run 60 to 80 pages, and essential information such as the loan amount and maturity date might be anywhere in the documents. This means the clerk's office must search for the information before entering it into required fields in their recording systems and often leads to rejections of the deeds or delays if the information cannot be found. With the new format, all the information the clerk's office needs to input into the county records is in one convenient place.
Data Points Required on First Page
Under HB 974, up to nine data points must be listed on the first page of a security deed or deed modification. These data points are:
- The date of the document
- The names of the signatories to the document
- The grantee's mailing address
- Map and parcel identification information, if available
- The original loan amount or the amount of any outstanding principal and additional advance according to a loan modification
- The initial maturity date or dates for the debt
- The amount of the intangible recording tax payable
- The amount, if any, of the intangible recording tax imposed for an additional advance according to a security deed modification agreement or other additional advance secured by a security deed
- If no intangible tax is imposed, a citation to the authority providing for the exemption of the tax
Takeaways and Considerations
The most important change is the requirement to list the amount of the intangible tax. Currently, clerks' offices require only that the amount of the loan and the date of maturity be listed, leaving the clerk to calculate the tax. The most common exemption to the tax is a loan maturity date of fewer than three years. If the exemption and maturity date are not clearly stated and readily accessible in documents, it may lead to rejection of the filing or at least a delay while the clerk's office contacts the parties to the document. Most security deed rejections stem from a lack of clarity in the tax information.
Failure to follow the new format will not affect foreclosure rights or any other legal rights under a loan agreement, but not providing the required information on the first page of a security deed will lead to an automatic rejection of the filing. The Georgia General Assembly specifically provided that not providing accurate tax parcel information will not void a transaction and nothing in the law changes the enforceability of a deed, mortgage, judgment or lien.
While these filing requirements are not mandated until July 1, 2023, it is recommended that parties to security deeds begin complying immediately in order to have a smooth process in place next year. Following the new format now also will help clerks' offices become more efficient, which benefits all parties.
Sample Cover Sheet
The law does not require a specific format for documents, other than to list all the required information on the first page. Holland & Knight has included a sample form that can be used for the first page of security deeds.